Its shelves are better stocked than ever before. It’s added thousands of new grocery items. And it’s rolled out new offerings such as the jazzy in-house Cat & Jack kids clothing line.
So why haven’t shoppers been showing up at Target Corp.’s stores in the last few months like they have in the past?
That was the troubling question on analysts’ minds after the Minneapolis-based retailer reported a surprising 2.2 percent drop in traffic during the May-to-July period — its first decline in that metric in a year and a half, and the biggest slide it’s seen since the Great Recession outside of the massive data breach a few years ago that temporarily scared off shoppers.
The company’s shares tumbled nearly 6 percent by midday trading Wednesday as Target also reported its first comparable sales drop in two years and lowered its forecast for the second of the year, including during the holidays, when it now expects sales to be flat to down two percent. It was a stark change from just a few months ago when Target executives said sales could grow as much as 2.5 percent this year.
Target executives offered their own explanations for the falloff in traffic: It lost some trips to in-store pharmacies amid the rebranding of them to the CVS Health banner. Electronic sales were down double digits — Apple products in particular tumbled more than 20 percent. And an overhaul of the grocery department to include more specialty and organic items is still not hitting the mark with consumers.
But analysts also wondered if there were deeper issues at play — in particular, Target’s ability to hold off the mounting threat from Amazon.com.
“Clearly this was a step in the wrong direction,” said Sean Naughton, an analyst with Piper Jaffray. “Some of the concern is now going to be about Amazon’s continued success and the potential for Prime Now (Amazon’s delivery service within two hours on select items) becoming more ubiquitous across the country with people being able to get things more quickly.”
Target is obviously in trouble for many reasons but you are kidding yourself if you don’t acknowledge the connection between the drop and the ridiculous decision to turn over control of the bathrooms to the liberal left.
While Smith downplayed suggestions the transgender bathroom controversy impacted the company’s bottom line (she pointed to larger troubles in the retailing marketplace), the fact remains Target reported a 2.2 percent drop in store traffic during the May-to-July period — the first drop in store traffic in more than 18 months.
Target also reported its first drop in comparable store sales in two years and now expects sales to be flat to down as much as 2 percent for the holidays, a critical season for retailer earnings.