Target Profit Declines as Consumers Curb Spending
By Lauren Coleman-Lochner
Target Corp., the second-largest U.S. discount retailer, said first-quarter profit fell after shoppers curbed purchases of clothing and home goods.
Net income dropped 7.5 percent $602 million, or 74 cents a share, from $651 million, or 75 cents, a year earlier, Target said today in a statement. Revenue advanced 5.4 percent to $14.8 billion.
Consumers contending with rising fuel and food costs have cut spending on the more profitable jewelry, home goods and clothing Target sells in favor of food and pharmacy items. At the same time, larger competitor Wal-Mart Stores Inc. is upgrading its general merchandise and vying for shoppers with discounts on groceries and drugs.
‘‘Their core customer is still sensitive to the economy, price increases, the price of gas, and a lot of items at Target are discretionary purchases,'' said David Abella, who helps manage $2.5 billion in assets, including Target shares, for Rochdale Investment Management LLC in New York.
Twenty-one analysts surveyed by Bloomberg estimated profit of 71 cents a share, on average.
Target also said it completed the $3.6 billion sale of 47 percent of its credit-card loans to JPMorgan Chase & Co yesterday.
Target advanced 7 cents to $54.99 at 9:33 a.m. in New York Stock Exchange composite trading. Before today, the shares rose 9.8 percent this year.