MINNEAPOLIS — Target reported a 2.1% same-store sales increase that was toward the low end of the company’s expectations.
Despite June sales that were softer than expected, Target left its second quarter profit forecast intact as the weaker-than-expected result offset a better-than-expected performance the previous month.
“Following better-than-expected performance in May, our June comparable-store sales were near the low end of our expected range,” said Gregg Steinhafel, Target’s chairman, president and CEO. “We believe these results, combined with our outlook for July, keep us on-track to deliver second quarter sales and adjusted EPS in line with the guidance we provided at the time of our first quarter earnings release.”
The company expects second quarter earnings adjusted to exclude expenses related to its entry in Canada to range from $1.04 to $1.14 and earning that include the Canadian costs to range from 94 centers to $1.04.
With a May comps increase of 4.4% and a June increase of 2.1% in the books, Target is calling for a July increase in the low to mid single digit range and expects to product a total second quarter same store sale increase of 3%.
The growth in July will likely come from some familiar sources, as was the case in June when the company said food grew at a low double digit pace and health and beauty increased in the mid single digits. Sales in the apparel and home categories increased in the low single-digit range while hardline categories advanced in the mid single-digits.
Customer traffic was flat during the month with all of the growth coming from increased transaction size.
While June results were less than planned and well below the June 2011 comp increase of 4.5%, the end point of the reporting period and the timing of the July 4 holiday likely had somewhat of an impact on sales. This year’s reporting period fell on Saturday, June 30 with July 4 falling on the following Wednesday, allowing shoppers more time to purchase Fourth of July related merchandise during the July reporting period.
Conversely, the June reporting period the prior year ended on Saturday, July 2 and July 4 fell on the following Monday ensuring a larger percentage of Fourth of July sales likely fell in the June period.