KMart in Hinkler. Photo: Mike Knott / NewsMail
KMart in Hinkler. Photo: Mike Knott / NewsMail Mike Knott

Target store to be converted to Kmart?

A MOVE to turn Target and Kmart into a merged retail operation is on the cards after a major re-shuffle of each company's management happened in February.

The two Wesfarmers-owned chains have been brought together under the helm of Kmart managing director Guy Russo, in the hope that the business mogul can transform Target into the same success of its counterpart.

Wesfarmers said it would cut administration and purchasing costs through the restructure and also flagged converting Target stores to Kmart and vice versa.

Grafton is home to both a Target store but no Kmart, so what does this mean for our region?

The DEX has often received overwhelming support for a Kmart when asking residents what they would like to see in the Clarence Valley.

We hit the streets again and, unsurprisingly, some residents were thrilled by the suggestion of Target being converted into a Kmart:

"Kmart is the bae," exclaimed Rachael Kempnich. "It has everything in it and better prices, better quality."

Coffs Harbour couple Dick and Monica Osborne were doing some shopping in Grafton for the first time and were surprised by the quality of services on offer. But they did note the absence of a Kmart.

"The best shopping centre I know is Centro Toormina and it's got a Kmart," Dick said.

"My preference is Kmart. But come Christmas time Target has some great sales," Monica said.

But to some people it really wouldn't make a difference.

"It wouldn't bother me, I'd still buy the same undies," said Kerrie Davis from Grafton.

The Sydney Morning Herald reported Bank of America Merrill Lynch's retail analyst David Errington stated the restructure as a "merger" of two fierce competitors would be "highly problematic" and cost the company sales and earnings.

"As we see it, the biggest winner from this merger could be Big W where disillusioned Target customers could migrate to," Mr Errington wrote in a research note.

The merger will significantly dent earnings, Mr Errington said, predicting Target would now run at a loss of $52 million and $100 million in 2017 and 2018, instead of earning about $100 million in each year.

He said Kmart's earning would be $25 million lower next year and $30 million lower in 2018 because of the merger, and cut his forecast earnings for Wesfarmers by 2 per cent this financial year, by 5 per cent in 2017 and just over 6 per cent in 2018.

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