American retailer chain Target lowered its targets for profit in 2017, saying that had to invest in its stores and reduce prices in order to repay consumers. The chain, which reported a decline in sales and profits during the quarter including Christmas, said that profit in 2017 will decrease by 25% below the forecasts of Wall Street.
Shares of the American retailer chain Target fell by 13$ to 58.18 USD in early trading.
“We will accelerate investment in intelligent network of physical and digital assets”, said the CEO of American retailer chain Target, Brian Cornell. “We will also invest in lower gross margins to ensure that our prices are clear and competitive every day”, added he. Cornell said that the company will provide further details of its plans at a meeting with financial analysts.
In 2017, Target announced that predicts adjusted earnings per share from 3.80 to 4.20 USD. The analysts expected 5.34 USD per share. The company predicted a decline of between 1% and 3% on comparable sales.
Target made the announcement after January the company cut its guidance for the quarter due to weaker than expected comparable sales during the holiday season, giving him the weaker traffic in stores of the company.
For the fourth quarter the comparable sales at Target fell by 1.5%, which is at the lower end of the range in the guidelines of the company. Cornell said that the results “reflect the impact of rapidly evolving consumer behavior, resulting in a very strong digital growth, but unexpected weakness in the stores”. The online sales have increased by 34%, but traffic in physical stores grew by only 0.2%.
Overall for the quarter ending on January 28, Target reported a profit of 817 million USD, or 1.45 USD per share, compared to 1.43 billion USD, or 2.32 USD per share, for the same period of the previous year. The analysts had expected 1.51 USD per share.
The sales of the US retailed fell by 4.3% to 20.69 billion USD, as analysts had expected 20.7 billion USD.