said same-store sales at it flagship Target stores are coming in "somewhat below" its expected 4%-6% rise for the three weeks ending Oct. 25, 2003. Separately,
said it is on track to meet its same-store sales expectations.
The news from Target comes on top of continuing weak same-store results at its Mervyn's and Marshall Field's stores. Analysts had been counting on strong results from the flagship stores to lead the way while management determined how to turn the struggling brands around.
The company reported that stores in the West, Mid-Atlantic and Northeast had performed well, indicating that sales in the South and middle of the country are responsible for the current drag. Sales of pharmacy, household goods and entertainment products were strong, but sales of children's clothing and men's shoes were weak.
This should be a critical Christmas season for Target. Inventory, accounts receivable and long-term debt are all up sharply from a year ago. If the company is to meet its earnings guidance for the year, it will be a result of strong sales at its flagship stores. If it misses, there will be renewed pressure on the company to divest non-Target brands and to choose a direction that better differentiates it from Wal-Mart, whose price structure Target can never match.
The company did not issue new guidance for the quarter, but had already said it would not meet third-quarter expectations of 33 cents per share on revenue of $11.3 billion when it reports Nov. 13. It still expects to earn about $2.00 per share for the year on strong Christmas season sales.
Target shares closed Monday at $38.80, up 24% for the year.