Target's Jan. sales measure edges up, but misses expectations
Winter storms in the South and East slowed overall January sales for Target Corp.
The Minneapolis-based retailer on Thursday reported sales at stores open at least one year edged up 1.7 percent from January 2010. Analysts had expected a 1.9 percent rise in that key measure.
The spending numbers reflect Target customers' focus on essential goods, said R.J. Hottovy, a Morningstar retail analyst.
"It was really was a continuation of a lot of the trends we've seen over the past couple of months, with grocery sales being quite strong," Hottovy said. "Health care and beauty was also quite strong. Apparel is still kind of hanging in there, at the low single digits. Again, we continue to see weakness on the consumer electronic side, as well as the home categories."
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Target it's getting more sales from its expanded grocery sections and five percent discounts given to customers paying for purchases with Target credit or debit cards. Hottovy expects those initiatives will help boost Taregt's same-store sales by about four percent this year.
"I do think management is on to something, not only with the 'P-Fresh' initiaitive driving additional traffic but also the red card rewards program," he said.
Hottovy expects Target's same-store sales will rise about 4 percent this year, with inflation accounting for a portion of the increase.
Sales were stronger in the Upper Midwest, California and the Mid-Atlantic. The South and Northeast, which had unusually cold and snowy weather during the month, were slower.
Total sales for the four weeks ended Jan. 29 rose 2 percent to $4.38 billion.
So far this fiscal year, Target's revenue in stores open at least one year has risen 2.1 percent, while its total sales are up 4 percent at $65.79 billion.
Target says it expects February revenue in stores open at least one year to rise by a percentage in the low single digits.
Many other retailers said their January revenue in stores open at least a year was stronger than expected, despite the snowstorms.
Costco Wholesale Corp, Victoria's Secret parent Limited Brands and teen retailer Wet Seal Inc. all posted gains that beat Wall Street expectations.
The measure is considered an important gauge of retailer's fiscal health because it excludes revenue from stores that opened or closed during the year.
(The Associated Press contributed to this report.)