Target shares plunge after sales, outlook disappoint
By Nandita Bose
CHICAGO (Reuters) - Retail chain Target Corp (TGT.N: Quote) gave a cautious outlook on Wednesday after reporting a lower-than-expected increase in quarterly sales due to unseasonable weather and weaker demand for electronics and groceries.
Shares of the company fell as much as 11 percent, their biggest intraday decline since December 2008, as investors focused on weaker revenues and a poor outlook despite higher-than-expected earnings.
Target's woes also encouraged investors to sell shares of rival retailers like Macy's M.N., JC Penney (JCP.N: Quote) and Wal-Mart Stores Inc (WMT.N: Quote) on Wednesday. Wal-Mart is due to report quarterly results on Thursday.
Target is the latest traditional brick-and-mortar chain to report disappointing sales as traditional chain stores spend more at online merchants like Amazon.com Inc (AMZN.O: Quote) and as slowly rising wages enable consumers to spend more on big-ticket purchases like cars and home improvements.
"We're approaching our business with appropriate caution as sales trends at Target and many of our key competitors (have) weakened," Chief Executive Officer Brian Cornell said on a conference call.
He said he expected price discounting to intensify as retailers try to shed excess inventory after a slow season.
Target said apparel sales rose during the quarter and were stronger than other retailers', but unseasonable weather hurt demand.
In addition, the company's grocery division suffered from a reorganization that increased organic and fresh food offerings but made it harder for customers to find products. Continued...