Target Q1 profit plunges 29%; lowers full-year outlook

Minneapolis -- Target Corp. reported a 26% drop in its first-quarter profit as unseasonably cool weather, the payroll tax increase and other economic pressures took a toll on sales.

Target earned $498 million the three months ended May 4, down from $697 million in the year-ago period. Sales rose 1% to $16.71 billion.

Same-store sales fell 0.6%. The number of transactions fell 1.9%.

"Target's first-quarter earnings were below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weather-sensitive categories," Gregg Steinhafel, chairman, president and CEO of Target, said in a statement.

Still, Target remains confident in its strategies to attract shoppers.

"While we are disappointed in our first-quarter performance, we remain confident in our strategy, and we continue to invest in initiatives, including Canada, our digital channels, and CityTarget, that will drive Target's long-term growth."

Target has begun opening the stores in Canada that it purchased from Zellers. It is on track to have some 125 location open in Canada by yearend.