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Wesfarmers to scale back Australia's Target amid fashion push

Australian retailer Wesfarmers Ltd. plans to shut down 20% of the outlets in its department store chain Target over the next five years, while also developing a more fashion-focused identity for the brand.

Guy Russo, CEO of Wesfarmers' department stores division and managing director of Target, said during a company investor briefing event June 6 that unprofitable stores among the chain's 305 locations would be subject to closure. In addition, Target will spend the next 12 months focusing on fashion acceleration, its online presence and optimizing its store network.

The Australian chain, which has no corporate connection to U.S. retailer Target Corp., is also set to shift into a midtier boutique business to compete with fashion chains H&M Hennes & Mauritz AB, Industria de Diseño Textil SA-owned Zara and Fast Retailing Co. Ltd.-owned Uniqlo.

Russo said during the presentation: "We're not going to go after size anymore, and we'll just be a nice, new boutique retailer that plays in midtier. ... I'd like to make sure that it's a profitable midtier business."

The revamped Target will aim to "deliver fashion that excites and quality that endures," Russo said. He added that key initiatives for growing the fashion segment include developing youth brands, innovating the fabric mix, investing in design and upscaling visual merchandising in stores.

As part of its fashion push, Target has added three in-house designers and also set a mandate for increased quality in its women's, children's and home brands, according to Russo. It is also offering items similar to those from H&M, Zara and Uniqlo, but in a lower price range, of A$30 to A$50.

Regarding Target's store network across Australia, Russo noted that as many as half remain unprofitable and that both small and larger-sized outlets could be hit with closures. The executive said he has already told managers to "get sales to start going up" in an effort to save locations before their leases expire.