Target Corp warned on Wednesday its annual profit was likely to be near the low end of its forecast as it anticipates continued cautious consumer spending, the latest retailer to signal U.S. shoppers were holding back.
Shares of Target fell to $66.88 in premarket trading after closing at $67.95 on Tuesday.
Target, which competes against Wal-Mart Stores Inc and other discount retailers with a mix of basic goods, apparel and accessories, said it earned $611 million, or 95 cents per share, in the fiscal second quarter ended Aug. 3, down from $704 million, or $1.06 per share, a year earlier.
Including the effects from opening Canadian stores but excluding other items, Target earned 97 cents per share, one penny more than analysts expected, according to Thomson Reuters I/B/E/S.
Target expects U.S. shoppers to remain cautious "in the face of ongoing household budget pressures," Chairman and Chief Executive Gregg Steinhafel said in a statement. He added the company continued "to learn, adjust and refine operations" five months after opening its first Canadian stores, which may suggest initial excitement over the new stores has waned.
In May, Target, noting that shoppers were sticking to shopping lists, trimmed its fiscal-year adjusted earnings forecast to a range of $4.70 to $4.90 per share from $4.85 to $5.05. It now expects adjusted earnings per share to be near the low end of the May forecast.
Second-quarter sales rose 4 percent to $17.12 billion, missing the analysts' target of $17.26 billion.
Sales at Target stores open at least a year, or same-store sales, rose 1.2 percent, below its forecast of a 2 percent to 3 percent increase.
Last week, Wal-Mart said second-quarter sales at its U.S. Walmart chain declined 0.3 percent, and said sales were likely to be flat in the current quarter.
Target opened its first Canadian stores in March, so sales from the locations were excluded from the key same-store sales figures. The company said $275 million in revenue came from Canada. The company has said it expects the Canadian business to add slightly to profit by the fourth quarter.