One out of three ain’t bad

No offense to the grammatically challenged recording artist known as Meatloaf, but the notion that “two out of three ain’t bad” doesn’t apply when the issue is monthly same-store sales at Target.

January results announced last week showed that Target produced a 1.7% comp increase compared with guidance that called for an increase in the low- to mid-single digits. Although 1.7% is technically a low single digit, the gain was declared to be below expectations by company chairman, president and CEO Gregg Steinhafel. In December, the company’s 0.9% comp increase also was below Steinhafel’s expectations, as guidance for the month forecast an increase in the low- to mid-single digits. Despite the weaker-than-expected sales in January and December, the November strength will be more than enough to offset the December and January weakness and enable Target to hit it fourth quarter sales guidance range of plus 2% to 4% -- recall the 5.5% comp gain posted in November was well above a forecast that called for a low single-digit increase. In fact, the figure is expected to be at the high end of the range, as Steinhafel indicated in mid-November that the company’s fourth quarter comp would be the strongest of the past three years. In essence, he was saying the figure would be greater than 2.8%, since the strongest showing of the past three years came in the first quarter of 2010 when a 2.8% increase was recorded.

It appears the company will be able to deliver on Steinhafel’s assertion, if only by a narrow margin, as analysts have settled in on 2.9% consensus figure with a high degree of confidence due to the availability of the November, December and January sales figures.