Target Corp. shares sank just over 5% March 23 after the retailer blamed the late arrival of warm weather for falling short of adjusted EPS forecasts for its fiscal first quarter.
For the three months ended May 5, the Minneapolis-based retailer reported adjusted EPS of $1.32, lower than the S&P Capital IQ consensus estimate for normalized EPS of $1.39.
Target shares slid 5.1% to $71.66 as of 9:36 a.m. ET on May 23.
Sales within some of the retailer's product categories, including sporting goods, sun protection and outdoor home furniture, were held back during the quarter as temperatures in much of the U.S. stayed cold for longer than usual, Executive Vice President and Chief Merchandising Officer Mark Tritton told analysts during a call.
Categories affected by the cool weather accounted for about 10% of Target's first-quarter sales, Tritton said.
"It's clear that warm weather affects the timing of sales of some of our temperature-sensitive categories," he said.
Results within those categories improved with warmer weather in late April and early May, Tritton added. A better performance in other product divisions also helped limit the effect of weaker sales, Chairman and CEO Brian Cornell said in a statement summarizing the results.
"Strong sales growth in our home, essentials and food [and] beverage categories offset the impact of delayed sales in temperature-sensitive categories, which accelerated rapidly in recent weeks as weather improved across the country," Cornell said.
Net earnings from continuing operations totaled $717 million, up 6.3% from the year-ago quarter but below the S&P Capital IQ consensus estimate for GAAP net income of $743.8 million.
On a comparable year-over-year basis, sales rose 3%, and digital sales grew 28%. Sales for the quarter totaled $16.56 billion, up 3.5% over the year-ago period and roughly in line with the mean consensus estimate compiled by S&P Capital IQ of $16.58 billion.
For its fiscal second quarter, Target anticipates adjusted EPS of between $1.30 and $1.50, with comparable sales growth in the low- to mid-single-digit range. The retailer also confirmed previous guidance it had given for its entire 2018 fiscal year, reiterating that it expects adjusted EPS of between $5.15 and $5.45 and a comparable sales increase in the low single digits.
