News

Target sees soft Christmas sales

BY Mike Troy

NEW YORK — Weaker than expected December sales at Target will cause fourth quarter profits to come in at the low end of an earlier forecast, the company said.

Sales at Target for the five week period ended December 31, increased 0.8% to $10.2 billion while same store sales were essentially flat, below the company’s guidance which called for an increase in the low single digits. The performance was driven by a low single digit decrease in comparable store transactions, offset by an increase in average transaction size.

"December sales were slightly below our expectations, as strong results late in the month did not completely offset softness in the first three weeks," said Target chairman, president and CEO Gregg Steinhafel. "Similar to November, profitability for December benefited from our continued focus on achieving an appropriate balance between price investments and driving sales, combined with thoughtful inventory management. As a result, we expect Target’s fourth quarter 2012 earnings per share will meet or somewhat exceed the low end of our prior guidance."

Target previously indicated it expects adjusted earnings per share in the fourth quarter to range from $1.64 to $1.74, or $1.45 to $1.55 if expenses related to the company’s 2013 entry into Canada are included.

December’s showing was against a relatively modest prior year increase of 1.6% and marked the second consecutive month that Target has missed its same store sale forecast. In November, the company reported a 1% decline in same store sales that was well below a forecast for a low single digit gain. At that time, Steinhafel assured investors that December comps would be in the low single digits and the company had the right plans in place to deliver seasonal results.

A key aspect of December’s weakness appeared to be weak sell through of the Target/Neiman Marcus Holiday Collection. The unique assortment of exclusive and pricy merchandise did not appear to resonate with customers, judging from 70% markdowns evident at some location where inventory levels remain disturbingly high.

Looking ahead to January, Steinhafel said he expect a low single digit same store sales increase for the comparable four week period. Speaking more broadly about 2013, he noted, "we will continue to focus on profitably growing Target’s market share by combining unique merchandise, convenience, value and an unbeatable guest experience across our stores, online and mobile channels."

Find us on Facebook for more information on drug store news, insights and products.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

News

Fred’s posts slight December decline; looks forward to strong 2013 with expansion in pharmacy, specialty drugs

BY Michael Johnsen

MEMPHIS, Tenn. — Fred’s on Thursday reported a 1% sales decline to $209.9 million for the five-week fiscal month ended Dec. 29. Comparable store sales for the month decreased 4.2% compared with a decline of 0.4% in the same period last year.

"December sales did not meet our expectations as customers limited their purchases of discretionary and weather-related merchandise again this month," stated Bruce Efird, CEO Fred’s. "The economic headwinds around the holidays overshadowed some of the positive aspects of the company’s performance in December, like the successful completion of our layaway sales program and continued script improvement in our pharmacy department." 

Efird said that, with the sales shortfall Fred’s experienced in November and December, the company now expects fourth quarter earnings per share to be in the range of $0.25 to $0.31.

"Looking ahead, we begin 2013 with many new programs and initiatives designed to improve customer traffic," Efird said. "We will accelerate pharmacy growth through expanded programs in specialty drugs and clinical services, as well as by increasing the pace of pharmacy acquisitions," he said. "We expect that 2013 will be a springboard year for Fred’s with the expansion of specialty drugs and clinical services, accelerated pharmacy acquisitions, new auto and hardware product initiatives, the rollout of a smaller drug and dollar store concept, and the beginning of the relocation of approximately 125 stores." 

In general merchandise departments, Fred’s is expecting a positive impact from discount tobacco programs and its new Hometown Auto and Hardware program, which will grow from 80 to 200 stores in 2013. Fred’s also is expanding its merchandise assortment across seasonal, which is designed to complement the new hardware program.

During the month, Fred’s opened four new stores and one Xpress pharmacy and closed two Xpress pharmacy locations.

Find us on Facebook for more information on drug store news, insights and products.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

News

Safeway chief to retire in May

BY Michael Johnsen

PLEASANTON, Calif. — Safeway late Wednesday announced that Steve Burd, its long-time chairman and CEO, will retire at the company’s annual stockholders meeting on May 14, 2013. Safeway’s board will begin a search for a successor, and will consider both internal and external candidates for the job, the grocer stated.  

"I feel this is the right time to move forward with a transition plan," Burd stated. "The Company is gaining market share with each passing quarter. We have developed the most sophisticated digital marketing platform in retail, we are implementing the most comprehensive and personalized fuel loyalty program, and we will be rolling out a wellness initiative that has the potential to transform the company," he said. "While I still have the high level of energy and enthusiasm I brought to the company 20 years ago, I need more personal time and, given my extensive work in health care, I want to pursue that interest further."

Burd joined Safeway in October 1992 as president and was appointed CEO in May of the following year. Among some of his key initiatives were developing the "Lifestyle" store format and forming a prepaid payment network that has become one of the larger distributors of gift cards. 

More recently, Safeway has introduced a digital marketing/loyalty platform called just for U, a platform that allows Safeway to personalize its prices to individual shoppers. Safeway has also partnered with a technology company to bring innovative health care services to Safeway customers.

Safeway has also been recognized for its employee health plans. In the last eight years, Safeway has introduced innovative design and practice features into its health plans. As a result, while the average U.S. company experienced an 8% annual growth in employer health care costs from 2005 through 2011, Safeway averaged a 2% annual growth rate for both the employer and employee contributions, the company stated. 

Burd also accelerated Safeway’s efforts in charitable giving and sustainability. During his tenure, the company raised more than $2 billion for charities, including over $200 million for cancer research.

Burd will help with the executive search and will continue to assist the company after he transitions out of his leadership posts.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES