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What Went Wrong At Target?

No retailer has been hit harder by recent trends than Target (NYSE:TGT). The iconic discounter’s cult-like following was not able to save it from a dramatic drop in revenues.

On April 30, 2016, Target reported a revenue figure that was $920 million lower than the number for January 2016. Target reported TTM revenues of $73.78 billion at the end of the fourth quarter of 2015 that fell to $72.86 billion at the end of the first quarter of 2016.

It looks as if all the revenue growth Target enjoyed in 2015 has reversed, and this time nobody can blame Canada. Between October 2014 and October 2015, Target’s TTM revenue grew by $2.84 billion, rising from $71.07 billion to $73.91 billion. That all but made up for the losses north of the border, but now it seems to have dramatically reversed.

The latest earnings figures show us that Target has suffered two straight quarters of revenue losses – fourth 2015 and first 2016. During that period, its revenue has declined by $1.05 billion. The decline is not only large it is accelerating.

Discount is doing Great, Target is not

What is even troubling is that it is coming at a time when other discounters – as diverse as Wal-Mart (NYSE:WMT), Dollar General (NYSE:DG) and Costco Wholesale (NASDAQ:COST) – are reporting revenue growth.

During the May 26, 2016, earnings conference call Dollar General CEO Todd Vasos said that his company’s first-quarter sales increased by 7%, and its same-stores sales increased by 2.2%. At Wal-Mart the TTM revenue grew by $1.08 billion during the first quarter of 2016, rising from $482.13 billion in January to $483.21 billion in April. Costco’s TTM revenue rose by $720 million between November 2015 and February 2016.

It looks as if the discount segment is doing well but Target is not. What is going on here, what is Target doing wrong that other retailers are getting right?

Read more at Seeking Alpha

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