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Target cuts profit forecast as same-store sales decline

Posted by: Admin | Posted on: August 17th, 2016 | 0 Comments

Target Corp’s (TGT.N) quarterly comparable sales fell more than expected and the retailer slashed its full-year profit forecast as it faces increased competition from online rivals and demand eases for clothes and electronics.

Target’s sales, like those of its rivals, have suffered as shoppers increasingly use online retailers such as (AMZN.O) and focus their spending on home renovations and big items such as cars rather than on clothes and electronic gear.

The Minneapolis-based retailer’s shares were down 2.6 percent at $73.50 in premarket trading on Wednesday.

Up to Tuesday’s close, they had risen nearly 4 percent since the start of the year.

Target’s sales at stores open for at least a year fell 1.1 percent. Analysts on average had expected same-store sales to decline 1 percent, according to research firm Consensus Metrix.

“Based on the current retail environment the company believes it is prudent to lower its expectations for comparable sales in the second half of the year,” the company said.

Target said it expected same-store sales to be flat to down 2 percent in the second half of the year and cut its full-year adjusted profit forecast to $4.80-$5.20 per share from $5.20-$5.40.

Net income attributable to the company fell nearly 10 percent to $680 million, or $1.16 per share in the second quarter ended July 30.

Excluding items, Target earned $1.23 per share. Net sales fell 7.2 percent to $16.17 billion. Analysts on average had expected earnings of $1.12 per share and revenue of $16.18 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Siddharth Cavale in Bengaluru and Nandita Bose in Chicago; Editing by Ted Kerr)

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