Forecast calls for caution

For all of the things that Target seems to have going right heading into the holiday season, the company’s official forecast of low single-digit November same-store sales seems remarkably mild. In the plus column there is the launch of the 5% Rewards loyalty program, a meaningful number (400+) stores in the PFresh format, reduced delinquency rates in the credit portfolio, favorable customer traffic trends, easy comparisons against last November when comps declined 1.5% and the expectation that cooler-than-normal November weather will make it feel like Christmas and provide a spark to seasonal sales.

All that stuff sounds pretty good, right? Of course, it is offset to a degree by the weak economy, high unemployment and intense competition for consumers’ dollars. Still, on balance forecasting a low single-digit comp increase with all Target has going for it seems to be a major-league sandbagging effort to lower the investment community’s expectations or a case of chairman, president and CEO Gregg Steinhafel exercising a good deal of restraint after a challenging October. Nothing wrong with either of those strategies, especially given the October comp of 1.7% was at the low end of the company’s guidance after a modest decline the prior year.

Forecast calls for caution

For all of the things that Target seems to have going right heading into the holiday season, the company’s official forecast of low single-digit November same-store sales seems remarkably mild. In the plus column there is the launch of the 5% Rewards loyalty program, a meaningful number (400+) stores in the PFresh format, reduced delinquency rates in the credit portfolio, favorable customer traffic trends, easy comparisons against last November when comps declined 1.5% and the expectation that cooler-than-normal November weather will make it feel like Christmas and provide a spark to seasonal sales.

All that stuff sounds pretty good, right? Of course, it is offset to a degree by the weak economy, high unemployment and intense competition for consumers’ dollars. Still, on balance forecasting a low single-digit comp increase with all Target has going for it seems to be a major-league sandbagging effort to lower the investment community’s expectations or a case of chairman, president and CEO Gregg Steinhafel exercising a good deal of restraint after a challenging October. Nothing wrong with either of those strategies, especially given the October comp of 1.7% was at the low end of the company’s guidance after a modest decline the prior year.

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