Target cut its full-year profit forecast on Wednesday while turning in a weak first quarter with disappointing sales, as a chilly start to spring kept shoppers from buying seasonal items like clothing.
Target warned in April its first-quarter results would be weaker than anticipated, and its performance was even worse than revised Wall Street expectations.
After the earnings announcement, the company's shares fell more than 2 percent in premarket trading. (Click here for the latest share price.)
Target earned $498 million, or 77 cents per share, in the first quarter ended on May 4, compared with a profit of $697 million, or $1.04 per share, a year earlier.
Including the effects from opening Canadian stores, but excluding losses related to the early retirement of debt and gains from the sale of its credit card business, Target earned 82 cents per share. On that basis, analysts looked for 85 cents per share on $16.8 billion in revenue, according to Thomson Reuters.
Revenue inched 1 percent lower at $16.71 billion from $16.87 billion.
Target posted a 0.6 percent decline in first-quarter sales at U.S. stores open at least a year, while analysts targeted a 0.03 percent decline, according to Thomson Reuters. It had warned investors a month ago that its results would be disappointing because of the weather.
Shoppers held off from buying spring merchandise, including fans and garden supplies. Last week, Wal-Mart Stores posted an unexpected 1.4 percent decline in same-store sales at its Walmart U.S. unit.
Target now expects adjusted earnings of $4.70 to $4.90 per share this year, down from its April forecast of $4.85 to $5.05. Analysts, on average, were looking for $4.48 per share this year.
— By CNBC and Reuters
Correction: This story was updated to reflect that Target missed earnings forecasts and that it earned 82 cents per share, including the effects from opening Canadian stores but excluding losses related to the early retirement of debt and gains from the sale of its credit card business.