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Target Corp posts surprise drop in 2016 same-store sales, forecasts 2017 decline

Tuesday, February 28, 2017 7:46
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Under pressure from online retailers, US stores giant Target Corp (NYSE:TGT) has reported a surprise drop in full-year 2016 sales and forecast a further fall in fiscal 2017.

The Minneapolis-based retailer said it expects sales at stores open for at least a year to decline in the low-single digit percentage range in 2017, after reporting a fall of 0.5% in 2016.

Consensus estimates were expecting the company’s same-store sales to increase 0.4% this year.

Target also forecast full-year earnings from continuing operations of US$3.80-US$4.20 per share, while analysts’ on average were expecting them to top US$5.00.

Target’s chief executive Brian Cornell, said : “Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores.”

The retailer’s results compare poorly against those of bigger rival Wal-Mart Stores Inc (NYSE:WMY), which last week reported higher-than-expected US sales for the fourth quarter as its low prices attracted more customers to its stores and online activity accelerated.

Quarterly drop …

Target’s net income dropped to US$817mln, or US$1.45 per share in the three months to January 28, down from US$1.43bn, or US$2.32 per share a year earlier.

Same-store sales in the quarter fell 1.5%, missing analysts forecasts of a 1.3% decline.

The retailer also reported a decline in gross margins to 26.9% from 27.9%.

Target’s net sales have now fallen for six quarters in a row as shoppers increasingly gravitate to online retailers such as Inc (NASDAQ:AMZN).

In early New York trading, Target shares plunged 14% to US$57.49, having already fallen by around 6% since the group warned on its fourth-quarter results in January.

Story by ProactiveInvestors


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