Target Corporation’s sales declined 3.2 per cent year over year to $24.14 billion with comparable sales falling 3.7 per cent in the first quarter.
Analyst Neil Saunders, MD at GlobalData, says consumers may have realized they can purchase cheaper items elsewhere.
“This performance is significantly worse than the overall market, which underlines that Target is losing share,” he said, noting that the company is “already on the back foot”.
“The overall sales decline also reverses last quarter’s trend of modest growth and is particularly worrying given that Target has a handful more stores than it operated a year ago. All in all, the picture painted by today’s figures is of a business that has run out of steam.”
The department store chain’s net earnings fell 0.8 per cent to $942 million as revenue dipped 3.1 per cent to $24.53 billion.
“From our data, Target has lost some customers and share in grocery and particularly in household products,” said Saunders.
“There is a sense among consumers that they can shop more cheaply elsewhere, which is one of the reasons there have been defections to Walmart and the overlap between the two chains has increased over the past year.”
Target noted that it relaunched its free-to-join Target Circle loyalty program in April and onboarded more than 1 million new members to the platform in the first quarter.
Moving forward, Target forecasts comparable sales to increase by up to 2 per cent in the second quarter and the full year.
“Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease, and convenience, as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals,” said Brian Cornell, Target chair and CEO.
