NEW YORK — Shares of Target Corp. took a beating Tuesday after the discounter revealed sales have lagged expectations so far this month.
This story first appeared in the December 18, 2002 issue of WWD. Subscribe Today.
Investors traded down the firm’s stock $2.05, or 6.5 percent, to close at $29.75 on the New York Stock Exchange.
As reported, Target said on a recorded call after the markets closed Monday afternoon that its comparable-store sales through last week were “well below” its planned 3 to 5 percent uptick. Sporting goods as well as men’s and women’s apparel were singled out as the retailer’s weakest categories for the first two weeks of the month.
Through its hip advertising and product offerings, Target has carved out a “chic” niche that’s differentiated it from Wal-Mart Stores, the world’s largest company and the firm’s primary competitor. Wal-Mart, while still sluggish, has fared better so far this month, with comps trending toward the low end of its projected 3 to 5 percent rise.
J.P. Morgan Chase & Co. analyst Shari Schwartzman Eberts, in research notes, noted that higher fuel prices have been squeezing the discount customer’s pocketbook.
“Our research shows a strong negative correlation between same-store sales results and retail gasoline prices, particularly for the discount stores, where gas costs make up a greater portion of the consumer’s disposable income,” she said.
Last week, the average price for a gallon of gasoline stood 27.8 percent higher than a year ago, the sixth consecutive week in which year-over-year increases topped 20 percent, Eberts noted. “With current gas prices 20 to 30 percent higher than year-ago levels during the key holiday season, comps are likely to remain under pressure,” she said. “We maintain our cautious approach to investing in [broadline retailers and department stores] as underlying sales trends and economic indicators continue to deteriorate.”