New York -- Target Corp. turned in a less than stellar performance in December, recording flat same-store sales. But Costco Wholesale Corp. and TJX shone, exemplifying an up-and-down season in which consumers backed off buying amid concerns about a “fiscal cliff” and the uncertain economic climate.
Target missed Wall Street’s expectations of a modest 0.8% rise in same-store sales. Still, the discount giant said that its fourth quarter earnings should meet or slightly exceed the low end of its forecast. A key aspect of Target’s weakness in December appeared to be weak sell-through of the highly-anticipated Target/Neiman Marcus Holiday Collection. The unique assortment of exclusive and pricy merchandise did not appear to resonate with customers, judging from 50% and even 70% markdowns at some locations.
Sales at Target for the five week period ended Dec. 31, increased 0.8% to $10.2 billion while same store sales were essentially flat, below the company’s guidance which called for an increase in the low single digits. The performance was driven by a low single digit decrease in comparable store transactions, offset by an increase in average transaction size.
“December sales were slightly below our expectations, as strong results late in the month did not completely offset softness in the first three weeks," said Gregg Steinhafel, chairman, president and CEO. "Similar to November, profitability for December benefited from our continued focus on achieving an appropriate balance between price investments and driving sales, combined with thoughtful inventory management. As a result, we expect Target’s fourth quarter 2012 earnings per share will meet or somewhat exceed the low end of our prior guidance."
Target said the strongest category during the month was food, with health and beauty and clothing also doing well.
Costco topped Wall Street expectations with a 9% rise in December same-store sales, beating estimates for a 6.5% increase. Excluding fuel sales and the effects of foreign exchange, the club posted an 8% rise.