US retailer Target Corp. said today (18 May) that it posted weaker than expected sales in its retail segment during the company’s first quarter.
Target recorded profit growth for the quarter but it was driven by “stronger than expected profitability” in its credit card sector. Chairman, president and CEO Gregg Steinhafel said the profits “offset the impact of weaker than expected” retail sales.
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In the quarter ended 30 April, Target posted a 2.8% increase in retail sales to reach US$15.6bn, driven by a 2% increase in comparable-store sales and the contribution from new stores.
EBIT fell 4.2% to $1.1bn, while EBIT margin declined to 6.8% from 7.3% in the same quarter of the previous year.
The company attributed the decline in gross margin to 30.4% from 31.3% in the prior year to the impact of its PFresh remodel programme and its 5% REDcard Rewards initiative.
Target booked net earnings of $689m for the first quarter, an increase of 2.7% on the year.
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