Target earnings fall 4 percent in 3rd-qtr, missing Wall Street forecasts

MINNEAPOLIS -- Discount retailer Target Corp. said Tuesday that third-quarter earnings dipped 4 percent, falling short of Wall Street forecasts, as weak sales in high margin categories held down profit despite overall revenue growth.

Target also said its board has authorized a new $10 billion share buyback program.

Third-quarter earnings fell to $483 million, or 56 cents per share, from $506 million, or 59 cents per share, in the prior year.

Quarterly sales grew 9 percent to $14.84 billion, from $13.57 billion in the third quarter of 2006.

Analysts surveyed by Thomson Financial forecast earnings of 62 cents per share on revenue of $14.83 billion. The earnings estimates typically exclude one-time items.

Target shares fell 50 cents to $53.40 in premarket trading.

"Our third quarter earnings were disappointing due to soft sales in our higher margin categories, leading to lower-than-expected gross margin in our core retail operations," said Chairman and Chief Executive Bob Ulrich. Target said its higher margin categories include apparel and home furnishings.

Quarterly same-store sales increased 3.7 percent. Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.