Minneapolis Target Corp. reported a 13% drop in first-quarter profit on Wednesday as it continues to confront sluggish consumer spending. It was Target’s seventh consecutive drop in quarterly profit. But the chain’s results beat analysts’ estimates as the retailer kept tight control on inventory and expenses.
The chain said profit fell to $522 million for its fiscal first quarter ended May 2, from $602 million a year ago. Its credit-card segment reported a profit of $39 million, down from $181 million last year. But the results marked an improvement from the pretax loss of $135 million it reported in the fourth quarter.
Sales edged up to $14.4 billion from $14.3 billion, but same-store sales fell 3.7%.
Chairman and chief executive Gregg Steinhafel said in a statement that the chain saw strong gains in sales at established stores, especially in areas such as food. He said results from the company's credit-card business, which have dragged down its performance in the past due to a rise in delinquencies, were "stable, profitable and consistent" with expectations.
"We believe this improved stability and predictability in key aspects of both our retail and credit-card segments reflects the resilience of our strategy," he said.
The company is gearing up for a battle at its shareholders’ meeting next week with activist shareholder William Ackman, who leads hedge fund Pershing Square Capital Management, which owns 7.8% of the discounter's outstanding shares. He has been fighting to change the company board of directors in an effort, he says, to provide fresh perspectives and make the discounter more profitable.