The Supply Side briefs: Target’s caution, Amazon, J Crew go outside the box

• Target gives cautious forecast, lighter profits
Another big box discounter warned of cautious consumer spending on Wednesday (Aug. 22) as the retailer’s second quarter profits narrowly beat estimates, while overall Target sales fell a little short of expectations.

Target earned $611 million, or 95 cents per share, in the fiscal second quarter ended August 3. Profits were down from $704 million, or $1.06 per share, a year earlier. Including the effects from opening Canadian stores but excluding other items, Target earned 97 cents per share, one penny more than analysts expected.

Second-quarter sales rose 4% to $17.12 billion, missing the analysts' forecast of $17.26 billion. Same-store sales rose 1.2%, below analysts' estimate of a 2.1% increase and its own forecast of a 2% to 3% gain.

Target said it doesn't see a meaningful pickup in same-store sales in the U.S. the rest of this year. The retailer gave a 1% forecast down from the 2% to 2.5% prior estimates.

Executives note the payroll tax increase is still a factor and the "crowding out" effect of a strong automobile and industry is in play.

Consumers who have purchased large ticket items such as automobiles in recent months are likely spending less on other discretionary goods. The retailer said food and healthcare sales were strong in the quarter, while women’s apparel was sluggish.

Things to watch at Target include:
• Same-day pickup of online orders which is coming in the third quarter;

• Lower weekly pricing in an effort to drive traffic, which was lighter in the recent quarter; and

• Losses in Canadian operations through the rest of this year, amid fluctuating margins.

• Amazon to sell magazine subscriptions

Amazon continues to blur the lines between retailer and publisher signing a deal with Condé Nast that will allow consumers to buy and renew print and digital magazine subscriptions on the Amazon site.



Not all brands will be immediately available but the deal does include: Vogue, Glamour, Bon Appétit, Lucky, Golf Digest, Vanity Fair and Wired to start with.

Other titles like The New Yorker, Allure and GQ, are expected to be brought on later in the year, the company said.

• J.Crew pins catalog

Multichannel apparel retailer J. Crew Group Inc. said it recently debuted its September catalog on Pinterest for the first time, using social media to connect with is loyal consumer base.


The pins feature images, not pages, from the catalog on the social network.


The items were posted a few days prior to the Aug. 22 availability date. But the retailer did allow consumers to pre-order.