CNBC – Target shares fell nearly 6 percent on Wednesday, as a massive marketing push and spike in digital sales weren’t enough to make up for fewer shoppers visiting its stores.
Despite ramping up the amount of advertisements that spoke to value; extending its free shipping window an additional week; and bringing in nearly 2,000 exclusive toys, the big-box retailer on Wednesday said that comparable sales declined 1.3 percent in November and December.
Electronics and food continued to struggle, while sales in its so-called signature categories — baby, style, kids and wellness — grew nearly 3 points faster than the company average. Target’s rapid 30 percent digital growth significantly outpaced the performance at its stores, where transactions dropped 1.7 percent. Transactions are often used as a gauge for traffic.
If Target’s in-store transactions continue to shrink in January, the holiday quarter will be the third-straight period in which its traffic has fallen. Wal-Mart, which hasn’t provided details about its holiday results, has grown traffic in its U.S. stores for eight consecutive quarters.
Target’s results came as somewhat of a surprise, after the retailer in November raised its fourth-quarter sales and full-year earnings forecasts. It had also indicated it was off to a strong start for the period, including a record day for its website on Thanksgiving. The company on Wednesday lowered its comparable sales and earnings expectations.
Target shares were last trading at $66.85.
“While we were pleased with Black Friday sales, December digital sales growth of more than 40 percent and continued strength in our signature categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores,” said Brian Cornell, chairman and CEO of Target.