Target isn’t off to a great start in the second quarter- with a same store sale increase of 2.8% that was toward the low end of the company’s guidance range that called for a low to mid-single digit increase. The company also fell short of its comp guidance in April.
“May sales were near the low end of our expected range, driven by a much slower traffic trend in the second half of the month,” according to Target chairman, president and CEO Gregg Steinhafel. His were an interesting choice of words to describe shopper traffic that wasn’t just characterized as slower, but much slower.
As other retailers have noted, high gas prices have not only put a squeeze on discretionary expenditures, but shoppers are consolidating trips, which helps explain why larger average transactions size accounted for the comp growth.
“Our guests continue to shop cautiously in light of higher energy costs and inflationary pressures on their household budgets. As a result, we’re focused on delivering more value than ever by offering reliably low prices on high quality, well-designed merchandise both in our stores and at Target.com,” Steinhafel said.
Food and consumables continue to be the primary drivers of the company’s results and that was the case again in May and is likely to be the case throughout the summer, especially if gas prices sustain themselves above $4 a gallon.
For Target, grocery comps were in the mid-teens while mid and high single digit gains were evident in healthcare, beauty and household essentials. Apparel comps were also up slightly.
=As for same-store sales expectation during June, Target is sticking with guidance in the low to mid-single digit range despite the persistence of challenging economic conditions which have caused the company to come up short or at the low end of similar guidance the past few months.