Did Walmart early openings ding Target comps?
Target previously acknowledged that the return of layaway at Walmart impacted its early-season toy sales, and now comes another interesting revelation in Target’s November sales release.
Target reported its November comps increased 1.8% and noted that figure was toward the low end of expectations which called for a low to mid single-digit increase. The company was up against a 5.5% gain last November, but it was the disclosure that comps were below the company average in the South and Southeast that suggests Walmart was a factor. The South and Southeast, Texas and Florida in particular, are areas where Walmart has its highest concentration of stores, and this year the company’s stores began offering Black Friday specials at 10 p.m. on Thanksgiving, whereas Target opted to open its stores at midnight on Black Friday. Conversely, the area where Target experienced its strongest results was in California where it has the least overlap with Walmart. There are a lot of factors in play on Black Friday, but this hardly seems like a coincidence nor does the fact that Walmart announced its 10 p.m. opening plans after Target and many other retailers had announced their midnight openings.
While Target’s 1.8% increase was somewhat of a disappointment, the company did note strength in key categories where it enjoys a high degree of overlap with Walmart. For example, there was a mid teens increase in the food category comps followed by a mid-single-digit gain in the household essentials area, which includes the beauty category where performance was the strongest. Meanwhile, comps in the apparel and accessories area where Target traditionally does well were flat, while hardline and home furnishings and decor comps declined in the low single digits.
As for December, Target chairman, president and CEO Gregg Steinhafel said the comp increase would be in the low to mid single digits but would exceed November’s 1.8%.
“Our view of December remains the same -- we expect a competitive and promotional environment as consumers continue to focus on value,” Steinhafel said. “At Target, we’ll provide our guests with great deals and low everyday prices on a unique assortment of items for gift-giving and holiday entertaining. In addition, REDcard holders enjoy an additional 5% savings every day in stores and online, along with free shipping on every order from Target.com.”