Target Q1 Adj. Profit Beats View, But Sales Miss; Sees Q2 Earnings Below View

(RTTNews) - Discount-store operator Target, Inc. (TGT) on Wednesday reported a slight decrease in profit for the first quarter from last year on lower sales. However, adjusted earnings per share beat analysts' expectations, while revenues missed their estimates.

Looking ahead, the company provided earnings guidance for the second quarter below the Street view, citing the recent slowdown in consumer trends, but believes its earnings outlook for fiscal 2016 is achievable.

The Minneapolis, Minnesota-based retailer reported net earnings for the first quarter of $632 million or $1.05 per share, compared to $635 million or $0.98 per share in the prior-year quarter. The latest quarter had lower number of average shares outstanding.

The latest quarter's earnings per share from continuing operations reflects $261 million of pre-tax early debt retirement losses, costs related to the sale of the pharmacy and clinic businesses to CVS Health and the resolution of income tax matters.

Excluding items, adjusted earnings from continuing operations for the quarter were $1.29 per share, compared to last year's $1.10 per share.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.20 per share. Analysts' estimates typically exclude special items.

Sales for the quarter declined 5.4 percent to $16.20 billion from $17.12 billion in the same quarter last year. Analysts' consensus revenue estimate was $16.32 billion.

Comparable sales growth for the quarter was 1.2 percent, driven by growth in both traffic and basket. Comparable digital channel sales grew 23 percent and contributed 0.6 percentage points to comparable sales growth.

However, the company noted that the increase in comparable sales was more than offset by the impact of the sale of the pharmacy and clinic businesses.

Looking ahead to the second quarter, Target forecast adjusted earnings of $1.00 to $1.20 per share, and comparable sales of flat to down 2 percent. The Street expects earnings of $1.36 per share for the quarter.

For fiscal 2016, the company believes the adjusted earnings per share within its prior guidance range is achievable. The company had earlier forecast full-year adjusted earnings in a range of $5.20 to $5.40 per share. The Street is currently looking for full-year earnings of $5.26 per share.