May proved a challenge, June looks the same

The revelation that Target’s May sales were worse than expected was troubling on a number of levels. For starters, not only did customers shop the company’s 1,698 stores less often in May, those who were in the store spent less money. That’s according to the company, which noted that the reason for its 6.1% decline was split evenly between a decrease in average transaction size and a decrease in store transactions. At the beginning of May after Target reported a slightly better than expected 0.3% same-store sales trend and increased customer traffic, the company forecasted May same-store sales would decline in a range of low to mid single digits. As a result, the actual 6.1% decline was deemed worse than expected and underscores just how difficult it has become to accurately forecast consumer demand from month to month, as consumer behavior is influenced by confidence levels and an uptick in gas prices. For June, same-store sales are expected to decline in the mid single digits.

There were some bright sports in the May numbers with non-discretionary categories such as health care, household, personal, baby and food showing strength. Even some hardline categories, such as toys, performed better than average, although others such as music, movies and books were weaker than average.

The apparel business continued to suffer with same-store sales declining in the high single digits and the home business declining in the low double digit range.

Geographically, the company said it enjoyed better than average comparable-store sales performance in Northern California and portions of the Northeast and upper Midwest, including New York, New Jersey, Minnesota and Ohio. Comparable-store sales performance was much weaker than the rest of the chain in portions of the South and mountain states, including Florida, Georgia and Colorado.