Target says low demand for Apple products hurts electronics sales
By Nandita Bose and Siddharth Cavale
(Reuters) - Target Corp reported a drop in demand for Apple Inc's products that hurt the retail chain's electronics sales in the second quarter, but said it is working with the iPhone maker to capitalize on new product launches during the second half.
Earlier on Wednesday, Target cut its fiscal-year profit outlook after quarterly sales fell more than expected due to lower demand for electronics and a weak start to a revamp of its grocery business.
The company's shares closed down 6.4 percent at $70.63 after falling as much as 7.4 percent.
Chief Executive Brian Cornell said customer visits declined across product categories during the quarter but electronics sales fell by a double-digit percentage rate and accounted for about two-thirds of the overall decline in sales at stores open at least a year.
About a third of the decrease in electronics sales stemmed from reduced demand for Apple products, which were down more than 20 percent. In April, Apple reported its first-ever decline in iPhone sales and its first revenue drop in 13 years due to a saturated market for smartphones.
Cornell said one of the first tasks for newly appointed Chief Merchandising Officer Mark Tritton is to spend time with Apple to make sure "we're putting the right plans together for the back half of the year, that we're ready to capitalize on their new innovation that they will be bringing to the market."
Apple's long-awaited iPhone 7 is expected to be launched next month and retailers hope it will create enthusiasm among consumers and boost phone sales. For the past several quarters Best Buy Inc, the largest electronics retailer in the United States, has complained about the lack of innovative new products to excite consumers.
Apple did not immediately respond to a request for comment. Continued...