The retailers have said the slow start to spring delayed purchases of items such as patio furniture, grills and gardening gear. For Target, sales of nonseasonal products like food and beverages helped buffer the impact of the weather. It also told analysts the lost sales began come back once the weather improved.
“Strong sales growth in our home, essentials and food & beverage categories offset the impact of delayed sales in temperature-sensitive categories, which accelerated rapidly in recent weeks as weather improved across the country,” CEO Brian Cornell said in a statement.
Still, the performance is likely to rattle investors who have been closely watching Target’s efforts to reinvent its business. Target has focused on new, smaller format stores, a push into private-label brands and boosting its delivery capabilities. The discounter’s investments weighed on its earnings in the latest period.
Target shares were down about 5 percent in premarket trading.
Target also offered a wide range of expectations for second-quarter adjusted earnings per share, saying it anticipates them to range between $1.30 and $1.50.
“We applaud Target for putting long-term success ahead of short-term gains. However, it does underline that continued effort is needed to drive top-line growth — especially as the company starts to lap tougher prior year comparatives,” said Neil Saunders, managing director of GlobalData Retail.
The Minneapolis-based retailer reported net income of $718 million, or $1.34 a share, compared with $678 million, or $1.23 a share. On an adjusted basis, it earned $1.32 a share, below expectations of $1.39 a share, according to Thomson Reuters.
Its 9.9 percent decline in operating income, largely thanks to price cuts and investments, concerned some analysts.
Revenue of $16.56 billion was 3.5 percent more than the same quarter last year, but below expectations of $16.58 billion, according to Thomson Reuters.