Target posts strong holiday sales, maintains outlook

Comparable sales at Kohl’s stores rose 1.2 percent during the fourth quarter of 2018 versus 6.9 percent in the previous year

Comparable sales at Kohl’s stores rose 1.2 percent during the fourth quarter of 2018 versus 6.9 percent in the previous year

(TGT.N) was down almost 4 percent even after the retailer posted relatively strong holiday sales growth of almost 6 percent. Kohl's also reported sales numbers that were far inferior compared with a year ago.

Comparable sales growth for the November/December period was 0.7% for owned stores and 1.1% for owned plus licensed stores.

With low unemployment, rising wages and consumer confidence high, there had been optimism about holiday sales receipts.

Target said store pickup and drive-up surged more than 60 percent from a year ago, and accounted for a quarter of the company's digital sales in the holiday period.

"The holiday season began strong - particularly during Black Friday and the following Cyber week, but weakened during the mid-December period and did not return to expected patterns until the week of Christmas", Jeff Gennette, chairman and chief executive officer at Macy's, said in a statement. The stock later declined 5% in early hours of regular trading after Macy's Inc. slashed its cut its revenue and earnings guidance.

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All five Target core merchandise categories saw comparable sales growth in the November/December period, the retailer maintained, with the strongest gains in toys, baby products and seasonal gift items.

Elsewhere in the retail sector, Kohl's said comparable sales rose 1.2 percent in November and December, drastically lower than last holiday season when the company saw comparable sales growth of almost 7 percent. Saunders said investors are also anxious that a recovery among traditional stores like Macy's is losing momentum, raising concerns that they might have to ramp up investments even more to increase sales. In November, e-commerce and catalog sales jumped 10.8 percent from a year earlier, according to Commerce Department data, more than double the overall sales increase of 4.2 percent. Its previous guidance issued in November called for EPS of $4.10 to $4.30.

A recession could hit many department stores particularly hard, some industry watchers said. Some believe, for instance, the company may not have done enough to make its merchandise and marketing compelling for customers as it tried to compete against online players like Amazon. It expects same-store sales growth of about 5 percent for the fourth quarter through January. Comparable online sales climbed 29 percent.

The Minneapolis-based company said its expects full year 2018 earnings to be in the range of $5.30 and $5.50 per share.

The retailer is now calling for diluted earnings per share of $3.95 to $4.00 for fiscal 2018, excluding settlement charges, impairment and other costs. That's well below the per-share projections of $4.23 from industry analysts.

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