Target posts unexpected profit drop

Target Corp. posted an unexpected decline in quarterly profit Tuesday after consumers facing higher mortgage payments and gasoline costs cut spending.

The discount retailer also said it would buy as much as $10 billion of its stock, which has lost 26% of its value since reaching a record in July.

Target reduced sales forecasts in September and October after unseasonable weather led consumers to forsake sweaters, coats and fleece.

Target expects a “decent” holiday season, although demand for clothing and home goods will remain “under more pressure” at least through the first quarter of next year, President Gregg Steinhafel said.

Third-quarter net income dropped 4.4% to $483 million, or 56 cents a share, from $506 million, or 59 cents, a year earlier, Minneapolis-based Target said. Analysts had estimated average earnings of 62 cents a share.

Shares of Target fell $2.21, or 4.1%, to $51.69.

Revenue, which includes credit card payments, rose 9.3% to $14.8 billion. Sales of more profitable clothing and home goods were “soft,” Target said.

The retailer forecast “same-store” sales, or sales at stores open at least a year, to rise 3% to 5% in the current quarter. Same-store sales climbed 3.7% in the third quarter, Target reported last week.