Holiday Miss For Target Translates Into Disappointing Sales: What Went Wrong?

Target (TGT) saw its share price drop over 6.5% at pre-market open on Wednesday as it released its holiday sales numbers. The company reported that sales of electronics, toys and some home goods were below expectations for the shopping season, despite a comparable sales growth of 1.4%.

“We faced challenges throughout November and December in key seasonal merchandise categories and our holiday sales did not meet our expectations,” Brian Cornell, chairman and CEO at Target said in a statement.

According to the retailer, it is on track to report its 11^th straight quarter of comparable sales growth for Q4, as its comparable digital sales grew by 19% in November and December. Target also saw its order same-day pickup, drive up, and Shipt services increase by 50% during the same time period.

Product categories where Target saw growth included apparel, which was up about 5%, essentials and beauty, which increased by approximately 6% and food and beverage, which grew by about 3%. However, home sales were down about 1%, with toys and electronics sales remaining flat for the holiday season.

“After three strong quarters this year and a record-breaking holiday season in 2018, we had some really ambitious plans heading into the season,” Cornell said.

“While we knew this season was going be challenging, it was even more challenging than we expected. On the topline, our comparable sales grew 1.4%, reflecting 19% growth in digital, which was below our guidance—a tough miss considering how hard our team worked all season long,” he added.

For Q4, Target said it expects comparable sales to increase by 1.4% compared to the 3% to 4% range the company previously forecast. Full-year comparable sales are expected to grow more than 3%, the company said.

Target also said it is maintaining its Q4 and full-year EPS guidance for an adjusted GAAP EPS of $1.55 to $1.75 for the fourth quarter, and adjusted EPS of $1.54 to $1.74 for the full-year.

Along with the holiday sales report, Target also announced the retirement of Janna Potts, executive vice president and chief stores officer, who will be replaced by Mark Schindele, effective immediately.

Christina Hennington was also named to the executive vice president and chief merchandising officer position for hardlines, essentials, and capabilities, while Jill Sando was named to the role of executive vice president and chief merchandising officer for style and owned brands. Both positions were effective immediately.

Shares of Target stock were down 6.30% as of 9:31 a.m. EST on Wednesday.