Target defends board, attempts to reverse slow sales

NEW YORK (AP) — Target Corp. defended its board of directors Wednesday while touting initiatives such as expanding its grocery offerings and relaunching its store brand of basics in an attempt to satisfy its critics and reverse sagging sales.

The discounter saw first-quarter earnings fall 13 percent. Though that beat Wall Street expectations, Target is still vulnerable to pressure from key shareholder William Ackman, who is fighting to change the board. The company said Wall Street profit expectations for the current quarter “seem achievable,” but it will be a challenge given the poor economy.

The struggle between Target and Ackman’s Pershing Square Capital Management, which owns a 7.8 percent stake in the company, has lasted for months ahead of next week’s shareholder meeting.

Target Chairman and Chief Executive Gregg Steinhafel said Pershing Square’s proposal to change the company’s board would “diminish the strength and talent of our board and impair its ability to continue to generate lasting and substantial value for all shareholders.”

Though Target says it’s committed to maintaining its innovative edge, it is turning to a humdrum category — groceries — to drive growth and help it compete again Wal-Mart Stores Inc., which has gained ground in the recession through its strength in food and necessities.

Target began testing a new food format at its discount general merchandise stores late last year that offers pre-packaged perishable food such as bananas and bagged lettuce. The company said Wednesday that it plans to expand the concept to 100 new and remodeled stores by the end of the year, with the goal of adding this format at most of its new and remodeled stores in the next three years. Target also vowed that its food prices will be equal to or better than at Wal-Mart.

The company said it was relaunching its store label products now called Target Brand as up & up; the introduction began in March with sunscreen lotion and the line will span 40 categories when the marketing push begins this summer.