MINNEAPOLIS – Target Corp., the No. 4 U.S. retailer, on Tuesday reported a 6 percent increase in fiscal first-quarter earnings that matched Wall Street's consensus forecast as a decline in consumer spending cut into profit growth.
The company, known for its trendy discount Target stores, said net income for the quarter ended May 5 rose to $254 million, or 28 cents a diluted share, compared with $239 million, or 26 cents a share, a year earlier.
Analysts polled by Thomson Financial/First Call had on average expected a profit of 28 cents a share. Their estimates ranged from 26 cents to 31 cents a share.
Revenues in the quarter rose 7.7 percent from a year earlier to $8.35 billion, helped by a 10.7 percent sales increase at the company's Target stores. Sales at stores open at least a year were 1.7 percent higher than in the same period last year.
"We are pleased with our first quarter results, particularly in view of the strength of last year's performance,'' Chairman and Chief Executive Bob Ulrich said in a statement. "We remain comfortable that we are well-positioned to meet near-term economic and competitive challenges and deliver reasonable growth in earnings per share for the full year.''
Target also said it still expects to achieve its previously stated long-term goal of 15 percent earnings growth.
A number of retailers have seen profit and sales growth slow dramatically from the blistering pace of recent years as the U.S. economy slows and consumers cut back on purchases. Helped by sales of items like food and household cleaners, discounters have generally outperformed department stores in the sluggish environment.
At the Target stores, pretax profits rose 7.7 percent to $502 million, while revenues increased to $6.77 billion from $6.12 billion a year-earlier.
At Target's Mervyn's chain of department stores aimed at the middle market, pretax profits rose 3.9 percent to $48 million, while sales decreased 2 percent to $873 million.
Pretax profits at the more upscale Marshall Field's department store chain dropped 20 percent to $23 million, while revenues fell 4.2 percent to $639 million.
Target shares, which settled at $37.75 on Monday, have outperformed the Standard and Poor's index of mass merchandisers, which includes rival Kmart Corp., by about 14 percent in the last 52 weeks.