The heat is on in July

A 1.7% increase in June same-store sales at Target was rather modest, but the more noteworthy development from June is the fact that customer traffic increased. Target chairman, president and CEO Gregg Steinhafel didn’t seem overly concerned by the sales performance, even though it was against an easy comparison the prior year when comps declined by 6.2%. He focused on positive trends elsewhere in the business that suggest the company is well positioned to achieve its second quarter profit plans.

“Sales remained relatively soft for the second month this quarter, though we continued to experience favorable merchandise sales mix, effective retail expense control and strong profitability in our credit-card segment,” Steinhafel said. “Sales trends in apparel, food, health care and beauty remained strong in June, while sales in electronics, video games, music and movies were particularly soft for the month. We continue to plan our business cautiously, with a focus on disciplined execution of our strategy across the company.”

Now, the pressure is on in July with expectations calling for same-store sales in the low single digits to salvage a slow start to the quarter that began with below planned sales in April. Target’s chances look good for July as back-to-school season begins and the retailer is always a popular destination for cost-conscious moms, teens and college kids. With traffic expected to be strong, categories that have been strong of late should continue to benefit. For example, the company said comps for June were strongest in food, healthcare and beauty, which generated comparable-store sales increases in the mid to upper single digits. Comps in apparel increased in the mid single-digit range, led by double-digit increases in shoes and ladies’ apparel, with the softest performance in children’s apparel, which should rebound in July.