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EZ2

Re: timhyma post# 117447

Wednesday, 01/18/2017 10:37:19 AM

Wednesday, January 18, 2017 10:37:19 AM

Post# of 120381
Careful ~~~~~

Target Issues Profit Warning on Disappointing Holiday Sales -- Update
DOW JONES & COMPANY, INC. 7:57 AM ET 1/18/2017
Symbol Last Price Change
TGT 67.575down -3.365 (-4.74%)
QUOTES AS OF 10:36:03 AM ET 01/18/2017
Target Corp. (TGT) posted softer-than-expected comparable sales during the holiday season and cut its guidance for the fourth quarter and year, the latest retailer to post a disappointing end to 2016.

During the November and December period, same-store sales fell 1.3%.

"While we were pleased with Black Friday sales, December digital sales growth of more than 40% and continued strength in our signature categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores," said Chief Executive Brian Cornell.

Target's (TGT) stock fell 4.8% premarket to $67.52.

Total sales declined 4.9%, hurt by comparisons to a year-earlier period that included revenue from Target's(TGT) pharmacy and clinic businesses, which it sold in December 2015.

Target (TGT) now anticipates fourth-quarter comparable sales to decline between 1% and 1.5%, compared with prior guidance of between down 1% and up 1%. Adjusted earnings are expected between $1.45 and $1.55 a share, compared with prior guidance of $1.55 to $1.75 a share.

For 2016, Target(TGT) now expects to report adjusted earnings of $5 to $5.10 a share, compared with prior guidance of $ 5.10 to $5.30 a share, reflecting 44 cents a share of early debt-retirement losses and a 1-cent per-share benefit from the resolution of income tax matters.

One bright spot for the retailer was digital sales, which grew more than 30% during the combined period. That was dragged by a more than 3% decline in Target(TGT) stores, the company said. Big box stores have been contending with dwindling foot traffic as they lose ground to online sales giant Amazon.com Inc., where shoppers are increasingly doing their shopping.

Comparable sales in signature categories, including toys, grew nearly 3 percentage points faster than the company average while comparable sales in electronics and entertainment declined in the high single-digit range and comparable sales in food and essentials both declined in the low single-digit range.

The company is slated to release its full fourth-quarter results Feb. 28.

Write to Anne Steele at Anne.Steele@wsj.com

By Khadeeja Safdar
Target Corp. (TGT) warned of weak profits and sales in the critical holiday period as the retail chain struggled to get shoppers to visit its stores and relied on discounting to compete with Amazon.com Inc. for online orders.

Sales at stores open at least a year fell 3% during November and December. Target(TGT) said online revenue jumped more than 30%, but still accounted for just a fraction its total business, so overall comparable sales are expected to fall for the quarter.

Digital gains were offset by "disappointing traffic and sales trends in our stores" and web discounting ate away at the company's profit margins, Chief Executive Brian Cornell said on Wednesday.

Target's (TGT) stock fell 4.7% to $67.69 in morning trading.

Mr. Cornell has been doubling down on physical stores as the chain searches for an e-commerce strategy to compete with rivals such as Amazon and Wal-Mart Stores Inc. The company has been opening several smaller stores in urban areas and college towns to attract younger shoppers who are increasingly buying items online.

At a National Retail Federation event this week, Chief Digital Officer Michael McNamara said he expected about 80% of business to continue to take place in Target's(TGT) stores. He also emphasized using stores as fulfillment centers for online orders, which he said provides a cost and lead-time advantage over Amazon.

The holiday season was a difficult one for many retail chains. While industry sales rose about 4% from a year ago, according to the NRF, customers were searching for discounts and much of the growth came from online shopping where Amazon captures the lion's share of sales.

Chains from department stores to mall-shops have warned of weak results and announced plans to close stores. On Tuesday, Toys "R" Us Inc. also posted a disappointing quarter, with same-store sales down 2.5% in the U.S. for November and December.

Toys R Us CEO David Brandon said toy sales started to slow after a promising results during the week of Black Friday, and that rivals started promoting heavily to compensate, causing the company to miss projections.

At Target(TGT), Mr. Cornell has been trying to reshape the company by fixing up stores and improving its merchandise selection. Target(TGT) made investments to improve its in-store pickup area ahead of the holiday season. The service was meant to lure last-minute shoppers and help save money from delivery costs.

Target (TGT) has also taken several steps to improve its grocery business, such as adding organic items and investing in store design. In recent months, the chain has been highlighting lower prices to make it a more attractive destination for household essentials.

Despite those efforts, comparable sales fell in the low single digit range in the food and essentials category during the holiday period. For electronics and entertainment products, that metric declined in the high single digit range.

Overall, the company said comparable-store sales, which includes its web business, are expected to fall as much as 1.5% in the fiscal fourth quarter. The company had projected it could decline as much as 1% or rise as much as 1% from a year ago.

Target (TGT) lowered its profit targets for the fourth quarter, which it expects to report on Feb. 28. Adjusted earnings are expected between $1.45 and $1.55 a share, compared with prior guidance of $1.55 to $1.75 a share.

Paul Ziobro and Anne Steele contributed to this article.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com


(END) Dow Jones Newswires
01-18-170757ET
Copyright (c) 2017 Dow Jones & Company, Inc.

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