Target, Saks have rough first quarter

For U.S. retailers, the phrase “challenging environment” has become a shared refrain for one of the toughest quarters in decades. And merchants expect the climate to remain difficult for the rest of the year as higher gas and food costs, and slumping home prices weigh on shoppers.

Target Corp. reported Tuesday that first-quarter earnings fell 8 percent on weaker-than-expected sales, particularly of non-necessities like lawn furniture.

Gregg Steinhafel, Target’s president and chief executive, told investors in a conference call Tuesday the discounter is stressing sale prices more in its advertising, especially the 50 million newspaper circulars it puts out, to grab a bigger share of the $107 billion in tax stimulus checks being distributed to American households.

Meanwhile, Saks Inc., reported a less-than-expected 66 percent increase in first-quarter earnings compared with weak year-ago results. It said increased discounting hurt profit margins.

“The weak housing market is pummeling home improvement chains, including Home Depot Inc., which reported a 66 percent drop in first-quarter profits on Tuesday. A one-time charge also dragged down profits. On Monday, rival Lowe’s Corp. reported a nearly 18 percent decline in first-quarter earnings and reduced its profit outlook for the year.

“Sales of delivered office products to corporate customers at home and overseas helped Staples Inc. post a 1.5 percent increase in its first-quarter profit and rebound modestly from small declines the previous two quarters.

The world’s largest office products supplier reported its fourth consecutive quarter of declining sales at established stores in the United States and Canada.

“Strong foreign demand for Hewlett-Packard Co.‘s computers, printers and other products widened its profit margin in its second quarter, but investors worry the trend will break as HP digests Electronic Data Systems Corp. this year. Profits were up 16 percent over the same period in 2007.

The results released Tuesday came as no surprise because HP provided a snapshot of its latest quarterly earnings and revenue last week when the Palo Alto-based company jolted investors with its planned $13.2 billion acquisition of technology services specialist EDS.

“Financial software company Intuit Inc. said its third-quarter profits jumped 21 percent on strong sales of its tax-preparation and accounting programs. Chief Executive Brad Smith said “an outstanding tax season” boosted sales of QuickBooks, TurboTax, and Payroll and Payments.