Traverse City Record-Eagle

Business

August 22, 2013

Target's 2Q profit falls 13% on shopper caution

NEW YORK (AP) — Target Corp. on Wednesday became the latest in a string of companies that have lowered their business expectations as they contend with an uncertain economy.

The cheap chic retailer muted its annual profit forecast after reporting a 13 percent drop in second-quarter profit as its expansion into Canada — its first foray outside the U.S.— has proven more challenging than it expected.

But the company also is contending with mixed economic signals that have caused it and its rivals, from Wal-Mart Stores Inc. to Macy’s, to temper their forecasts for the remainder of the year. While jobs are easier to get and the housing market is gaining momentum, these improvements have not been enough to get most Americans who are facing stagnant wage growth to spend more freely.

“As we monitor the economy and consumer sentiment, we continue to see a mix of signals in which emerging optimism is balanced with continuing challenges,” said Gregg Steinhafel, Target’s chairman, president and CEO, in an earnings call with analysts.

Target earned $611 million, or 95 cents per share, in the quarter ended Aug. 3. That compares with $704 million, or $1.06 per share, a year earlier. Excluding certain items related to its expansion into Canada, the retailer earned $1.19 per share.

Total revenue reached $17.12 billion, up 2 percent from $16.45 billion in the quarter. Analysts expected earnings of 96 cents per share on revenue of $17.28 billion, according to FactSet.

Shares fell 3.6 percent, or $2.45, to finish at $65.50.

Revenue at stores open at least a year — a gauge of a retailer’s health — rose 1.2 percent. That’s below the 1.9 percent analysts had expected.

Like Wal-Mart, Target said that its customers continue to struggle with a 2 percentage-point increase in the Social Security payroll tax since Jan. 1. That means take-home pay for a household earning $50,000 a year has been sliced by $1,000.

Text Only

the BIZ

AP Video
U.S. Paratroopers in Poland, Amid Ukraine Crisis US Reviews Clemency for Certain Inmates Raw: Violence Erupts in Rio Near Olympic Venue Raw: Deadly Bombing in Egypt Raw: What's Inside a Commercial Jet Wheel Well Raw: Obama Arrives in Japan for State Visit Raw: Anti-Obama Activists Fight Manila Police Motels Near Disney Fighting Homeless Problem Michigan Man Sees Thanks to 'bionic Eye' Obama to Oso: We'll Be Here As Long As It Takes Bon Jovi Helps Open Low-income Housing in Philly S.C. Man Apologizes for Naked Walk in Wal-Mart New Country Music Hall of Fame Inductees Named 'Piles' of Bodies in South Sudan Slaughter SCOTUS Hears Tv-over-Internet Case Chief Mate: Crew Told to Escape After Passengers
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide