Citing what officials called a "difficult retail environment" Target Corp. on Wednesday reported a 1.1% comparable-store sales decline in the fiscal second quarter and lowered its comp guidance for the second half of the year.
While the quarterly comp decline was within Target's expected quarterly range of flat to -2% comps, it marked the first time in six quarters the Minneapolis-based retailer failed to post positive comps. The company also said it expected comps for the second half of the year to remain in the flat to -2% range.
Officials in March had forecasted annual comp gains of 1.5% to 2.5%. First quarter comps, reported in May, improved by 1.2%. Target also said fiscal-year earnings-per-share would likely come in lower than initially forecast.
For the quarter, which ended July 30, sales totaled $16.2 billion. Net income for the quarter was $680 million, a 9.7% decrease. Earnings per share of $1.16 per beat analyst estimates as gross margins increased by 40 basis points to 31.3% of sales. Target said digital sales increased by 16% during the quarter, and that comps in its "signature categories" (style, baby, kids and wellness) outpaced overall comps by approximately 3%.
“While we recognize there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations,” Brian Cornell, chairman and CEO, said in a statement. “Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in signature categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”