Grocery was among the categories experiencing lackluster performance for Target Corp. during the recent holiday sales period.
TargetCEO Brian Cornell said Wednesday there was “softness in our Electronics and Entertainment, and Grocery and Essentials businesses, though candy was a bright spot within Grocery.”
As online retailing continues to erode sales at brick-and-mortar stores, Target this week cuts its quarterly earnings forecast when sales results for November and December came in lower than anticipated, Reuters reported.
“This year, our performance was mixed. While we drove strong sales during those key shopping moments of Black Friday, Cyber Monday and the days leading up to Christmas, overall sales for November and December did not meet our expectations,” Cornell said. “Our November and December traffic was flat, which shows some improvement over last quarter but a more significant shift from stores to digital than we expected. Generally, we saw guests visiting our stores and Target.com for very specific items and shopping the remainder of our assortment less.”
Cornell said Target now expects Q4 comparable sales in the range of -1.5 percent to -1 percent and adjusted EPS from $1.45 to $1.55, which is down from prior guidance of $1.55 to $1.75.
“Like the season overall, response to our promotions was mixed,” Cornell said. “Guests gravitated to our most compelling and easy-to-understand deals that matched their needs at a specific point in the season, like 30 percent off toys.”
In other instances, he continued, “we learned that our offers were overly complex or lacked excitement and newness. For example, some deals, like buy-one-get-one frozen pizza, were brought back because of their popularity in 2015 but didn’t perform as well in their second year. In total, as we look to apply learnings from the season moving ahead, we know that we have a clear opportunity to refine our promotional strategy, making offers even more compelling.”
Cornell acknowledged that 98 percent of Target customers regularly shop online. “Throughout the 2016 holiday season, we noticed a clear migration to digital shopping, a behavior we would attribute to how time-pressed our guests are during the season,” he said. “Moving forward, we will continue to focus on the role our stores play in facilitating ease and convenience within the digital experience, as well as what our physical stores can offer guests in terms of breadth of assortment, newness, inspiration, service and value.”
Cornell said the company expects to deliver full-year adjusted EPS of $5 to $5.10 in 2016, “which would mark an all-time high for Target. And, importantly, we’re making big strides in improving the shopping experience in every channel, evolving our supply chain and technology in support of flexible fulfillment, and bringing our flexible format stores to more and more guests in dense urban and suburban markets.”