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Target's holiday season wasn't as successful as it hoped

After a year of gains, Target's holiday performance disappointed.

Target shares dropped on Wednesday morning after the retailer announced that its holiday sales were more sluggish than expected.

After enjoying a banner year with quarter after quarter of sales growth, Target said that its comparable sales over the busy Christmas period only rose 1.4 percent.

This is well below the 3-4 percent it had predicted for itself, and in pre-market trading Wednesday Target's share price, which surged throughout 2019, dropped by 6 percent.

Much of its struggles came in electronics, sales of which dropped 6 percent, while there was a 1 percent dip in the home department, while sales of toys remained flat.

Because these categories account for a much higher portion of sales during the holidays, they have a larger impact on our overall sales growth as compared to the rest of the year

Digital sales meanwhile grew by 19 percent, which Target says was boosted by its new suite of same-day fulfillment services – namely order pick up, drive up and delivery via Shipt.

These same-day services accounted for three-quarters of Target's digital sales growth.

There were also strong sales in apparel, up 5 percent, beauty, up 7 percent, and food, up 3 percent.

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But with electronics, toys and home Target's bread and butter during the festive period, the lack of sales growth in these departments had an outsized impact on overall performance.

"We faced challenges throughout November and December in key seasonal merchandise categories and our holiday sales did not meet our expectations," Target CEO Brian Cornell said.

"However, because of the durability of our business model, we are maintaining our guidance for our fourth quarter earnings per share. We also remain on track to deliver historically strong full-year results in 2019, including comparable sales growth of more than 3 percent and record-high EPS (earnings per share) reflecting mid-teens growth compared with last year."

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