Today’s earnings release indicated that the tough fourth farther Target is emerging from is the beginning — and not the end — of a slump in sales that the retailer is expected to carry on through the rest of 2017.
The company is currently predicting a low-to-mid-single-digit decline in Q1 comparable sales, as well as a low-single-digit decline for the full year. Target’s comparable sales figure includes sales at stores open for for at least a year as well as digital offerings.
For the most recent period, “comparable sales” sales dropped 1.5 percent, the bottom of Target’s projected range. Physical stores had a sadder story to tell: a 3.3 percent decline at locations open for at least a year.
The holiday shopping quarter also saw revenue drop 4.3 percent to $20.7 billion, which was the predicted decline by S&P Global Market Intelligence estimates.
Net earnings saw the biggest miss — down 42.7 percent to $817 million, reflecting an earnings per share of $1.46. Those figures trailed expectations of $854 million and $1.51.
“Our fourth-quarter results reflect the impact of rapidly changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores,” Cornell said in a statement.
Target is talking about a turnaround, centered on new brands and improved digital offerings.
But for now at least, investors aren’t feeling fully confident — the company’s stock fell 12.6 percent in pre-market trading to $58.50.
Going forward, Cornell says Target will “accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment,” including 12 new brands covering $10 billion of the company’s annual sales over the next two years.
“While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best position Target for continued success over the long term,” Cornell added.