Comparable store sales for May 2008 have decreased 0.7% from the previous month. Most of the decline can be attributed to sales volume decline, but some of this was offset with average sale size increases. Some of the weaker categories were men's apparel, jewelry, and lawn/patio.
Target, one of the last Big Box retailers to claim entire ownership of its credit card interest, has made the decision to sell about 40% interest in its credit card receivables to JP Morgan.
Target has been struggling to sell its credit card business with current credit market conditions being below desirable. Target's public struggle with the sale have hurt investors' confidence in the company, which saw its shares hit a 52 week low during trading Thursday December 20th.
Target reported a drop in their third quarter earnings, despite seeing total revenue grow about 9.3% compared to the same quarter of 2006. Revenue growth was driven primarily by new store openings combined with a 3% increase in same store sales growth and 19% growth in Target credit card revenues. However, despite growing revenues, sales in high-margin product categories such as apparel and home goods fell, leading to a 4.4% decrease in net profit in the quarter. Target’s management linked the falling sales in high-margin products to the struggling macroeconomic conditions that have hurt other retailers as consumers are less confident in the economy.
The decline in the subprime lending market causes Target's stock price to fall 5%, as investors feared that financial troubles would slow retail sales. This fear is seemingly corroborated by a report from the U.S. Commerce Department, reporting lower than expected Q1 sales growth at U.S. retailers.
Target's stock price jumps up after the company reports a 19% surge in fiscal fourth-quarter earnings. The better-than-expected earnings were spurred largely by strong credit card operations revenue.
The retail industry picks up as Q1 sales start strong. The better-than-expected growth in sales is attributed to a rise in consumer spending prompted by weak crude oil prices.
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