Target Keeps Growing Grocery Sales

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Target Keeps Growing Grocery Sales

By Gina Acosta - 01/15/2020
Target Keeps Growing Grocery Sales
In addition to food and beverage, Target saw continued strength in apparel, beauty and essentials during November and December

Target Corp. grew market share in food and beverage categories during the holidays, but that wasn't enough to offset weakness in other key categories, leading the big-box retailer to slash its quarterly sales outlook.

In addition to food and beverage Target said that it saw continued strength in apparel, beauty and essentials during November and December. But electronics, toys and areas of the home goods department were below planned performance, which led to an overall 1.4% same-store sales increase between Nov. 1 and Dec. 31.

Digital same store sales grew 19% in the November/December period, driven primarily by the company's same-day fulfillment services (Order Pick Up, Drive Up and Shipt), which together grew more than 50% from the comparable period last year.

The company is maintaining its previous guidance for fourth-quarter earnings per share. It did warn, however, that same-store sales growth for the full quarter, which includes January, would likely come in at less than half of the 3% to 4% growth it had predicted earlier.

"We faced challenges throughout November and December in key seasonal merchandise categories, and our holiday sales did not meet our expectations," admitted Brian Cornell, chairman and CEO of Target. "However, because of the durability of our business model, we remain on track to deliver historically strong full-year results in 2019, including comparable-sales growth of more than 3% and record-high EPS reflecting mid-teens growth compared with last year."

The Census Bureau is expected to report December retail sales on Thursday, the  same day that National Retail Federation is expected to provide an update.

Meanwhile, market researcher The NPD Group said that holiday results were lackluster, estimating that total sales rose 0.2% compared with the previous year. 

Target also revealed the retirement of EVP and Chief Stores Officer Janna Potts. Potts has been with the company for 30 years, holding a variety of leadership roles during that time. Most recently, she played a critical role as the lead architect in the successful rollout of a new operating model for Target's nearly 1,900 stores, enhancing the retailer's focus on guest service and fueling the growth of its digital business through a suite of convenient store-based delivery and pickup options. She will remain with the company in an advisory role until May 1.

Effective immediately, Mark Schindele has been named EVP and Chief Stores Officer. He also will join Target's Leadership Team. Schindele has been with the company for nearly 20 years, most recently as its SVP of properties. In that role, he was responsible for leading the company's remodel and small-format strategies, elevating the shopping experience and introducing Target to new guests in densely populated areas. Prior to that, Schindele held leadership positions in merchandising, sourcing and operations.

Additionally, the retailer said that it's formalizing the interim structure it announced for its merchandising organization in October, with the appointment of Christina Hennington to EVP and chief merchandising officer, hardlines, essentials and capabilities, and Jill Sando to EVP and chief merchandising officer, style and owned brands, effective immediately. Both Hennington and Sando will join Target's leadership team. In their new roles, Hennington and Sando will collaborate closely with Stephanie Lundquist, Target's EVP and president of food and beverage, on the development and execution of a unified merchandising strategy for the retailer. 

"Christina and Jill are seasoned leaders and incredibly talented merchants, and during their respective tenures, both have driven outstanding outcomes that compel guests to choose Target," Cornell said. "The appointments we're making today with Mark, Christina and Jill underscore the expertise and deep bench of talent we continue to develop at Target, and I have every confidence in their ability to create opportunities that will fuel future growth for our company."

Minneapolis-based Target operates more than 1,800 stores, 39 distribution centers and Target.com. The company is No. 15 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States.