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Target 2Q in line
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August 21, 2001: 10:03 a.m. ET
Discount chain's results match estimates on 8.4% sales increase
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NEW YORK (CNNfn) - Discount retailer Target Corp. posted a 5 percent increase in fiscal second-quarter earnings Tuesday matching Wall Street estimates as the company said it was comfortable with earnings forecasts for the full year.
Target reported earnings of $271 million, or 30 cents a share, up from $258 million, or 28 cents a share, a year earlier. Analysts on average anticipated a profit of 30 cents a share, according to earnings tracker First Call.
Sales in the quarter increased 8.4 percent to $8.8 billion from $8.1 billion.
Target's (TGT: down $2.25 to $34.85, Research, Estimates) shares fell $1.10 in early trading following the earnings report Tuesday.
"We remain comfortable that we are well-positioned to deliver reasonable growth in earnings per share throughout the remainder of 2001," CEO Bob Ulrich said. "Over the long term, we remain confident in our ability to achieve average annual earnings per share growth of 15 percent or more."
The company said during a conference call with analysts Tuesday that it believes Wall Street's forecast for fiscal year earnings per share of $1.53 is reasonable and that it anticipates a $67 million pre-tax accounting charge in the third quarter.
The charge would amount to 5 cents a share. Analysts currently expect the retailer to earn 62 cents a share in the third quarter.
Though the Minneapolis-based chain posted a much higher net income figure in the quarter, it only matched expectations because of a modest gross margin decline amid the slowing economy.
However, the company did manage to cut costs in the quarter, which minimized the effect of markdowns.
Target also posted lower sales and a quarterly loss at its Marshall Field's department store chain.
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Discount retailers such as Target, Wal-Mart Stores and Kmart have fared better than other retailers during this latest economic downturn as price-conscious consumers have shifted away from higher-priced department stores, analysts have said.
That helps explain the decline at Marshall Field's and the sales drop at the Mervyn's chain.
Separately Tuesday, Target said it is suing rival Kmart Corp. (KM: down $0.24 to $12.56, Research, Estimates), charging the Troy, Mich., chain committed "overwhelming errors" in comparing its prices with Target's on an in-store advertising campaign.
The suit comes as the fierce competition between discount chains for budget-conscious consumers intensifies in the lackluster economy. 
From staff and wire reports
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