Correction: sales did not exceed expectations
It seemed like everything was going Target’s way after the company reported a 5.5% same-store sales increase during November, but then the revelation came last week of a 0.9% December comp increase and the wind came out of the company’s sales.
The weakness was surprising as expectations had grown lofty. Target News Now was among those guilty of being overly optimistic, and several days prior to the release of December results commented, “with Target set to release December sales results this Thursday the issue isn’t whether the company’s results will be in line with expectations but the degree by which they are likely to exceed same-store sales guidance in the low to mid single-digit range.”
Oops. Nothing could have been further from the truth, as the 0.9% gain was below the company’s guidance and well off analysts’ consensus estimate of 4%. So what went wrong? Turns out Target, like a lot of other retailers, was simply too effective with its promotional efforts in November and essentially pulled demand forward that might otherwise have translated into December sales. Poor weather late in the month hurt post Christmas sales in the Northeast, but it was December and snow happens.
The sales shortfall did not sit well with investors, and Target’s stock price got pummeled after enjoying a nice run late last year. Shares had risen to slightly more than $60 in the first days after the New Year, but the release of December