Minneapolis — Target reported relatively flat sales and a 28 percent drop in net earnings during its first fiscal quarter, ended May 4.
First-quarter net earnings were $498 million, down from the prior year’s $697 million. Net sales were $16.7 billion, up 1 percent from the prior year’s $16.5 billion.
In a prepared statement Gregg Steinhafel, chairman, president and CEO of Target, said, “First-quarter earnings were below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weather-sensitive categories. While we are disappointed in our first-quarter performance, we remain confident in our strategy, and we continue to invest in initiatives, including Canada, our digital channels and CityTarget, that will drive Target’s long-term growth.”
In its U.S. segment, first-quarter sales increased 0.5 percent to $16.6 billion, from $16.5 billion last year, reflecting a 0.6 percent decline in comp-store sales combined with the contribution from new stores.
Segment earnings before interest expense and income taxes (EBIT) were $1,239 million in the first quarter of 2013, a decrease of 7.5 percent from $1,340 million in 2012.
As a reminder, following the sale of the U.S. credit card portfolio in March 2013, Target’s historical U.S. retail segment and U.S. credit card segment results were combined to form a new U.S. segment. Selling, general and administrative (SG&A) expenses in the new U.S. segment include income from the profit-sharing arrangement with TD Bank Group, net of servicing expenses. In prior periods, credit card revenues, net of credit card expenses, from the historical U.S. credit card segment have been classified within U.S. segment SG&A expenses, Target said.
Target operates 1,832 stores: 1,784 in the United States and 48 in Canada.