Target (NYSE:TGT) reported that comparable digital sales increased 23 percent in the first quarter, on top of a 38 percent growth in the first quarter last year. In addition, the big box chain's signature categories – style, baby, kids and wellness – grew more than three times as fast as the company average.
In total, Target reported that first-quarter 2016 comparable sales had a small growth of 1.2 percent due to the impact of the sale of the pharmacy and clinic business to CVS Health. Overall sales decreased 5.4 percent to $16.2 billion from $17.1 billion one year prior. Total sales were $120 million less than Wall Street analysts were predicting, reported Fortune.
But Chairman and CEO Brian Cornell said the company was pleased that his latest strategy, to try and drive sales in signature categories, is paying off.
"We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment," Cornell said. "First quarter comparable sales in signature categories grew more than three times the company average, digital comparable sales grew 23 percent, and strong execution by our team delivered stronger-than-expected growth in adjusted EPS."
However, the solid 23 percent rise in digital was still worrisome to some analysts, as it marked not only a slowdown from the year prior, but also the 34 percent rise during the holiday season, reported Fortune.
The company's view of second quarter has been tempered due to the recent "volatile consumer environment," Fortune reported. Many retailers have reported a rocky start to 2016, including Macy's, which reported a 6.1 percent drop in same-store sales, and Nordstrom, which reported a 64 percent decline in profits. Target expects Q2 to end with comparable store sales flat to down 2 percent.
"We plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape," Cornell said in a statement to Fortune.
- see this Target press release
- see this Fortune article
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