Target (TGT) posted weaker than expected holiday sales, a sales gain of only 1.4% in November and December.
The big-box retailer said on Wednesday that its holiday sales were weaker than planned. TGT shares tumbled more than 8% on the news. Walmart (WMT) hasn’t reported holiday results, in effect to it, also traded lower. WMT stock was last down about 2%.
Target (TGT) said that its same-store sales during the November and December were up just 1.4%, as compared with growth of 5.7% a year earlier. That was quite below the company’s guidance for the period and well short of the 5.7% growth it had a year earlier.
The company said that it should still be able to hit its profit target, for the fiscal fourth quarter, the sales report sent shares of Target (TGT) down 9% in premarket trading.
Despite missing the mark in sales, it is maintaining a prior outlook for the fourth-quarter earnings. It also said in a press release that the fourth quarter of 2019 remains on track to mark Target’s eleventh consecutive quarter of same-store sales gains.
Target (TGT) said that it found strength in apparel and beauty, while lackluster performance in key holiday categories like electronics, toys and parts of its home business offset those gains.
CEO Brian Cornell said Target “faced challenges throughout November and December in key seasonal merchandise categories.” But “because of the durability of our business model, we are maintaining our guidance for our fourth quarter earnings per share.”
“While we knew this season was going be challenging, it was even more challenging than we expected,” Cornell added in a separate blog post.
Especially this holiday season, Target was expected to be a winner in the toys category. The company has been devoting more square footage in stores to toys, following Toys R Us’ liquidation. It has partnered with Disney to open mini Disney shops within certain Target shops. Target also is now powering the website of the Toys R Us brand that has relaunched post bankruptcy.