Target Offers Holiday Gloom

For Target (TGT Quote), the holidays were far from bright.

The discount retailer warned late Monday that it now expects December same-store sales to be in a range of down 1% to up 1%. That's far short of its prior projection for a 3% to 5% rise in same-store sales, or sales at stores open at least a year.

Based on those numbers, it's unlikely Target can meet its projections for fourth-quarter earnings. In early December, the company said sales trends would need to "meaningfully improve" in the month for it to achieve its fourth-quarter EPS growth forecasts.

The company said in its update Monday that a jump in sales in the third week of December wasn't enough to offset unfavorable trends in the earlier part of the month.

Retailers are widely expected to post tepid results for the holiday season, with results largely buoyed by last-minute shoppers who waited for discounts. Target, a longtime outperformer, has particularly stumbled recently as some of its lower-income customers cut back on spending amid the housing and credit crises.

Target, along with most other major chains, will report its full December results on Jan. 10.

The company's sales warning came on the same day that activist investor Bill Ackman disclosed that he had lifted his stake in the retailer to nearly 10%. That news sent Target shares up 3.5% Monday.