Target 1Q Profit Falls

Minneapolis First-quarter profits at Target Corp. dropped almost 8% on softer-than-expected sales and higher costs, but the retailer still beat Wall Street earnings estimates for its first quarter.

The retailer on Tuesday reported a profit of $602 million in the three months ended May 3, down from $651 million during the same period last year. Revenue rose 5% to $14.8 billion from $14 billion. Same-store sales fell 0.7%.

In a statement, president and chief executive Gregg Steinhafel said that the profit "met our expectations despite softer-than-expected sales performance." He added that "the current economic environment remains challenging."

The company said profit margins declined slightly from last year because sales grew faster in low-margin categories, which generally includes food and essentials such as paper towels.

The company also announced Tuesday that the transaction to sell an undivided interest in approximately 47% of its credit-card receivables to JPMorgan Chase for cash proceeds of about $3.6 billion was completed on Monday, May 19, 2008. The transaction is expected to provide Target with sufficient liqui