US retailer Target Corp. posted a 13% drop in first-quarter profit today (20 May), but beat analysts’ estimates as a result of cost-control measures.
Target, which is locked in a proxy battle with activist investor William Ackman, saw its net earnings fall to US$522m for the quarter ended 2 May, compared with $602m in the previous year.
Earnings per share in the first quarter decreased 6.8% to $0.69 from $0.74 in the same period a year ago.
Analysts, on average, had been expecting the company to earn 60 cents per share, according to Reuters Estimates.
Sales however, edged up by 0.4% to reach $14.4bn due to the contribution from new store expansion. Comparable-store sales fell 3.7%.
“Our first-quarter earnings per share reflect disciplined execution of our strategy in a difficult environment,” said Gregg Steinhafel, chairman, president and CEO. “In our retail segment, we continue to experience strong positive comparable store sales results in our traffic-driving food and commodity categories, and the profitability of our first quarter sales was higher than expected due to outstanding gross margin and expense rate performance.”
Target is in a long-running battle with Pershing Square, the hedge fund led by activist investor Ackman, who wants to nominate himself and four others to the retailer’s board as he looks to revitalise the business.
The boardroom struggle has rumbled on this month with the discount retailer insisting its nominees to the board would be best for the business.
An AGM is scheduled for 28 May.
For coverage of Target Corp.’s subsequent Q1 conference call, click here.