Target saves Q4 with January comps increase

Target appears to have salvaged its fourth-quarter sales results with a 4.3% same-store sales increase in January to offset a disappointing 1.6% increase in December and a 1.8% increase in November.

January sales increased 5.1% to $4.6 billion during the four weeks ended Jan. 28 compared with the same period the prior year, while comparable-store sales advance 4.3% on top of a prior year increase of 1.7%. The gain was driven equally by an increase in average transaction size and customer traffic. The gain fell squarely within the company’s guidance range, which called for a low-to-mid, single-digit increase and was sharply higher than the disappointing monthly results the company reported for the first two months of the fourth quarter.

“January sales were near the high end of our expected low-to-mid, single-digit range, reflecting strong performance in both discretionary and non-discretionary categories,” said Gregg Steinhafel, Target chairman, president and CEO. “Sales trends were healthy throughout the month and across the country. These results reflect our commitment to delivering a superior experience and providing compelling everyday value on a unique assortment designed to satisfy our guests’ wants and needs.”

The 4.3% increase in January when blended with November and December results puts Target’s fourth quarter same-store sales increase at 2.2%, toward the low end of its guidance range and below the 2.4% increase reported the prior year.

As in prior months, the strongest performance came in the areas of food and household essentials, which are benefitting from expansion under the PFresh store remodeling program now in about two thirds of the company’s discount stores. Same-store sales in food increased in the low teens and household essentials increased in the mid-single digits with the strongest gain coming in health care. The home category also increased in the mid single digits as did apparel, although Target noted the weakest segment of the category was women’s apparel. The only category that declined was hardlines, which fell by a mid single digit percentage.

Target is expecting February same-store sales to increase in the low-to-mid single digits.