Target (TGT) has long been loved by people because it's a fun place to shop. At least it used to be a fun place to shop.
Customer satisfaction with the total shopping experience at Target has declined for a fourth consecutive period, according to a new survey of 2,500 people done by investment bank Cowen. Declines in customer satisfaction were seen across the board, led by drops in customer service, merchandise selection and product quality. Overall, Cowen says customer satisfaction at Target plunged 383 basis points to 66.7%.
It appears unhappy Target shoppers could be taking their business elsewhere.
On Wednesday, the discount retailer reported first quarter same-store sales fell 1.3%. While that was better than analyst estimates for a 3.6% drop, it marked the fourth straight quarterly decline in the key retail measure. Walmart's U.S. business, on the other hand, saw same-store sales gain 1.4% in the first quarter on the back of efforts to slash food prices and bolster customer service.
Wall Street shrugged off Target's sales choppiness, for now.
Target shares rose 0.9% to $55.04 in Wednesday trading as earnings beat forecasts, due mostly to expense timing and other cost savings. Shares gained as much as 2% on Thursday. First quarter adjusted earnings came in at $1.21 a share, hammering projections for 89 cents a share. Total sales clocked in at $16.02 billion, surpassing forecasts for $15.64 billion.
The company left its full year profit outlook of $3.80 to $4.20 a share unchanged, but acknowledged the better than expected start to the year may lead it to finish above the range's midpoint.
Target CEO Brian Cornell conceded on a conference call that the company has a ways to go before it's back to full health. "We aren't doing any high fives in the room," said Cornell.
"Target management understands our fears: physical store comps being down 2.2% driven by declining traffic gives the need to intensify changing customer perception that you can "pay less" at Target as the retailer is likely losing share on everyday essentials, as customers turn to Amazon (AMZN) , Walmart and other places," says Cowen analyst Oliver Chen.
"Our view is that the company may need to focus on optimizing customer satisfaction."
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Editor's Pick: Originally published May 18.