MINNEAPOLIS–Target posted “disappointing” sales dues to the weak economic environment, with home pulling in “essentially flat” results, said Gregg Steinhafel, chairman and chief executive officer, during a conference call with analysts.
Target’s net earnings fell to $602 million for the first quarter ended May 3, compared with $651 million in the year-ago quarter.
Sales grew 5.0 percent in the first quarter to $14.3 billion, due in part to store expansion. That was offset by a 0.7 percent decline in comparable-store sales.
Retail segment earnings before interest expense and income taxes fell 2.2 percent to $959 million.
The retailer is now reporting in two business segments, retail and credit card, in light of Target’s sale of 47 percent of its credit card business to JPMorgan.
In home, replacement or “accessories” businesses, such as pillows and sheets in bedding, and patio seating cushions in seasonal furniture, are selling well, while bedding ensembles and patio sets are not, Steinhafel said.
In home, Target is facing inflationary pressures in the 5 to 11 percent range. The retailer is negotiating with suppliers to stave off price increases, delay them, “and in some cases, pass them along in the marketplace as a last resort,” Steinhafel said.
“The consumer is very cash-strapped right now,” Steinhafel said. “We’re accentuating the ‘pay less’ side of our brand promise” through endcap promotions and circulars that emphasize sale merchandise, he said.