NEW YORK - The grim news from U.S. retailers accelerated yesterday as Target Corp. said its first-quarter earnings fell 8 percent.
The Minneapolis discount retailer blamed weaker-than-expected sales, particularly of non-necessities such as lawn furniture.
Meanwhile, Saks Inc., the operator of luxury chain Saks Fifth Avenue, posted a 66 percent profit rise - but that was compared with a first quarter last year that was hobbled by onetime charges. Saks said heavy discounting hurt profit margins in this year's quarter.
Target's president and chief executive officer, Gregg Steinhafel, told investors in a conference call yesterday that the discounter was stressing its sale prices more in its advertising to grab a bigger share of the $107 billion in tax-stimulus checks being distributed to U.S. households.
"We're just very mindful that the consumer is very cash-strapped right now and is looking for good values. They're looking for more sale merchandise, and we are responding," he said.
Ken Perkins, president of RetailMetrics L.L.C., a research company in Swampscott, Mass., expects that stimulus checks will not provide merchants with a big lift, and said he wondered where the impetus lay for a consumer-spending rebound.
Target reported a profit of $602 million, or 74 cents a share, in the three months ended May 3 compared with $651 million, or 75 cents a share, a year earlier. Analysts surveyed by Thomson Financial expected 71 cents a share.
Revenue rose 5 percent to $14.8 billion. Analysts had predicted $14.92 billion.
The company said profit margins declined slightly from a year earlier because sales grew faster in low-margin categories, which generally includes food and essentials such as paper towels.
Sales at stores open at least a year, a key retail measure, fell 0.7 percent.
Saks earned $18.27 million, or 13 cents a share, for the three months ended May 3. That compares with $11.04 million, or 7 cents a share, a year earlier. The year-earlier period included 12 cents a share in onetime charges against earnings.
Revenue rose to $862.35 million from $792.75 million a year earlier. Same-store sales rose 8.4 percent.
Analysts surveyed by Thomson Financial expected higher profit of 17 cents a share in the latest period on lower revenue of $841 million.