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Target cuts forecast on sluggish holiday sales


Another retailer is reporting a less-than-stellar holiday.

Target Corp. on Wednesday cut its guidance for the fourth quarter and year on the heels of a 1.3% decline in same-store sales in November and December. (Total sales for the combined month decreased 4.9%, reflecting the impact of the December 2015 sale of the company’s pharmacy and clinic businesses.)

The brightest spot in the discounter’s holiday performance was online, where sales rose some 30%. But that growth came at the expense of store traffic, which the retailer termed “disappointing.”

“While we significantly outpaced the industry's digital performance, the costs associated with the accelerated mix shift between our stores and digital channels and a highly promotional competitive environment had a negative impact on our fourth quarter margins and earnings per share,” said Brian Cornel, Target chairman and CEO. “Despite these challenges, we are positioned to deliver full-year Adjusted EPS of $5 or more in 2016, which would mark an all-time high for Target. And, importantly, our team has made substantial progress in positioning Target for long-term success by improving the shopping experience both in stores and on, transforming our supply chain and technology to support every way our guests want to shop, and developing new store formats that allow us to reach new guests in dense urban and suburban markets.”

Target continued to be impacted by declining same-store sales in food, electronics and entertainment, where sales declined in the high single digit range. Same-store sales in the retailer’s “signature” categories, including toys, grew nearly 3% points faster than the company average.

Target said it now expects fourth-quarter comparable sales to fall between 1.0% and 1.5%, compared with its prior view of sales ranging between a decline of 1% to an increase of 1%. It expects adjusted earnings per share in the range of $1.45 to $1.55, lower than its previous guidance of $1.55 to $1.75.

For 2016, Target said it now expects to report adjusted earnings of $5 to $5.10 a share, compared with prior guidance of $5.10 to $5.30 a share, reflecting 44 cents a share of early debt-retirement losses and a 1-cent per-share benefit from the resolution of income tax matters.

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