Comps decline forecast for April

Everyone knew Target’s March sales were going to be good, but not quite this good. The combination of an early Easter, improving consumer confidence, pent up demand, decent weather and the continuation of improving trends regarding customer traffic had analysts forecasting a 7.6% comps increase that proved to be well short of the 10.3% gain the company reported. Now comes the hard part, as the company cycles against a more challenging month over the prior year when April sales felt the beneficial effect of Easter. The company is forecasting same-store sales will decline in the low-to-mid single-digit range, but when combined with the strong March performance the overall effect will be an increase in the 3% to 5% range.

The forecast decline for April is understandable, as the consumer remains on shaky ground, and there is the whole Easter thing, but it does seem conservative, given evidence of momentum throughout the business. Target has regained traffic due to a heightened promotional emphasis on consumables, and those efforts are generating meaningful sales contributions. More importantly, shoppers are being exposed to rampant newness evident throughout the store thanks to the steady flow of merchandise exclusives this spring just as consumers appear willing to break loose on discretionary items.

There is also the issue of prior-year comparisons. It’s not like Target knocked the cover off the ball last year when Easter fell in April. The company mustered a paltry 0.3% gain and that was on top of a 3.1% decline in April 2008.

Nevertheless, Target tends to be a conservative company and forecasting a decline this month is no doubt the prudent thing to do considering the state of the nation’s economy, the uncertainty associated with consumer demand for merchandising exclusive as well as the ever present competitive challenge associated with Walmart.