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Mervyn's continues to play a key role in supporting Dayton Hudson's growth by providing cash flow to help fund Target's store expansion. In 1998, we made progress strengthening Mervyn's competitive position through merchandising, marketing and store initiatives. And while Mervyn's delivered below-plan sales and profit performance, Mervyn's did post its second consecutive year of positive comparable-store sales growth in 1998. We believe Mervyn's can expand its margins and deliver more consistent comparable-store sales growth going forward.
Mervyn's main focus in 1998 was to improve the quality, content and clarity of its merchandise offering. We expanded the number and breadth of national brands, and will add new brands such as Hallmark Home Collections, Sideout and Cuisinart in 1999. We are also expanding our relationships with many key national brands we carry such as Gloria Vanderbilt and Villager by Liz Claiborne. And we have edited and more clearly defined our owned brands such as Hillard & Hanson® and High Sierra®. In addition, we are making it easier for guests to shop by segmenting the entire store by brand or lifestyle. In 1998, Mervyn's developed a marketing strategy that more consistently supports its brand image as a promotional, middle-market neighborhood department store. Mervyn's will become more visible to guests in 1999 with increased broadcast advertising and a more compelling Sunday newspaper tab, exposing guests to new merchandise and great values every week. Mervyn's completed ten full-store remodels and made minor remodels to 11 additional stores in 1998. We also added 18 new merchandise shops and new fixtures at every store. In 1999, Mervyn's will remodel another 20 stores. Improving both in-stocks and guest service are priorities in 1999. The implementation of Dayton Hudson's Global Merchandising System and the Location Management System will help Mervyn's improve guest service and drive incremental sales through more effective price management, reduced markdowns, increased inventory turns and improved in-stocks. We are optimistic that Mervyn's will generate consistent comparable-store sales increases and profit improvement in the year ahead, and will remain an important contributor to the company's overall growth.
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