Target Q1 Sales Better Than Expected Amid 'Choppy' Retail Climate, Says CEO

Comparative sales were down 1.3 percent at Target in Q1 as revenue slipped 1.1 percent to $16 billion from $16.2 billion a year ago, it reported Wednesday. Results were “better than our expectations,” said CEO Brian Cornell, as softness at the beginning of the quarter improved toward the end of the term ended April 29. But “we’re not doing high fives,” Cornell said. The company has “a lot of work to do.” Electronics benefited in the quarter from “healthy growth” in Apple Watch and iPhone, said Chief Merchandising Officer Mark Tritton. Electronics delivered a mid-single digit comp sales increase in the quarter, the strongest in three years, he said. Target is beginning a same-day delivery test in its Tribeca store in New York, said Chief Operating Officer John Mulligan. Shoppers will choose at checkout whether to have orders delivered in a delivery window of their choice later in the day, during the trial, which will reveal potential operational challenges as the company prepares similar rollouts to other markets, he said. The retailer guided to a low-single-digit decline in comparable store sales for Q2, and still expects a low single-digit drop for the full year in a “very choppy environment,” Cornell said. He repeated Target is in an early stage of a multiyear effort toward long-term growth and profit but warned of “multiple headwinds in the current landscape.” A 0.8 percent rise in digital channel comp sales helped offset a 2.2 percent decline in stores, which accounted for 95.7 percent of revenue vs. 96.5 percent in the year-ago quarter, said the company. Net earnings were $681 million vs. $632 million. Shares closed up less than 1 percent to $55.04.