Target Stock Falls Nearly 9% After Disappointing Holiday Sales

The retailer is still up 70% from a year earlier.

On Wednesday, Target reported its holiday sales and investors were disappointed by the results. The company’s same-store sales were up by 1.4% during November and December. But in comparison, the retail giant’s same-store sales grew by 5.7% a year earlier.

This caused the company’s shares to fall nearly 9% by mid-morning. Walmart saw its shares fall slightly as well even though the company has yet to release its holiday sales numbers. 

Why did Target’s holiday sales fall short?

During the holiday season, Target saw strength in its beauty and apparel lines. Beauty product sales were up by 7% while apparel sales gained 5%. But these gains were offset by losses in the company’s electronics, toys, and home lines. 

It’s somewhat surprising that the company’s toy sales fell flat, especially since the company has been devoting more space in its store to toys. And Target recently partnered with Disney to open mini Disney shops within select stores. Not to mention, Target is handling the relaunch of Toys R Us’s website. 

The company saw the biggest dips in its electronics sales which were down 6% through November and December. And sales on home items fell 1%. However, management is confident that the company is still on track to meet its fiscal 2019 targets and chose to maintain its fourth-quarter guidance. 

What’s next for Target?

For many people, it was a surprise to see Target come up short during the holiday season. Retailers like Kohl’s, Macy’s, and JC Penney all struggled during the holiday months, but Target usually comes out on top. 

But it wasn’t all bad news for the company. Target’s digital sales rose by 19%, thanks to the company’s same-day services. Overall, Target saw its same-day services rise by 50% during the holiday months as more customers embraced options like curbside pickup and Shipt grocery delivery. 

And the company’s investments in its store remodels, a new grocery line, and its mobile updates should begin to pay off in 2020. Overall, the company is considered a moderate buy on Wall Street with a potential upside of more than 18%.