Target on Wal-Mart

NEW YORK — Target Corp. is going bananas to keep up with Walmart Stores Inc.

The discounter, known for stylish towels and jeans, has long sold groceries. But it is barely holding onto its customers while its chief rival, Walmart, is rapidly picking up new shoppers as its powerful low-cost message resonates in the recession. So Minneapolis-based Target plans to stock more fresh food — including bananas — and play up its low prices.

Meanwhile, Walmart, the world’s largest retailer, is expanding its selection of nonessentials such as home furnishings, while improving the quality of its store-brand foods.

Activist shareholder William Ackman has for several months been using Target’s struggle with Walmart as ammunition to push Target shareholders to change its board. He has said his five picks, including himself, would provide fresh perspective, increase profitability and re-energize stock, which has dropped 42 percent from its $70 high in July 2007, though it since has rallied.


What should they do?
Facing criticism from Wall Street analysts who believe it’s been late to respond to the recession, Target is becoming more vulnerable. But New York-based retail consultant Walter Loeb is not convinced that Ackman should get involved.
Target’s cheap chic mantra — its advantage in boom times — became a drag in late 2007, as the recession began and shoppers focused on basics.

At the same time, Walmart, based in Bentonville, Ark., found a balance of merchandise and marketing to enhance its renewed focus on price.



by the associated press

Target's shareholder to hold town meeting

NEW YORK (AP) — Less than three weeks ahead of what's expected to be a heated proxy contest at Target's annual shareholders' meeting, activist shareholder William Ackman aims to strengthen his case to investors for a new slate of directors by personally introducing his roster at a town hall meeting here Monday.

According to documents filed Friday with the Securities and Exchange Commission, Ackman, who runs Pershing Square Capital Management, which owns a 7.8 percent stake in the discounter, intends to "improve Target's board and consequently, help make Target a stronger, more profitable and more valuable company."

Friday's filing outlined Ackman's reasons for why investors should pick his nominees and offered comparisons to the Target's incumbent nominees.

"We believe that the deficit of relevant experience and the lack of significant shareholder representation on Target's board has contributed to the company's material underperformance during this recession," Ackman noted in Friday's filing.

Since March, Ackman has been pressing his case in a series of regulatory filings to nominate his own slate of five candidates — including himself — to Target's board. That number includes the seat left vacant by the resignation of Robert J. Ulrich, former chairman and chief executive, who resigned from the board on Jan. 31.

In addition to Ackman, Pershing Square has nominated Winthrop Realty Trust Chairman and CEO Michael Ashner, former Starbucks Corp. CEO Jim Donald, law professor Ronald Gilson, and Richard Vague, the former chairman and CEO of First USA. Ackman has maintained that this slate will bolster the board's expertise in retail, credit cards and real estate issues. In the filing, Ackman insisted that the nominees are "entirely independent" and have "no preconceived agenda other than to maximize shareholder value."

Target has fought back by asking its shareholders to vote against Ackman's picks and support its own board of incumbents. Target has maintained the retailer's shareholders are best served by re-electing the four current directors whose terms expire at this year's annual meeting, set for May 28.

Ackman has long been pushing Target to do more with its assets as part of a campaign to boost the company's stock. But since Target rejected Pershing Square's real estate proposal to separate the land the retailer owns underneath its stores and distribution centers, Ackman has turned his intentions to shaking up the board. Target's shares have fallen 45 percent since May 2008 to $28.83 on March 16, the day before Ackman announced the proposal for new board nominees, but have rallied to $43 since then. Shares are still down 16 percent from a year ago.

Discounters, particularly Target's chief rival, Wal-Mart Stores Inc., have benefited from consumers switching to cheaper stores and focusing on necessities. But at Target, where more than 40 percent of revenue comes from nonessentials such as funky jeans and quilts, the cheap-chic formula has become a drag as shoppers fixate on the lowest prices and forego the extras, no matter how reasonably priced. The company's credit card woes have also dragged down its profits.

Last week, Target announced that same-store sales or sales at stores opened at least a year rose 0.3 percent in April; Wal-Mart's same-store sales rose 5 percent. Same-store sales are considered a key indicator of a retailer's health.

In a letter written by Gregg Steinhafel, Target's chairman, president and CEO, and sent to shareholders last week, he noted that Pershing Square has launched the proxy fight because it rejected its real estate proposal, which it called too risky.

"Your board and management team have a strong track record of success and a clear strategy for sustaining Target's competitive advantage, driving continued profitable growth and creating substantial shareholder value over time," Steinhafel wrote.

Target is Pershing Square's largest investment in its portfolio.


by the associated press

Walmart pays $2M , to workers family . From Black Friday Killing

Walmart pays $2M in trampling

MINEOLA, N.Y. — Walmart agreed Wednesday to pay nearly $2 million and improve safety at its 92 New York stores as part of a deal with prosecutors that avoids criminal charges in the trampling death of a temporary worker.

Nassau County District Attorney Kathleen Rice, who began a criminal investigation shortly after last November’s customer stampede at Walmart’s Valley Stream store, said that if she had brought criminal charges against the retailer for negligence in the worker’s death, the company would have been subject to only a $10,000 fine if the company were convicted.

Instead, she said, the company has agreed to implement an improved crowd-management plan for post-Thanksgiving Day sales, set up a $400,000 victims’ compensation and remuneration fund, and provide a $1.5 million grant to social services programs and nonprofit groups within Nassau County.

The agreement included no admission of guilt by the Walmart company.



FROM WIRE REPORTS