Target (TGT) reported weak first-quarter sales Wednesday, and the discount retailer expects a continued slump amid a “volatile consumer environment.”
The news sent shares down 9% in premarket trading.
Comparable sales, which strip out the effect of newly closed or open stores, rose 1.2% during the quarter as Target attracted more shoppers, but that wasn’t enough. Total sales came in at $16.2 billion, or $120 million less than what Wall Street analysts were expecting.
What’s more, Target said it expects comparable sales could fall as much as 2% this quarter, raising questions about whether the retailer’s turnaround, after a rough patch two years ago, has hit a wall.
Another potentially worrisome development was Target’s 23% digital sales growth, a marked slowdown from a torrid pace during the holiday season when they rose 34%, despite hundreds of millions of dollars being poured into e-commerce.
Target’s numbers follow a set of dismal retail results from the likes of Macy’s (M), Kohl’s (KSS), and Gap (GPS) that suggest shoppers remain careful about how they spend and are simply shifting their spending to other areas like home improvement or shopping more online at Amazon (AMZN).
But CEO Brian Cornell, who has focused on winning priorities product categories like baby, wellness, and fashion for apparel and home, said Target was staying the course. This week, the company announced it has hired Mark Tritton, a former Nordstrom executive, as its new chief merchant after a one-year search.
“We plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape,” Cornell said in a statement Wednesday.
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Target reported an adjusted profit of $1.29 per share, 10 cents better than Wall Street expected.