UPDATE 4-Target profit falls 41 pct, plans focus on basics
* Q4 shr 81 cents vs Wall Street view 83 cents
* Same-store sales fall 5.9 pct
* Sees EPS below yr-ago levels in first half
* To increase focus on food, pharmacy to draw shoppers
* Shares edge down 0.2 pct (Recasts; updates stock price, adds company comment)
NEW YORK, Feb 24 (Reuters) - Target Corp (TGT.N) said quarterly profit fell nearly 41 percent, worse than Wall Street expected, and that it would focus more on food and pharmacy products instead of trendy fashions to lure shoppers.
The discount retailer said on Tuesday that earnings declined as it cut prices to clear holiday merchandise and lost money in its credit card segment because shoppers fell behind on payments. It said results in the first half of the year would be below year-earlier levels.
"We are experiencing challenges not yet seen before in our business," Chief Executive Gregg Steinhafel on a call with analysts. He said Target will take "aggressive action, balancing offense and defense, to ensure that we remain relevant to our guests."
The company's shares fell 0.2 percent. Rival Wal-Mart Stores Inc (WMT.N), which has gained momentum in the recession by selling lower-priced food and other necessities [ID:nN17535726], rose 2.8 percent.
Target's net income fell to $609 million, or 81 cents per share, in the fourth quarter ended Jan. 31 from $1.03 billion, or $1.23 per share, a year earlier. Analysts had expected 83 cents per share, according to Reuters Estimates.
Sales declined 1.6 percent to $19 billion. Sales at stores open at least a year, a key gauge of a retailer's health, dropped 5.9 percent.
SHIFT TO BASICS
The results mark Target's sixth consecutive drop in quarterly profit and come as shoppers shift to basics after once splurging on the trendy clothes and furniture that account for roughly 40 percent of the company's sales.
Target, which is being pressured by hedge fund manager William Ackman to turn around its business, said it would boost its dairy and frozen food selection.
In new and remodeled stores, the company is allocating more space to household, health care and beauty items, and consolidating its own private brands to make its product offerings clearer. Continued...
