Target Corp on Wednesday reported a lower-than-expected increase in quarterly sales at established stores and gave a cautious outlook for the current period, citing volatile weather and weaker demand for electronics and groceries.
Shares of the company, which also reported slower digital sales growth, fell more than 9 percent to $66.74 in early trading.
The news also dragged down shares of rivals like Wal-Mart Stores Inc, which fell 3.4 percent, and follows disappointing sales reports from other retailers, including Macy's Inc and JC Penney.
Target Chief Financial Officer Cathy Smith said apparel sales rose during the quarter and were stronger than other retailers', but big swings in temperature hurt demand in that category.
"We did see a noticeable slowdown post-Easter," Smith said on a media conference call.
She also said the grocery division suffered from a reorganization that increased organic and fresh food offerings but meant customers took time to navigate the aisles to find products.
Target said sales at stores open at least a year rose 1.2 percent in the first quarter ended on April 30, missing market expectations for a 1.6 percent increase, according to research firm Consensus Metrix.
Net sales fell 5.4 percent to $16.2 billion, mainly due to the sale of the pharmacy and clinic business to CVS Health Corp. Analysts on average had forecast $16.32 billion, according to Thomson Reuters I/B/E/S.
Digital sales increased 23 percent, compared with a year-earlier rise of 38 percent.
Target said that given the slowdown in consumer demand, second-quarter comparable sales would be flat to down 2 percent even though it was confident that it would meet its earnings outlook of $1.00 to $1.20 per share before special items.
First-quarter net income fell to $632 million from $635 million a year earlier.
Excluding restructuring charges and gains from the CVS deal, earnings stood at $ 1.29 per share. Analysts on average were expecting $1.20.
(Reporting by Nandita Bose in Chicago; Editing by Lisa Von Ahn)