LOW Lowes Companies Inc

Retailer pins decline on consumer caution and wet weather in latest quarter Recent data from the U.S. Commerce Department showed that consumer spending in April rose to the best level in more than a year. In the past year, Internet and catalog sales have grown more than three times as fast as overall sales, up 10.2%, while department-store sales sank 1.7% over the past 12 months. "It's been a very wet and cold start to the year and it's reflected in our sales," he said. "We haven't seen anything

By Khadeeja Safdar and Lisa Beilfuss 

Target Corp. said consumers pulled back on spending in the first quarter and warned that a key sales measure could fall in the current period -- the first such decline in two years.

Chief Executive Brian Cornell cited "an increasingly volatile consumer environment" and said he expects "excess inventory" at other retailers to "extend the very intense promotional environment into the months ahead."

Shares of the company were off 7.6% at $68 as of 4 p.m. trading on Wednesday. Sales at stores open at least a year rose 1.2% in the quarter ended April 30, short of Target's 1.5% to 2.5% annual target.

The company warned that metric would be flat to down 2% in the current quarter. A decline would be a first for Target since Mr. Cornell took over as CEO in 2014.

Target joins a growing list of retailers reporting a disappointing start to the year.

Last week, soft results from department stores like Macy's Inc. and Nordstrom Inc. illustrated shoppers' shift away from brick-and-mortar stores and sparked declines across the retail sector.

That pressure was renewed Wednesday as shares in Wal-Mart Stores Inc. fell 2.2%. Wal-Mart was slated to report quarterly results Thursday.

Off-price chain TJX Cos. and home-improvement stores like Home Depot Inc. reported healthy traffic and spending at their locations. Wednesday, Lowe's Cos. posted a strong earnings beat with a profit of $884 million, or 98 cents a share, up from $673 million, or 70 cents, a year earlier. Revenue rose 7.8% to $15.2 billion.

Despite weakness in the first half of the year, Target said it still sees its full-year earnings forecast as "achievable." Mr. Cornell said the spending slowdown at the start of the year was the result of consumer caution and unusually cold and wet weather in certain regions.

The Minneapolis company has been spending aggressively to beef up digital sales. In the first quarter, Target's digital sales rose 23%. Online sales represented 3.5% of Target's top line, a smaller chunk than the 5% achieved in the holiday period, though up from 2.8% a year earlier.

Overall for the quarter, Target reported a profit of $632 million, down from $635 million a year earlier. Revenue declined 5.4% to $16.2 billion, largely due to the sale of its pharmacy and clinic businesses. Analysts had forecast $16.32 billion in revenue, according to Thomson Reuters.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

May 19, 2016 02:49 ET (06:49 GMT)

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