Target stock fell 7% in early trading Wednesday after the retailer reported sales that missed forecasts.
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Target, the sixth-largest USA retailer, said that given the slowdown in consumer demand, second-quarter comparable sales would be flat to down 2 percent even though it was confident that it would meet its earnings outlook of US$1.00 to US$1.20 per share before special items.
Target’s same-store sales gained 1.2 percent in the first quarter, which ended April 30, the Minneapolis-based company said in a statement Wednesday. The company bought back shares worth $893 million and paid dividends of $336 million in the reported quarter.
He wants to regain the retailer’s cheap chic status and make Target more nimble after a series of headline-grabbing setbacks, including a major debit and credit card breach that hurt sales and profits for months.
Target’s chairman and CEO, Brian Cornell, commented about the results, “We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment”. That fills a role that had been vacant for nearly a year when long-time executive Kathryn Tesija stepped aside. Digital sales rose 23%, and SSS for signature categories, which comprise Kids, Baby, Style, and Wellness, grew more than thrice the company’s projections.
Despite weakness in the first half of the year, Target said it still sees its full-year earnings forecast as “achievable”.
Target (TGT) had a solid start to the year compared with struggling apparel retailers in the malls, but it’s still not immune to the broader consumer spending slowdown.
In his latest move, Mr. Cornell on Monday hired Nordstrom veteran Mark Tritton as Target’s next chief merchandising officer, filling the position after its former top merchandiser left last summer.
Revenue declined 5.4% to $16.2 billion.
On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.20 per share.
Cornell said e-commerce sales were a “bright spot” last quarter.
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Moving ahead, Target said that it expects adjusted earnings to be $1.00 – $1.20 a share on flat comparable store sales in the second quarter.
