Target issued a cautious forecast for holiday sales, sending its shares down. But as Fred Katayama reports, it reported solid results in the quarter just ended.
Target feeling ho-ho-hum about the upcoming holiday shopping season. The retailer forecast earnings that fell way short of what analysts were expecting. And sales don't look much brighter. Target predicts sales at its existing stores will remain flat in the holiday quarter or rise by 2 percent at best. That disappointing outlook sent its shares south at the market open Wednesday, extending their nearly 17 percent drop this year. Outlook aside, Target reported solid results in the quarter just ended. Its rising comparable store sales and falling profit both handily beat estimates. Cowen senior analyst Oliver Chen said, "We continue to watch Target's new brand evolution and launches, the integration of physical and digital, ability to communicate value to the consumer, and physical store traffic. These factors will be the marginal stock drivers in our view." To lure back customers to its stores, Target has been slashing prices. As part of its turnaround bid, it plans to double the number of small-format stores, invest heavily in e-commerce, and keep grocery prices low in battling Wal-Mart, Kroger and Amazon.