Target blames weather for soggy results

Like rival Wal-Mart, it's pointing the finger elsewhere for its problems while other retailers are coping just fine.

By Jonathan Berr May 22, 2013 10:53AM
Target store in San Bruno, California /Justin Sullivan/Getty Images Shares of Target (TGT) are trading down Wednesday morning after the nation's second-largest retailer reported earnings that disappointed Wall Street. It put the blame on cooler-than-normal weather and higher taxes, the same reasons Wal-Mart (WMT) pointed to for its woes.

Target earned  $498 million, or 77 cents a share, down 40% from $697 million, or $1.04 a share, a year earlier. Sales rose 1% to $16.7 billion. The results lagged analysts' forecasts for profit of 84 cents a share and revenue of $16.8 billion, according to Bloomberg. Worse, Target also cut its earnings outlook for the year.

Target CEO Gregg Steinhafel said the company was "disappointed in our first quarter performance," which he attributed to soft sales in apparel and other weather-sensitive products. He also stressed confidence in Target's strategy, including plans to expand in Canada.

While it's true that cool spring weather doesn't put consumers in the mood to buy summer apparel and that discretionary income is getting squeezed by higher Social Security taxes, that can't be the whole story because other retailers facing the same issues are doing fine.

TJX (TJX) the parent of TJ Maxx and Marshall's, reported on Wednesday that net income rose to $604.8 million, or 82 cents a share, as sales increased 7% to $6.2 billion. The company's earnings guidance was below expectations. TJX's chains have 1,943 locations, and the retailer expects the market to support 2,400 to 2,600 stores, 100 to 200 more than it earlier forecast.

Kohl's
(KSS) profit was $147 million, or 66 cents a share, versus $154 million, or 63 cents a share, a year earlier. That beat the 57 cents a share analysts had forecast. Sales fell 1% to $4.2 billion, slightly lagging the $4.26 billion analysts had expected. Nonetheless, Wall Street pushed up the discount retailer's share price in early trading.

Target, like Wal-Mart, won't be able to blame the weather and taxes for much longer.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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9Comments
May 22, 2013 12:57PM
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Lets see why Target sales are down, the last several times I have tried to shop at Target,I was unable to find someone to help me,TV's were not marked and the employees who were stocking shelves,were blocking aisles with their stock. i could not access several aisles due to the rude employees who think they are the only ones in the store. Well  guess what if you don't allow customers to shop,you don't need to stock shelves because nothing will be sold. If you are open to shop at 8am then don't stock shelves,they should be stocked overnight.
May 22, 2013 11:46PM
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Target is the new walmart, give them a few more years and they will look like twins, just different colors of buildings and logos!!
May 22, 2013 5:47PM
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Target is overpriced and the stores in my area  are set up poorly for shopping convenience. 

 

Not to mention they think they can be all pushy in their political views by degrading those who don't believe with their stances.  I'd rather shop somewhere that just wants to sell stuff.

May 22, 2013 5:46PM
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It couldn't be that consumers have less money to spend due to tax hikes and inflation, no it's the weather, moon phases, etc.
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I worked for the company. That's why I will never shop there.
May 23, 2013 5:37PM
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Nobody knows how to sell anything. When was the last time you heard someone say they forgot to buy some Mr. Clean? The problem is they didn't forget, it's because they didn't remember! Therefore, it's the ADVERTISING that doesn't work, not because of weather or taxes.
May 22, 2013 8:07PM
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We don't have money to spend at Target or Wal*Mart because we spent it all at the gas station (Minnesota residents, anyway).
May 22, 2013 11:48PM
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The only advantage I've seen shopping at a target store is the aisle have more space to move because there are so few shoppers and the checkouts are faster than walmart for the same reason!
May 23, 2013 10:37AM
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I enjoy shopping at Target because the stores are cleaner and isles are wider so it seems less crowed but prices are higher than Walmart so....  Its a trade off.   I worked for Target many years ago and they had one requirement, we stocked early in the morning (going in at 3am) and when the store opened we were to have the pallets and pallet jacks off the store floor, not sure what happened to that policy.  
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