November sales a tasty surprise

Adding food, consumables and other frequently purchased items to the merchandise mix as a means to drive customer traffic isn’t exactly an original retail strategy. Dollar stores and drug stores have both done it, but not with the degree of success that seems evident in Target’s most recent monthly sales results.

Same-store sales surged 5.5% during November, exceeding the company’s guidance of a low single-digit gain and analysts’ consensus estimates of a 3.7% gain, and a key driver was the food category, which the company said grew at a double-digit pace in the mid-teens. It probably helped that Target was quite aggressive with food promotions during the month as the cover of the weekly ad for the period from Nov. 14 to 20 was devoted to Thanksgiving, and then it was followed up with an ad for a four-day pre-Thanksgiving sale with sharp price of holiday staples. Those promotional efforts hit as Target had completed remodeling activities for the year and with roughly one third of its store base in the PFresh format which features expanded fresh offerings and an enlarged consumables presentation. The mid-teen double-digit gain followed what had been low double-digit gains in the food category during October, September and August preceded by an unspecified double digit gain in July. The PFresh approach is clearly having the desired effect as the company continues to report increased customer traffic and solid topline sales.

“Guests are responding to our compelling holiday merchandising and marketing programs, and they love our new 5% REDcard Rewards program,” said Gregg Steinhafel, Target chairman, president and CEO. “We’re well-prepared for the biggest month of the year, and believe we’re on track to achieve fourth quarter sales and profitability consistent with our guidance on Nov. 17.”

Accordingly, Target offered December same-store sales guidance that incorporates additional upside by calling for a comp increase in the low to mid single-digit range.