The unexpected cold weather resulting in soft sales of spring merchandises compelled Target Corporation (TGT - Free Report) to take a cautious stance on its sales and earnings projection for the first quarter of fiscal 2013. This operator of general merchandise and food discount stores in the U.S. warned that its sales and earnings for the first quarter would fall short of its earlier projection.
The Minneapolis, Minn. based company now anticipates flat comparable-store sales for the first quarter of fiscal 2013, citing sluggish sales trend across seasonal and weather-sensitive categories. Target had earlier forecasted comparable-store sales to increase between 0% and 2%.
Higher Social Security Payroll taxes, unfavorable weather conditions, and political gridlock and brinkmanship have dampened the mood of shoppers, as evident from the March retail sales data that fell 0.4%, the next major drop since June last year, according to the U.S. Department of Commerce. A sluggish recovery in the labor market is also cited as one of the factors hurting consumers’ enthusiasm.
These factors have compelled retailers to take a backseat, and revisit their strategies to tackle this unprecedented situation. Retail chains like The Cato Corporation , Gap Inc. (GPS - Free Report) and The TJX Companies, Inc. (TJX - Free Report) witnessed comps decline of 11%, 1% and 2%, respectively, in March.
Target also warned that the first-quarter earnings would come in below the lower-end of the previously provided guidance range of $1.10 to $1.20. However, this Zacks Rank #3 (Hold) stock kept its fiscal 2013 earnings guidance of $4.85 to $5.05 per share, unchanged.
The current Zacks Consensus Estimates for the first quarter and fiscal 2013 stands at $1.04 and $4.66 per share.