UPDATE 4-Target profit falls, suspends buybacks; shares down
* Q3 shr $0.49 vs $0.48 analysts' view
* Suspends share buybacks, cuts 2009 capex by $1 bln
* Q3 same-store sales fall 3.3 pct
* Shares down 3 percent (Adds comments from conference call, updates stock price)
NEW YORK, Nov 17 (Reuters) - Target Corp (TGT.N) posted a nearly 24 percent drop in profit as an economic downturn curtails shoppers' ability to splurge on the discount retailer's trendy wares and make payments on its credit cards.
To navigate the tough environment, Target will conserve cash to protect its liquidity and debt ratings, the company said on Monday.
It is temporarily suspending nearly all of its share buybacks, has cut its 2009 capital spending plan by $1 billion, and is pulling back new store openings at least through 2010. Shares in the company fell 3 percent to $32.03.
"The consumer is more than hesitant," Chief Executive Gregg Steinhafel said on a conference call. "They are very stressed right now and we, like other retailers, are all struggling from the inability ... to motivate and inspire people to come into our stores."
The results on Monday marked Target's fifth consecutive drop in quarterly profit, and Target forecast earnings for the current quarter that could fall below Wall Street targets as it cuts prices to clear through poor selling merchandise.
But the latest quarter's profit was slightly better than expected, and analysts said its forecast for the holiday season was expected as shoppers confront tighter budgets and decreased access to credit.
"Most people have been anticipating that retailers are going to be taking down their numbers for the fourth quarter," said Stephanie Hoff, an analyst with Edward Jones "I don't think it's that shocking."
Profit fell to $369 million, or 49 cents per share, in the third quarter ended Nov 1, from $483 million, or 56 cents per share, a year ago. Analysts, on average, expected earnings of 48 cents per share, according to Reuters Estimates.
Sales rose 1.7 percent to $14.6 billion as it opened more stores. But sales at stores open at least a year, a key gauge of a retailer's health known as same-store sales, fell 3.3 percent.
CONSUMERS AVOID CLOTHES, HOME DECOR
While Target made a name for itself selling cheap but trendy designer clothes and home decor, its business has faltered in the last year as shoppers shift spending in favor of basics, like food and toiletries. Continued...
