So much for Donald Trump claiming credit for the rebound on Wall Street, jobs and the improved tone to the US economy generally since his election in early November.
For US retailers there has been no such rebound – in fact its a bust. Trump naturally is not talking about what is now a disaster of a post-Thanksgiving period which is supposed to be when most US retailers make their most of their money for the year.
Target became the latest (and largest) US retailer to reveal the damage from an indifferent US consumer. On Wednesday it slashed its full year earnings guidance after sales over the all-important holiday shopping season came in weaker than expected.
The retailer said it expects adjusted earnings per share for the year to come in between $US5.00 to $US5.10, down from its previous forecast of $US5.10 to $US5.30.
Shares in Target fell 5.7% (to levels before the November 8 election of Trump) as it joined a host of rivals in revealing a weak holiday period.
Department store operators Kohl’s, Macy’s (which is sacking 10,000 staff and closing stores as well) Sears, JCPenney, luxury jeweller Tiffany (whose 5th Avenue store in New York is next door to Trump Tower and has been hit by traffic restrictions) and bookseller Barnes & Nobles have all reported that same store sales fell over the holidays.
On Tuesday, Toys’R’Us Inc. also posted a disappointing quarter, with same-store sales down 2.5% in the US. for November and December.
Toys’R’Us CEO David Brandon said toy sales started to slow after a promising results during the week of Black Friday, and that rivals started promoting heavily to compensate, causing the company to miss its forecasts. The challenging outlook for the retail sector has prompted both Neiman Marcus and Claire’s to pull their IPOs this month.
Much of the adjustments at Target appeared to be the result of lacklustre trading in the current quarter. Like-for-like sales fell 1.3% over November and December.
Sales at stores open at least a year fell 3% during November and December. Target said online revenue jumped more than 30%, but still accounted for just a fraction its total business, so overall comparable sales are expected to fall for the quarter.
Now the company says it now expects same store sales for the fourth quarter to drop between 1% and 1.5%, compared with its prior guidance of -1% and + 1%. Adjusted EPS for the quarter will also be affected, and is projected to come in at 10 to 30 cents a share lower at $US1.45 to $US1.55.
“While we were pleased with Black Friday sales, December digital sales growth of more than 40 percent and continued strength in our Signature Categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores,” according to Brian Cornell, Target chairman and chief executive.
The company is due to release its fourth quarter results on February 28.
