Despite December’s sales weakness, Target chairman, president and CEO Gregg Steinhafel confirmed the company’s fourth-quarter same-store sales forecast in the range of 2% to 4% and said January comps would be in the low- to mid-single digits. He also affirmed the fourth-quarter profit forecast by noting that the current median First Call estimate of $1.40 for Target’s fourth-quarter earnings per share is a reasonable estimate within a range of possible outcomes, as favorability in the corporation’s credit card segment performance and income tax rate are expected to offset a slight decline in its retail segment EBITDA margin rate.
"December sales were below expectations, as strength in grocery and apparel was offset by softness in electronics, toys and some home categories. Sales in some key gift-giving categories moved earlier into the holiday season, and lower margin items drove a higher portion of sales than expected,” Steinhafel said. “Our 5% REDcard Rewards program is delivering the results we expected and we’re confident that we will continue to generate profitable growth, even while consumer buying patterns exhibit volatility across categories and over time.”
Target continues to report the strongest growth in its consumables business, as it was busy throughout 2010 expanding those categories and adding fresh products as part of a massive Pfresh remodeling program. December same-store sales were strongest in grocery where a low double-digit increase was followed by a mid single-digit gain in health care and beauty. Comparable-store sales in apparel increased in the low-to-mid single-digit range, with the strongest performance in shoes and men’s apparel and the softest performance in the newborn, infant and toddler areas. Despite a considerable promotional emphasis, comparable-store sales in hardlines decreased in the mid single-digit range in such categories as electronics, toys, sporting goods and entertainment. Comps also declined in the home business in the low single-digit range.