Target’s December Sales Come in Below Expectations

Target Corporation reported that its net retail sales for the five weeks ended Jan. 1, were $9.88 billion, up 1.4% from $9.74 billion for the five weeks ended Jan. 2, 2010. On this same basis, December comparable-store sales increased 0.9%.

“December sales were below expectations, as strength in Grocery and Apparel was offset by softness in Electronics, Toys and some Home categories,” said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. “Sales in some key gift-giving categories moved earlier into the holiday season, and lower margin items drove a higher portion of sales than expected. Our 5% REDcard Rewards program is delivering the results we expected, and we’re confident that we will continue to generate profitable growth, even while consumer buying patterns exhibit volatility across categories and over time.”

Based on Target’s quarter-to-date sales results and January outlook, the company continues to expect fourth-quarter comp-store sales will increase in the range of 2 to 4 percent as previously outlined during its third quarter earnings conference call. The company also believes that the current median First Call estimate of $1.40 for Target’s fourth quarter earnings per share is a reasonable estimate within a range of possible outcomes, as favorability in the corporation’s credit card segment performance and income tax rate are expected to offset a slight decline in its retail segment EBITDA margin rate.