US retail giant Target released its earnings report on Wednesday, revealing worse-than-expected numbers that managed to drag down other retail stocks on the stock market. Analysts initially expected Target to stand out from other retailers in terms of its holiday sales but it failed to hit even the most bearish of forecasts.
According to its latest earnings report, Target's same-store sales for the months of November and December were only up by just 1.4 percent. This is a dismal amount of growth compared to the 5.7 percent growth it had over the same months in 2018.
Despite not hitting its target growth rate for the 2019 holiday season, Target stated that it would still be maintaining its prior outlook for its fourth-quarter earnings. The company also stated that its performance in the final three months of 2019 still put it on track for its 11th consecutive quarter of same-store sales gains, albeit just barely.
Following the release of its earnings reports, Target's share prices dropped by as much as 7 percent. Walmart, which has yet to release its holiday quarter results, was also dragged down. The company traded lower by 1.8 percent following the drop in Target's share prices.
Target stated that its sales growth for the last quarter were somewhat elevated by an increase in sales of its apparel and beauty products during the holiday season, while its key holiday items such as electronics and toys performed poorly. Target CEO Brian Cornell told investors that the company had faced difficult challenges throughout last year's holiday season but the durability of its business model has allowed it to weather the storm.
Analysts had initially expected the company to win out over its competitors for the holiday season, especially in the toys category. Target has significantly expanded its toy offerings in months prior to last year's holiday season, taking advantage of Toys R Us's recent liquidation. Target even formed a new partnership with Disney to open up mini Disney-themed shops within its stores.
Unfortunately, its strategy didn't seem to work as the company's toy sales for last year's holiday season had remained flat. Target did mention that it has gained a substantial amount of market shares in the country's toy market following its revival of the Toys R Us brand after its bankruptcy.
As for its other categories, Target reported a 6 percent drop in its electronics sales for the months of November and December. The company's home items sales also plunged by 1 percent. Meanwhile, its beauty products sales had climbed by 5 percent and its food and beverage sales had also inched up by 3 percent during the holiday period.
