• Net earnings fall 0.4% to $632m
  • Revenues decline 5.4% USD$16.2bn on loss of pharmacy and clinic businesses
  • Comparable sales grew 1.2%

US department store retailer Target Corp said its first-quarter results reflect an "increasingly volatile consumer environment" after posting a 5.4% fall in revenue in comparison with last year.

For the three months to the end of March, the company posted revenues of USD$16.2bn, down from USD$17.2bn in the same period last year. 

However, while comparable sales grew 1.2% thanks to a slight increase in average spending per customer, and digital sales grew 23%, this was more than offset by the impact of the sale of its pharmacy and clinic businesses, Target said.

Net earnings slipped 0.4% to $632m from $635m, while gross margins widened slightly to 30.9% from 30.4%.

Chairman and CEO Brian Cornell said the results demonstrate Target's strategy to weather the current consumer climate. "With an outstanding team, a resilient business model and a strong balance sheet, we plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape."

While the company said its view on the second-quarter has been tempered by the slowdown in consumer trends, it believes its full year adjusted EPS, within its prior guidance range, is achievable. Target added it expects to see comparable sales of flat to down to 2% in the coming quarter.

Neil Saunders, CEO of Conlumino, says Target's growth rate has been 'buffeted somewhat' by the more sluggish pace of spending in apparel.

He adds: "Although Target's overall sales number is negative, this is to be expected given the removal of pharmacy sales. As such, what matters most is the comparable sales number. While this is not spectacular, given the softness in many segments of retail over the first-quarter the fact that it remains in positive territory is a testament to Target's relative strength."

Like its peers Macy's, Dillard's and Kohl's, Target has got off to a rocky start to the year:

Why it's a tough time to be an apparel retailer