Target chairman/CEO Brian Cornell took Apple to task during a second-quarter earnings call today, blaming an innovation lull at the tech giant for much of his company’s comp-sales softness.
The No. 2 discount chain reported a 1.1 percent comp decline in its second quarter ended Aug. 1. Nearly two-thirds of the decrease was attributable to CE, whose comps fell by the double digits, and about a third of that was attributable to Apple products, whose comps sank by more than 20 percent, Cornell said.
“We have to improve electronic[s] performance,” the former Sams’ Club, Michael’s and PespiCo chief exec told analysts on the call. “It was a significant drag … and Apple played a significant role there.
“We over-indexed with Apple products,” he continued. “Our guests come to us looking for those products. They are looking for the newness and the innovation.”
Cornell noted in response to an analyst’s question that the problem extends beyond iPhone alone, and is “a broader story across the [Apple] product suit.”
To remedy the situation, Target is working with Apple and other CE vendors “to evolve our assortment and accelerate innovation,” he said.
Specifically, recently appointed chief merchandising officer Mark Tritton made facetime with Apple an early priority, Cornell said, and reviewed roadmaps and merchandising strategies to ensure “that we are putting the right plans together for the back half of the year; that we are ready to capitalize on their new innovation that they will be bringing to market."
Target’s total sales fell 7.2 percent during the quarter, to $16.2 billion, and net earnings slid 9.7 percent, to $680 million.
In a statement, Cornell said the company exceeded its earnings projections amid “a difficult retail environment,” and will continue to invest in new store formats, digital capabilities, the in-store experience, and its four core product categories — style, baby, kids and wellness — which only tangentially touch on CE.
Hat tip to Seeking Alpha.