The long road back

The shoppers keep coming, but they don’t have money to spend and are using credit in a more responsible manner. That appears to be the situation facing the retail industry overall and Target in particular. For most of this year, the company’s same-store sales have been inline with guidance, and that was the case again in August. Same-store sales increased 1.8%, prompting Target chairman, president and CEO Gregg Steinhafel to say, “We’re pleased with our strong performance in back-to-school and back-to-college categories, as well as our performance in apparel and food. Guest traffic trends remained healthy throughout the month. These results demonstrate the resilience of our strategy and our ability to deliver on both sides of our expect more, pay less brand promise.”

The 1.8% increase may have met expectations, but the gain was on top of a decline of 2.9% from August 2009. However, it is not for a lack of shoppers as Target continues to report increases in the number of people shopping its stores.

Look for more of the same in September, with official guidance calling for same-store sales to increase in the low single digits. Back-to-school season is over and stores are transitioning to Halloween assortments. However, with cash-strapped shoppers purchasing closer to the time of need Target won’t get much of a lift from seasonal sales in September, not when shoppers still have all of October to buy their Halloween stuff.