Target blames toys, electronics for weak holiday sales, shares fall 8%
(Reuters) - Target Corp (TGT.N) said on Wednesday it missed its own expectations for holiday season sales, citing weak demand for toys and electronics for growth of just 1.4% and dragging shares across the retail sector lower.
The industry bellwether’s strategy of improved merchandise, loyalty program, store layout, which resulted in three strong quarters this year and a record-breaking 2018 holiday period, fell short during the shorter-than-usual holiday season.
Comparable sales growth a year ago was 5.7%.
“While we knew this season was going be challenging, it was even more challenging than we expected,” Chief Executive Officer Brian Cornell said.
“A tough miss considering how hard our team worked all season long.”
The numbers come just a week after several U.S. retailers including Kohl’s (KSS.N), J.C. Penney (JCP.N) and Macy’s (M.N) reported lower sales for the key shopping period, raising doubts about the broader health of the retail sector.
Target’s shares, which nearly doubled in 2019, fell 8% before the bell, while shares of the world’s biggest retailer, Walmart Inc (WMT.N), slipped 2%.
Target said lower sales in categories such as toys, electronics and home products, which typically account for a higher portion of sales during the holidays, had a greater impact on overall sales growth.
Still, apparel, beauty, food and beverage were some of the bright spots, the company said.
Digital sales during the November-December period grew 19% compared with 2018’s 29% rise.
The company now expects its fourth-quarter same-store sales to be in line with its holiday period growth of 1.4%, down from its prior range of a 3% to 4% growth. It maintained its forecast for full-year profit.
Analysts have projected quarterly comparable sales growth of 3.8%, ac