Target Same-Store Sales Flat in Dec., Miss Expectations

Still, the retailer expects fourth-quarter earnings per share to “meet or somewhat exceed” the low end of its previously announced guidance.

Target Corporation’s same-store sales were flat in December, falling short of both the company’s own expectations and Wall Street estimates.
 
Same-store sales, or sales at stores open for at least a year, are a key barometer of retail performance. Analysts polled by Thomson Reuters had expected a 0.8 percent jump for the five-week period that ended Monday.
 
Meanwhile, Target’s net retail sales increased 0.8 percent to $10.2 billion in December.
 
“December sales were slightly below our expectations, as strong results late in the month did not completely offset softness in the first three weeks,” Target Chairman, President, and CEO Gregg Steinhafel said in a prepared statement.
 
Still, Steinhafel said that he expects Target’s fourth-quarter earnings per share to “meet or somewhat exceed” the low end of the company’s previously announced $1.64 to $1.74 adjusted range.
 
The holiday season represents a key period for retailers, which can make up to 40 percent of their annual revenue in November and December.
 
Minneapolis-based Target had launched several new efforts in an attempt to position itself for strong sales during the holidays. Those efforts included debuting a “holiday price match” program through which it matched prices with online competitors—and partnering with luxury retailer Neiman Marcus to offer a limited holiday collection that debuted on December 1.
 
But demand for the collection was weak and shelves remained well-stocked three weeks after the launch, prompting Target to cut prices in half in the days leading up to Christmas. (More recently, items in the collection were reportedly marked down 70 percent in a clearance sale that began in Target stores and online on New Year’s Day.)
 
In a monthly sales recording, Target said that December same-store sales were strongest in food, which experienced a “mid-single digit” increase, followed by health and beauty and apparel, each of which experienced a “low-single digit” increase. Home products were up “slightly.” Meanwhile, sales of durable goods like appliances and electronics decreased in the “mid-single digit” range.
 
Same-store sales were strongest in portions of the west and weakest in portions of the east.
 
On news of the December sales results, Target shares were trading down about 2.2 percent at $60.13 mid-day Thursday.
 
Unlike Target, many retail chains reportedly experienced strong sales in December. The New York Times said Thursday that 17 retail chains tracked by Thomson Reuters reported a 4.5 percent average increase in same-store sales, exceeding the 3.3 percent gain that analysts had expected. Those that experienced increases include Nordstrom, Kohl’s, and Macy’s.
 
Year-to-date, Target’s overall sales are up 3.3 percent to $66 billion—and same-store sales are up 2.7 percent.
 
Target’s December sales announcement comes just a day after an analyst at New York-based investment banking firm Jefferies & Company said in a report that he has downgraded his rating for the company’s stock from “buy” to “hold.” Equity analyst Daniel Binder said that, while Jefferies had “high hopes” for Target during the holiday season, the firm believes that the retailer struggled in its online execution, saw more price competition, and increased markdowns; he also cited soft December sales and poor results for the collection with Neiman Marcus.

Target is Minnesota’s second-largest public company based on revenue, which totaled $68.5 billion in its fiscal year that ended in January 2012. It operates 1,782 stores across the United States and plans to open 124 stores across Canada beginning in March. The retailer said in September that it plans to stop reporting monthly sales results in its 2013 fiscal year.