MINNEAPOLIS (KMSP) - Target has cut its fourth-quarter profit and sales outlook after a “disappointing” and “softer-than-expected” holiday shopping season. Target CEO Brian Cornell said the company had good Black Friday sales and growth in Target.com sales, but those successes were offset by disappointing in-store sales revenue.
"While we were pleased with Black Friday sales, December digital sales growth of more than 40 percent and continued strength in our Signature Categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores," Cornell said in a statement.
In its updated outlook Wednesday, Target reported sales at stores opened at least one year were down 1.3 percent for the months of November and December. The company is now forecasting a revenue decline of 1 percent to 1.5 percent in the quarter.
A particularly weak spot for Target this winter was sales in electronics and entertainment, which declined in the “high single digit range.” Grocery and “essentials” both declined in the low single-digit range.
Cornell said a highly promotional competitive environment and its costs associated with shifting more products and resources to Target.com had a negative impact on fourth quarter profits.
"While we significantly outpaced the industry's digital performance, the costs associated with the accelerated mix shift between our stores and digital channels and a highly promotional competitive environment had a negative impact on our fourth quarter margins and earnings per share,” Cornell said. “Our team has made substantial progress in positioning Target for long-term success by improving the shopping experience both in stores and on Target.com, transforming our supply chain and technology to support every way our guests want to shop, and developing new store formats that allow us to reach new guests in dense urban and suburban markets.”
Target Corp. shares fell nearly 4 percent in premarket trading Wednesday.