Plenty of company in November

Not that it is any consolation, but Target was hardly alone in reporting weak sales for November. While Target’s direct competitor Wal-Mart was one of the few winners—with a 3.4% same-store sales increase that exceeded company guidance and analysts’ estimates—several other direct competitors had a poor showing in November.

Kmart reported a same-store sales decline of 10% for November. The division of Sears Holdings has been in a downward spiral for some time, and during its third quarter reported a 7% same-store sales decline that marked the 11th consecutive quarter in which same-store sales declined. Kmart’s last quarterly comps increase came in the fourth quarter of 2005, when it reported a paltry 0.9% gain. That accomplishment was considered noteworthy at the time, because it was the first time since the second quarter of 2001 that Kmart posted a positive same-store sales increase.

The Sears division of Sears Holdings also reported weak results for November, with a decline in comps of 7.8%. Sears has not generated a positive quarterly same-store sales increase since Sears, Roebuck and Co. merged with Kmart Holding Corp. to form Sears Holdings on March 24, 2005. Sears’ best quarterly same-store sales results since the merger were a negative 3.1% that occurred in the first quarter after the deal closed.

Sears Holdings reported third-quarter results for the period ended Nov. 1 and noted that its sales dropped nearly $1 billion to $10.7 billion from $11.6 billion the prior year. The deterioration in sales resulted in Sears Holdings reporting a third-quarter loss of $146 million, or $1.16 a share, compared with a modest profit of $4 million, or 3 cents a share, last year.

Deteriorating sales are a new phenomenon at Target and this year, even though sales are expected to be up modestly from the prior year, virtually all measures of profitability and financial performance will suffer a downturn.