Target (TGT) reported sales for January that missed analyst estimates by a wide margin. Sales for the month improved by a meager 0.5% compared with an expectation for 1.4% growth.

I told you something was amiss at Target. Management does not change strategy without some serious analysis of data and foresight.

In fact, executives are paid big bucks for getting in front of trouble. With years of experience and education, executives must sift through reams of data in order to properly steer the ship.

That is why it pays to listen to management when they set strategy. They are doing so using forecasting and intimate knowledge of the company and its operations in the market.

Investors can glean much from watching this process unfold.

The company announced it would slow domestic growth, focusing on smaller stores with an emphasis on higher-volume, lower-priced goods. In addition, the company said it would be seeking growth opportunities in Canada, Mexico and Latin America.

It is that international expansion that I find interesting.

Target competitor Costco has been enjoying big gains in sales overseas. That trend continued in January, and you can bet Target is taking notice.

From a valuation standpoint, Costco trades for a premium compared with Target. Part of the reason for the gap is related to the difference in international presence.

In the long term, investors could argue that Target is the play, given the opportunity to expand overseas. Unfortunately the company was vague in describing its plans other than to say that growth would occur over a number of years.

As such, does it make sense for investors to stay the course with Target?

I would not. There is a crumbling happening here that has yet to fully unfold. Costco experienced similar troubles in 2009 when month after month the company disappointed. I think the same will happen with Target.

Interestingly, a discount retailer that already has an international presence is PriceSmart. I made that stock one of my Top 10 Stocks for 2010. Here are 5 reasons to buy PriceSmart.

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