Photo: Target
The 2019 holiday selling season was supposed to be strong for retailers, with the usual suspects — Amazon.com, Best Buy, Costco, Target, Walmart, et al — expected to outperform the industry as a whole. That’s what made Target’s announcement of good, not great, results for holidays surprising to industry watchers and analysts.
The retailer reported that same-store sales were up 1.4 percent for the season, below the chain’s forecast of three to four percent growth and well below 2018’s 5.7 percent comp performance.
“After three strong quarters this year and a record-breaking holiday season in 2018, we had some really ambitious plans heading into the season,” wrote Target CEO Brian Cornell on a company blog. “While we knew this season was going to be challenging, it was even more challenging than we expected. On the topline, our comparable sales grew 1.4 percent, reflecting 19 percent growth in digital, which was below our guidance — a tough miss considering how hard our team worked all season long.”
In a separate statement, Mr. Cornell pointed to weakness in “key seasonal merchandise categories” — specifically electronics and toys — as contributing factors in Target’s holiday results. Some of the retailer’s home assortment also came up short.
The chain’s electronics sales were down six percent over the last two months of the year compared to a 4.6 percent gain for the category reported by Mastercard Spending Pulse, CNBC reports. This last figure includes major appliances, a category in which Target does not compete.
The retailer also reported that its toy sales were flat across November and December. Mr. Cornell did maintain, citing NPD Group numbers, that his company gained market share of the category despite falling short of its own sales target.
On the positive side, Target reported a seven percent gain in its beauty sales and a five percent increase in apparel. Even food, an area of relative weakness for the chain, increased three percent.
The retailer maintained its earnings guidance for the year.