UPDATE 1-Target sees solid year after weak holiday quarter
Feb 27 (Reuters) - Retailer Target Corp appears poised for a solid showing in the first quarter and forecast a higher profit for the year after a weak performance in the key holiday season.
Shares initially rose as much as 3.5 percent on Wednesday on the heels of the company's quarterly report, then gave up the gains in premarket trading, slipping 1.6 percent to $63.
For the current year, Target forecast adjusted earnings of $4.85 to $5.05 per share, which would exceed the $4.76 it earned last year.
Target did not give a sales forecast, but Chief Executive Gregg Steinhafel said the company faced a "highly promotional retail environment and continued consumer uncertainty."
Its fourth-quarter profit fell, as sales of food and value-priced items only partially mitigated weakness during the holiday season as shoppers held back from discretionary spending in an uncertain economy.
Target's holiday season included a disappointing showing for its collection of gifts sold in collaboration with high-end department store Neiman Marcus. The line that includes designer dresses and dishes launched on Dec. 1, and Target sharply discounted the goods even before Christmas
Target earned $961 million, or $1.47 per share, in the fiscal fourth quarter, down from $981 million, or $1.45 per share, a year earlier. Target had fewer shares outstanding in the latest period.
Adjusted earnings, excluding items such as costs related to Canadian store opening plans, rose to $1.65 per share from $1.49 per share a year ago.
Target tempered profit expectations back in early January, when it reported flat December same-store sales and forecast earnings per share to meet or somewhat exceed the low end of its prior view. Target's outlook was for net earnings of $1.45 to $1.55 per share and adjusted earnings of $1.64 to $1.74 per share.
Target previously said sales rose 6.8 percent to $22.37 billion in the fourth quarter, with same-store sales up 0.4 percent. Same-store sales missed analysts' average target of 0.8 percent, according to Thomson Reuters I/B/E/S.
For the first quarter, Target forecast adjusted earnings of $1.10 to $1.20 per share versus $1.11 a year ago.