10:12 AM EDT, 05/22/2024 (MT Newswires) -- Target's ( TGT ) fiscal first-quarter earnings unexpectedly declined, while the retailer issued a downbeat bottom line guidance at the midpoint for the ongoing three-month period.

The company's adjusted earnings fell to $2.03 a share for the quarter ended May 4 from $2.05 the year before, versus the Capital IQ-polled consensus of $2.06. Total revenue moved 3.1% lower to $24.53 billion. The Street's view was for $24.54 billion.

Comparable sales slid 3.7%, almost in line with what analysts were expecting, as the number of transactions decreased by 1.9%. "The average transaction was also down 1.9% as consumers continue to spend cautiously, particularly in discretionary categories," Chief Financial Officer Michael Fiddelke said on an earnings call, according to a Capital IQ transcript. The stock tumbled 8.5% in Wednesday's trading session.

Gross margin increased to 27.7% from 26.3% in the prior-year quarter amid cost improvements that more than offset higher promotional markdowns, according to the company. Selling, general and administrative expenses rose to $5.17 billion from $5.03 billion year-on-year.

"Our first-quarter financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter," Chief Executive Brian Cornell said in a statement. "Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services."

For the current quarter, Target ( TGT ) expects adjusted EPS between $1.95 and $2.35, while the Street is looking for normalized EPS of $2.18, which is above the outlook's midpoint of $2.15. Comparable sales are set to be in a range of flat to up 2% versus the market's estimate for a 1.6% gain.

"While this is below the growth rate we'd expect to deliver over time, it reflects the continued cautious approach to our near-term outlook, which has served us well in recent quarters," Fiddelke said on the call.

The retailer continues to project adjusted EPS of $8.60 to $9.60 for the full year with same-store sales flat to up 2%. The Street is currently looking for normalized EPS of $9.42 and comparable sales growth of nearly 1%. "We believe these ranges continue to properly show the range of scenarios we're completing given how the environment and our business has progressed so far this year," according to Fiddelke.

Price: 141.30, Change: -14.48, Percent Change: -9.30