Target and Saks improve sales
MINNEAPOLIS -- Target's profits were as good as analysts expected, and Saks lost less money than expected.
Investors have been nervously watching for Target's results since last week, when bigger rival Wal-Mart Stores posted a higher quarterly profit but cut its 2007 earnings forecast because of weak consumer spending.
Target wasn't immune to that weakness.
"As we look to the remainder of the year, we are planning our business more conservatively to reflect this climate" along with a fiscal year that was one week longer last year, President Gregg Steinhafel said on a conference call.
Steinhafel said they'll be especially careful to manage inventory on discretionary goods like clothing and seasonal items.
Analyst Todd Slater of Lazard & Co. said it makes sense any downturn in consumer spending would hit Wal-Mart harder.
"I think the climate is significantly tougher for the most moderate (income) households, which probably make up a larger percentage of Wal-Mart's traffic than it does Target's," he said.
For the quarter that ended Aug. 4, Minneapolis-based Target said it earned $686 million, or 80 cents per share, up 12.6 percent from $609 million, or 70 cents per share, a year ago. Revenue rose 9.5 percent to $14.62 billion from $13.35 billion a year ago.
Analysts surveyed by Thomson Financial were expecting 80 cents per share on revenue of $14.67 billion.
Target said same-store sales rose 4.9 percent for the quarter.
Meanwhile, upscale department store operator Saks Inc. reported a narrower loss as its same-store sales jumped 13.2 percent and its margins expanded on reduced markdowns.
The company reported a second-quarter loss of $24.6 million, or 17 cents per share, compared with a loss of $51.9 million, or 38 cents per share, during the same period last year. Second-quarter sales jumped 15 percent to $694.1 million, from $603.8 million in the prior-year period.
Saks' loss would have been 14 cents per share if not for one-time charges. On that basis, Thomson Financial analysts were expecting a loss of 15 cents per share on sales of $684.6 million.