So far so good. The third quarter at Target is off to a solid start as Target reported a 4.1% same-store sales increase that was squarely in the middle of the company’s guidance range, which called for an increase in the low to mid single digits.
As has been the case with prior monthly sales reports, the increase was driven primarily by growth in average transaction size although August saw a lesser contribution coming from an increase in comparable-store transactions. The 4.1% increase came on top of a prior year increase of 1.8% and particularly encouraging from Target’s perspective is that every region of the country was said to have experienced a healthy increase in comparable-store sales and back-to-school season began well.
The big wild card in the results was an estimated half a percentage point boost in same-store sales that occurred late in the month as Hurricane Irene rolled up the East Coast. The pantry loading behavior that typically goes on in advance of such stores aided Target’s August results, but now a corresponding negative impact is expected during September as consumers work off their inventory build up of food and consumables.
Despite this situation, Target maintained its monthly forecast that has been in place for most of the year, which calls for a comp increase in the range of low to mid single digits.
“August comparable-store sales were in line with our expectations, reflecting solid results in our back-to-school and back-to-college categories,” said Target chairman, president and CEO Gregg Steinhafel. “While the pace of the economic recovery is uneven and uncertain, we are confident in our ability to execute on our strategy, to offer the right balance of extraordinary value, convenience, newness and differentiation and to remain our guests’ preferred shopping destination.”
With regard to specific categories, once again comparable-store sales in grocery increased in the mid to upper teens, while health care, beauty and household essentials increased in the mid single-digit range. Another area of increase was apparel which was up slightly led by double digit increases in the intimate, hosiery and performance segments. The company said same store sales in hardline categories declined in the low single-digit range and home categories declined slightly.