Target Cuts Outlook as Profits Fall 29%
Target Corporation on Wednesday reported disappointing first-quarter earnings, chalking up the results in large part to a drawn-out winter.
The Minneapolis-based retailer also lowered its full-year outlook, a move that sent its stock price down.
Target said that profits totaled $498 million, or $0.77 per share, for the quarter that ended May 4, down 28.5 percent from $697 million, or $1.04 per share, during last year’s first quarter.
Adjusted earnings per share—which exclude items related to Target’s recent expansion to Canada and the retirement of some debt, among other things—totaled $1.05, down 5 percent from $1.11 during the first quarter of 2012.
Revenue, meanwhile, ticked up 1 percent to $16.7 billion, but sales at stores open at least a year slid 0.6 percent.
Including the effects from opening Canadian stores, but excluding losses related to the early retirement of debt and gains from the sale of its credit card business, Target earned $0.82 cents per share—missing analysts' expectations of $0.85 per share, according to a report by Reuters.
“Target’s first-quarter earnings were below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weather-sensitive categories,” Chairman, President, and CEO Gregg Steinhafel said in a statement.
Looking forward, Target said that it expects its full-year adjusted earnings to be $4.70 to $4.90 per share. That's down from its previous forecast of $4.85 to $5.05 per share.
Shares of Target’s stock were trading down about 4.6 percent at $67.95 Wednesday afternoon.
Target’s disappointing first-quarter earnings, however, should not come as a significant surprise: Last month, the company warned that profits would likely fall short, due to slow sales in “seasonal and weather-sensitive categories.”
Steinhafel said that the company will continue to invest in its Canada operations and its “digital channels.”
Target entered Canada earlier this year and currently operates 48 stores in the country. The 24 Canadian stores that Target opened during the first quarter generated $86 million in sales during the quarter.
Target has recently taken several steps to bolster its technology business. It recently opened a “Technology Innovation Center” in San Francisco, which is meant to provide the company with greater access to innovative technology start-ups and experts in e-commerce. It also partnered with Facebook to launch a new website called “Cartwheel” and teamed with tech magazine Wired to feature an in-store and online assortment of tech gadgets selected by the magazine’s editors.
Additionally, the company recently partnered with social media site Pinterest, whereby so-called “pins” about the brand will contain additional descriptive information, according to a report by Mashable, and Target recently began testing a new media-streaming service with its own employees, an product akin to Netflix or Hulu.