Before the market opened on Wednesday, shares of Target Corp. TGT, -6.71% fell 7.7%, hitting a three-month low. This came after the discount retail giant reported a fiscal first-quarter profit that fell short of expectations due to weak sales of non-essential items. Net income dropped from $950 million, or $2.05 a share, in the same quarter last year to $942 million, or $2.03 a share, this year.
That was less than the $2.06 earnings per share that FactSet thought would happen. Total sales went down 3.1% to $24.53 billion, which was just above the $24.52 billion average predicted by FactSet.
Same-store sales also went down 3.7%, which was in line with what was expected. The gross margin went up from 26.3% to 27.7% because lower costs more than made up for higher promotional markdown rates. The company thinks that adjusted EPS for the second quarter will be between $1.95 and $2.35, which is close to the $2.20 consensus estimate from FactSet. It kept its adjusted EPS forecast for the full year at $8.60 to $9.60 and said it now expects same-store sales to be flat to up 2%, up from its previous forecast of “a modest increase.” The stock has gone up 9.4% so far this year as of Tuesday.
The Consumer Staples Select Sector SPDR ETF XLP, -0.15% has gone up 8.8%, and the S&P 500 SPX, -0.03% has gone up 11.6%.
