Target Corp. cut its fourth-quarter earnings forecast after sales were hurt by “disappointing” customer traffic, signaling that the holiday pain that rocked department-store chains took a toll on discount retailers as well.
Profit will be $1.45 to $1.55 a share in the quarter through January, the Minneapolis-based company said Wednesday in a statement. That’s down from a previous projection of $1.55 to $1.75 and misses analysts’ $1.66 average estimate.
The forecast suggests that customers’ migration online and away from brick-and-mortar locations during the holiday season hurt discount retailers, echoing themes reported earlier this month by department-store chains Macy’s and Kohl’s. Target Chief Executive Officer Brian Cornell said digital sales rose 40 percent in December but that traffic and sales trends at its stores were “disappointing.”
Comparable sales during the fourth quarter will fall 1 percent to 1.5 percent. The company had projected they’d range from a 1 percent decline to a 1 percent gain.
The shares fell 3.7 percent to $68.30 at 7:30 a.m. in early trading in New York. Target’s stock was little changed last year.
During the November-December holiday period, comparable sales slipped 1.3 percent, Target said. That was the result of a 3 percent drop at stores and digital growth of 30 percent.
Sales in what Target calls its Signature Categories, which includes toys, grew almost 3 percent faster than the company average. Sales in electronics and entertainment fell by a high-single-digit percentage, and food and essentials sales dropped by a low-single-digit rate.
Target’s forecast is another sign that the holiday sales growth reported by the National Retail Federation and other industry watchers mostly benefited online merchants. The retail trade group said spending rose 4 percent to $658.3 billion during November and December, beating the 3.6 percent gain it had projected. Nonstore sales, an indicator of online transactions, jumped 13 percent.