A single-digit outlook for July

Target got off to a slow start in the first month of the second quarter with May same-store sales that were a little less than planned. Comps increased 1.3% during May compared with company guidance that called for a low- to mid-single digit increase. Expectations for June call for comps to increase in the low single digits and could be skewed somewhat by the timing of Independence Day. Results from this year’s June reporting period, which ends on Saturday, July 3 will be compared against a prior-year period which included the beneficial effect of the reporting period ending on Saturday, July 4.

Despite May results that were less-than-planned, investors were willing to settle for encouraging news on several other fronts. Customer traffic continued to increase, even though shoppers spent slightly less per visit, and from a margin perspective the company indicated that same-store sales in apparel were above the company average and inventories remained in very good condition. Comps were strongest in grocery, health care and beauty, where sales increases were in the mid- to upper-single digits. Comps in hardlines were well below the company average, with electronics and housewares showing weakness.