Target not immune to retail sector woes
Target said Wednesday that it was tripped up by the same conditions in the spring quarter that hurt its department store and apparel retailing counterparts: The consumer, despite a relatively healthy economy, still wasn’t spending big at the big-box retailer.
Target reported a 1.2 percent rise in comparable sales, a measure of digital sales and sales at stores open more than a year. While that growth reflected an uptick in foot traffic to its stores, it was also the slowest year-over-year growth it has seen on that key metric in the past six quarters. And it now says it is expecting a gloomy second quarter, with comparable sales that could be down as much as 2 percent.
Target’s stock settled down more than 7 percent.
During a conference call with reporters Wednesday, chief executive Brian Cornell said the spring quarter was marked by volatility and unevenness. He said sales slowed down noticeably after Easter, a similar pattern to what Macy’s and Kohl’s reported seeing during the season. Target also saw patchy results across different geographies, with the West and Midwest performing relatively well and the Northeast struggling.
Meanwhile, the retailer said the changes it is making in its grocery aisles to incorporate more fresh food and organics created some speed bumps. While customers reacted favorable to the products, they were initially confused about navigating the revamped aisles and struggled to find the items they were looking for.
Still, there were some reasons for optimism about the chain in the first quarter results. Its apparel sales were up “2 to 3 percent,” Cornell said, with women’s ready-to-wear standing out as a particularly strongly performing area. Given that the likes of Macy’s and Gap had such a challenging season selling clothes, this might be a signal that Target is outmaneuvering some of its competitors in this category.