Target Holiday Sales Soft, Dec. Misses Expectations
Despite launching various discounts and promotions in an attempt to capture significant sales during the holiday season, Target Corporation's December sales failed to meet both company and Wall Street expectations.
Same-store sales-sales at stores open at least a year and an industry barometer-rose 1.6 percent, less than the 3.1 percent increase that analysts predicted.
“December sales were below our expectations as growth in grocery and beauty offset softness in electronics and music, movies, and books,” Target Chairman, President, and CEO Gregg Steinhafel said in a statement. “Sales and traffic were strongest in the week leading up to Christmas as guests waited to shop for last-minute gifts. In 2012, we'll continue to pursue initiatives designed to deliver compelling value and a superior shopping experience against the backdrop of continued slow and volatile economic growth.”
In the weeks leading up to Christmas, Minneapolis-based Target offered discounts on big-name toys and other gifts-both in stores and online. Its “Big Toy Event” featured a buy one-get one 50 percent off offer for various toy brands, and its “25 Days of Toys” promotion featured a 30 to 50 percent discount on one popular toy each day between November 30 and Christmas Eve.
Target also debuted a three-day “Almost Last Minute Sale” featuring deep discounts on various home, apparel, accessory, toy, and electronic items. The retailer tapped social media channels too; Facebook fans could print a coupon entitling them to a $10 gift card when they spent at least $50 in stores during a limited window.
Target's net retail sales last month totaled $10.1 million, representing a 2.6 percent increase from December 2010-another period during which sales fell below expectations.
A University of St. Thomas Holiday Spending Sentiment Survey, conducted during the first week of November, found that 2011 holiday spending in the Twin Cities metro area was expected to jump 4.6 percent from the prior year's forecast-and local households planned to spend $703 on average for holiday gifts.
In light of Target's results, the company revised its guidance for the fiscal fourth quarter, which ends in late January. It now expects diluted earnings per share of $1.35 to $1.43, down from its prior guidance of $1.43 to $1.53.
Year-to-date, Target's sales total $63.9 billion, up 4 percent from the same time a year ago.
Target serves customers at 1,767 stores and on its Web site-and it will open its first Canadian stores in 2013. It is Minnesota's second-largest public company based on revenue, which totaled $67.4 billion in the fiscal year that ended in January 2011.