Target struggled to sell electronics in the second quarter, especially Apple products.
The retailer on Wednesday reported earnings that were stronger than expected. But it lowered its outlook for the rest of the year as it plans for a “challenging environment,” according to CEO Brian Cornell.
There was “meaningful pressure in electronics” during the second quarter, and a decline erased 70 basis points from overall sales at stores open for at least one year, he said.
“Notably about a third of this pressure was driven by Apple products which were down more than 20% in the quarter,” Cornell said.
He added that the weakness was not confined to one particular Apple product, and the company is working with Apple and vendor partners to grow sales.
But iPhone sales have taken an unusual turn lower everywhere. Earlier this year, Apple acknowledged that iPhone sales fell for the first time in the device’s nine-year history.
The company is expected to announce a new iPhone in September. According to reports and leaks, it will look very similar to the iPhone 6s. The notable changes will likely be an upgraded camera and the removal of the headphone jack.
A more drastic redesign is expected in 2017, a decade after the iPhone first launched. And meanwhile, people may not find convincing reasons to upgrade in the fall.
But Target is hoping that the new phones, an overhauled MacBook Pro, and other products also lift sales.
“Our guests come to us looking for those products,” Cornell said. “They’re looking for the newness and the innovation, and we’re putting together plans with Apple and our merchandising teams to make sure we’re ready to take advantage of that in the back half of the year.”