Target Corp., the second-largest U.S. discount retailer, said first-quarter profit will be less than it previously expected as cold weather hampered sales of spring merchandise.
Adjusted profit in the current quarter will be less than the low end of its forecast range of $1.10 to $1.20 a share, the Minneapolis-based company said today in a statement. The average of 10 analysts' estimates compiled by Bloomberg was $1.11 a share when the statement was released.
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Target, already struggling with a weaker consumer-spending environment that's taking a toll on U.S. retailers, has been facing colder-than-normal temperatures that are hurting sales of spring merchandise. The retailer won't be the last to be hit by the combination of the unsteady economy and the cooler weather, said Ken Perkins, president of researcher Retail Metrics.
"Target's warning is just another example amongst many who have guided first-quarter earnings lower, and I would expect to see more," Perkins, who's based in Swampscott, Massachusetts, said today in an interview.
Target today maintained its forecast for full-year profit of $4.85 to $5.05 a share.
The shares fell 1.3 percent to $67.60 at 9:08 a.m. in New York. Target had gained 16 percent this year through yesterday, compared with an 8.8 percent increase for the Standard & Poor's 500 Index.
While the weather often serves as an excuse for disappointing sales, retailers have a legitimate claim this year as temperatures have been colder than usual following an abnormally warm spring last year, Perkins said.
"It has been tough for Target to get off to a good start because it has been so cold in the Midwest and Northeast," Perkins said.
Target said when it reported earnings for its fourth quarter, which ended Feb. 2, that higher payroll taxes and waning consumer confidence led to tepid sales. The company said today that same-store sales, which rose 0.4 percent in the fourth quarter, will be little-changed in the current quarter.
Commerce Department figures released last week showed retail sales in the U.S. dropped 0.4 percent in March, the biggest drop since June. The sales data prompted economists to trim consumer-spending forecasts from what was projected to be the best quarter in two years.
Family Dollar Stores Inc. cut its profit forecast for this year earlier this month, saying cold temperatures and shoppers holding back on purchases had hurt results.