Target Corp. missed the mark in the holiday season, adding its name to a string of retailers that have disappointed investors, including Macy’s Inc., J.C. Penney Co. Inc. and Kohl’s Corp.
Target said its combined comparable sales for November and December fell 1.3 percent — spooking investors, who sent shares of the company down 4.8 percent to $67.55 in the opening minutes of trading Thursday.
Brian Cornell, chairman and chief executive officer of Target said, “While we were pleased with Black Friday sales, December digital sales growth of more than 40 percent and continued strength in our Signature Categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores.”
Comparable sales in the company’s stores fell more than 3 percent while digital sales grew more than 30, a trend that’s in keeping with many traditional retailers that have seen their growth siphoned off to the web.
Target said the number of transactions was flat compared with a year earlier, with a more than 30 percent jump online offset by a 1.7 percent decline in comparable store transactions.
“While we significantly outpaced the industry’s digital performance, the costs associated with the accelerated mix shift between our stores and digital channels and a highly promotional competitive environment had a negative impact on our fourth quarter margins and earnings per share,” Cornell said.
The company is on track to deliver adjusted earnings per share of $5 or more this fiscal year — an all-time high — but the fourth quarter results will fall short of the firm’s projections.
Target now expects adjusted fourth-quarter earnings of $1.45 to $1.55 a share, down from the $1.55 to $1.75 previously anticipated.
The discounter has 1,803 stores and is working to adjust its business, following customers to the web. Many other retailers on the same path find themselves closing stores along the way.
Macy’s Inc. is closing 63 doors this spring under a plan first laid out last year and another 150 Sears Holdings Corp. doors are going dark.