The Bull's-Eye Shrinks at Target

The red and white bull's-eye just got smaller at Target (NYSE: TGT  ) , with the retailer slashing its forecasts for September same-store-sales estimates. Is this a sign of things to come, or is it just a one -month aberration?

The softening market has shoppers pulling back the reins on their spending habits, and the revised comps numbers reflect it. For this month, Target now anticipates a 1.5% to 2.5% increase -- quite a distance form the previous guidance of 4% to 6%.

Sure, Target impressed Wall Street last month with its 6.1% increase in comps from July, and it didn't miss its recent quarterly earnings estimates. Its rival Wal-Mart (NYSE: WMT  ) , which embraces the notion of everyday low prices, posted a fairly strong quarter as well. But it isn't the past that has me worried. It's the future expectations that recently have been dwindling while the list of retailers lowering guidance is long and growing.

The Christmas season could be the worst we've seen in five years, and in preparation, companies such as Ross Stores (Nasdaq: ROST  ) have discounted expectations and cited the overall economy as the culprit. The share price at Lowe's (NYSE: LOW  ) , meanwhile, fell 5% on the news that it, too, was lowering its outlook because of a challenging environment.

The New York Conference Board announced today that its consumer confidence number fell significantly from August and sits at the lowest level since the devastating Hurricane Katrina hit the United States in 2005 and oil and gas prices soared. No matter how you look at it, the data suggests that this probably isn't a one-time slip. We're in the midst of weak business conditions, and with the crucial holiday season expected to be anemic, chances for a quick improvement don't look promising.

I like Target, and the fact that it attracts a wider audience makes it less susceptible to feeling a huge impact from the troubling economic environment. But as we're seeing, consumer pessimism seems to be spreading and weighing down on more and more retailers, no matter what income bracket the company targets. Given Target's PEG ratio of 1.15, I think I'd hold off on this one till we get a clearer picture of how the company is holding up in the unfavorable market.