Easter in action

The Easter effect will be evident this Thursday when Target reports March sales that should be fantastic compared with prior-year results. The company’s official guidance provided when February results were released in early March calls for same-store sales to increase in the mid to upper single digits. That’s quite a wide margin, and analysts have settled in safely at a midpoint of 7.6% for a consensus estimate. However, it is likely that simply hitting that figure would likely be viewed as a disappointment because, in addition to the beneficial effect of Easter falling one week earlier this year, weather conditions nationwide have been favorable in the waning weeks of the reporting period.

Whatever Target reports in the way of a comp increase will be only part of the story. What the company has to say about traffic trends at its stores will be of keen interest as well, since the past several months the company has disclosed more folks are shopping its stores. That nugget of information gets interpreted a lot of ways. Some see it as a sign that Target is regaining market share lost to Walmart at the height of the recession, while others see it as a sign consumer confidence is improving because shoppers are returning to retailers that offer a more discretionary product mix. The latter is a difficult conclusion to make based solely on Target’s numbers, however the company’s results are a useful data point when assessing the overall state of the consumer. Just don’t read too much into what promises to be a month of artificially inflated same-store sales growth because the true picture won’t be clear until early May when April results are reported and the full effect of the Easter shift is evident.