Minneapolis – Target’s profits were as good as analysts expected, and Saks lost less money than expected. These days, that’s good news.
Investors have been nervously watching for Target’s results since last week, when bigger rival Wal-Mart Stores Inc. posted a higher quarterly profit but cut its 2007 earnings forecast because of weak consumer spending.
Target wasn’t totally immune to that weakness.
“As we look to the remainder of the year, we are planning our business more conservatively to reflect this climate” along with a fiscal year one week longer last year, president Gregg Steinhafel said in a conference call.
Steinhafel said Target will be especially careful to manage inventory on discretionary goods such as clothing and seasonal items.
Analyst Todd Slater of La zard & Co. said it makes sense that any downturn in consumer spending would hit Wal- Mart harder.
“I think the climate is significantly tougher for the most moderate (income) households, which probably make up a larger percentage of Wal- Mart’s traffic than it does Target’s,” he said.
For the quarter ended Aug. 4, Minneapolis-based Target Corp. said it earned $686 million, or 80 cents per share, up 12.6 percent from $609 million, or 70 cents per share, a year ago.
Revenue rose 9.5 percent to $14.62 billion, from $13.35 billion a year ago. Analysts surveyed by Thomson Financial were expecting Target to earn 80 cents per share on revenue of $14.67 billion.
Target said same-store sales rose 4.9 percent for the quarter.
Meanwhile, upscale department-store operator Saks reported a second-quarter loss of $24.6 million, or 17 cents per share, compared with a loss of $51.9 million, or 38 cents per share, during the same period last year.
