Target Issues Profit Warning on Disappointing Holiday Sales -- Update
19 January 2017 - 12:12AM
Dow Jones News
By Anne Steele
Target Corp. posted softer-than-expected comparable sales during
the holiday season and cut its guidance for the fourth quarter and
year, the latest retailer to post a disappointing end to 2016.
During the November and December period, same-store sales fell
1.3%.
"While we were pleased with Black Friday sales, December digital
sales growth of more than 40% 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," said Chief Executive Brian Cornell.
Target's stock fell 4.8% premarket to $67.52.
Total sales declined 4.9%, hurt by comparisons to a year-earlier
period that included revenue from Target's pharmacy and clinic
businesses, which it sold in December 2015.
Target now anticipates fourth-quarter comparable sales to
decline between 1% and 1.5%, compared with prior guidance of
between down 1% and up 1%. Adjusted earnings are expected between
$1.45 and $1.55 a share, compared with prior guidance of $1.55 to
$1.75 a share.
For 2016, Target now expects to report adjusted earnings of $5
to $5.10 a share, compared with prior guidance of $5.10 to $5.30 a
share, reflecting 44 cents a share of early debt-retirement losses
and a 1-cent per-share benefit from the resolution of income tax
matters.
One bright spot for the retailer was digital sales, which grew
more than 30% during the combined period. That was dragged by a
more than 3% decline in Target stores, the company said. Big box
stores have been contending with dwindling foot traffic as they
lose ground to online sales giant Amazon.com Inc., where shoppers
are increasingly doing their shopping.
Comparable sales in signature categories, including toys, grew
nearly 3 percentage points faster than the company average while
comparable sales in electronics and entertainment declined in the
high single-digit range and comparable sales in food and essentials
both declined in the low single-digit range.
The company is slated to release its full fourth-quarter results
Feb. 28.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 18, 2017 07:57 ET (12:57 GMT)
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