Target Suffers Disappointing Holiday Sales; Makes Leadership Changes
Target suffered holiday sales below expectations and additionally has announced several leadership changes.
"We faced challenges throughout November and December in key seasonal merchandise categories and our holiday sales did not meet our expectations,” said Target’s chairman and CEO Brian Cornell. “However, because of the durability of our business model, we are maintaining our guidance for our fourth quarter earnings per share. We also remain on track to deliver historically strong full-year results in 2019, including comparable sales growth of more than 3% and record-high EPS reflecting mid-teens growth compared with last year.”
In the important November/December period Target saw 1.4% comparable sales growth, slowing from 5.7% comp growth a year ago. The company had been looking for a fourth quarter same-store sales increase of 3% to 4% — the performance in the November/December period suggests Target will miss that mark, Yahoo Finance explains.
The retailer said it experienced softer-than-expected performance in electronics, toys and portions of its home assortment in the holiday period.
After digging into Target's foot traffic analytics, Ethan Chernofsky, VP of marketing at Placer.ai, noted Target's November and December traffic year over year saw only a minor decline in visits of just over 1% from 2018 to 2019.
"This is in line with what we're seeing across the industry because of the shorter holiday season in 2019 - Thanksgiving started almost a week later," he noted. "That said, most of the key 'days' saw Target enjoying a year-over-year increase including an 8% bump on Black Friday, and really strong weeks heading into Christmas.
"Target’s ‘decline’ needs to be seen within context. The brand was very effective at driving visits on key shopping days like Black Friday and the build up to Christmas. However, it is very difficult to fully overcome a shortened holiday season."
Target also announced the retirement of EVP and chief stores officer Janna Potts. Effective immediately, Mark Schindele has been named to the position and Potts will remain with the company in an advisory role until May 1.
Schindele will also join Target's Leadership Team. He has been with Target for nearly 20 years, most recently serving as its SVP of Properties. In that role, he was responsible for leading the company's remodel and small-format strategies, elevating the shopping experience and introducing Target to new shoppers in densely populated areas. Prior to that, Schindele held leadership positions in Merchandising, Sourcing and Operations.
Potts has been with the company for 30 years, serving in a variety of leadership roles during that time. Most recently, she played a critical role as the lead architect in the successful rollout of an entirely new operating model for Target's nearly 1,900 stores, enhancing the retailer's focus on guest service and fueling the growth of its digital business through a suite of convenient store-based delivery and pickup options.
"Over the course of her 30 years with the company, Janna has made many significant contributions, including transforming the role our stores play in delivering for our guests in this new era of retail. We wish her the best as she prepares for retirement," said Cornell. "As we look ahead, I'm confident Mark brings the right set of diverse experiences to realize even more potential for Target. His passion for retail, Target and our team, coupled with his understanding of our end-to-end business, make him well-positioned to lead our Stores organization into 2020 and beyond."
Additionally, the retailer announced that it is formalizing the interim structure it announced for its Merchandising organization in October with the appointment of Christina Hennington to EVP and chief merchandising officer, Hardlines, Essentials and Capabilities, and Jill Sando to EVP and chief merchandising officer, Style and Owned Brands, effective immediately. Both Hennington and Sando will join Target's Leadership Team. This structure reflects the size, scale and complexity of Target's multi-category commercial businesses and operations. In their roles, Hennington and Sando will collaborate closely with Stephanie Lundquist, Target's EVP and president of Food and Beverage, on the development and execution of a unified merchandising strategy for the retailer.
"Christina and Jill are seasoned leaders and incredibly talented merchants, and during their respective tenures, both have driven outstanding outcomes that compel guests to choose Target," said Cornell. "The appointments we're making today with Mark, Christina and Jill underscore the expertise and deep bench of talent we continue to develop at Target, and I have every confidence in their ability to create opportunities that will fuel future growth for our company.