Target's November Sales Decline

Target Corporation ( TGT - Analyst Report ) , the operator of general merchandise and food discount stores in the United States, registered a 1% decline in comparable store sales (comps) for November 2012, reflecting a decrease in comparable-store transactions. Moreover, sales were below an escalation of 1.8% marked in November 2011.

The company witnessed soft sales during the first two weeks of the month, while sales picked up later in the month. Alongside, the company registered weak sales in the Northeast region which was affected by Superstorm Sandy. However, sales remained strong in the south.

Category wise, Target reported solid sales in Food, with health and beauty increasing in the low single-digit. The company stated that sales in home and apparel category decreased in the low single-digit, while hardlines witnessed a decline in the mid single digits.

Year-to-date, Target’s sales augmented 3.8% to $55.8 billion, while same-store sales increased 3.2%.

Minneapolis, Minnesota-based Target Corporation announced that net retail sales for November inched down 0.1% to $6,183 million from $6,191 million reported in the year-ago period.

In general, the November sales data of retailers remained largely affected by the storm as most of the retailers witnessed soft sales during the month. Comps results for retailers such as Macy’s Inc ( M - Analyst Report ) , Nordstrom Inc. ( JWN - Analyst Report ) and Kohl’s Corporation ( KSS - Analyst Report ) witnessed a downfall of 0.7%, 1.1% and 5.6%, respectively.

Going forward, Target’s efficient marketing, multi-channel strategy, innovative product offering, compelling pricing strategy and new merchandise assortments are expected to drive comparable store sales and operating margins over the long term.

We expect the company to gain market share, and believe that the focus on consumable items should boost sales. The company expects low single-digit increase in December comparable store sales.

Currently, we prefer to have a long-term ‘Neutral’ recommendation on the stock. Moreover, Target holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.