Dive Brief:

• Target missed expectations and delivered a disappointing forecast on Tuesday, with first quarter same-store sales increasing 1.2%, according to the retailer, compared to analysts' expectations of 1.6%, according to research firm Consensus Metrix. The retailer's stock fell as much as 9.3% in early trading after the report. 

• Same-store web sales rose 23% in the quarter and the retailer found particular success in its Style, Baby, Kids, and Wellness categories, which saw sales grow more than three times as much as the company average, the company said.

• Though the retailer expects challenges in consumer spending for the second quarter—with same-store sales flat or down 2%—it maintained its full-year guidance. The company forecasted earnings at $1 to $1.20 a share in the second quarter, below analysts estimates of $1.36, according to Bloomberg. 

Dive Insight:

Although Target's transgender bathroom policy has put it in news of late, its Q1 stumble has more to do with consumer spending trends than any political flak it may be receiving. Target CEO Brian Cornell said that the company, like many other retailers, is dealing with a tough consumer environment, which has seen consumers unwilling to buy and more sales being siphoned by Amazon.  

But despite the big frown from Wall Street indicating some worry around the retailer's turnaround effort, Target’s results put it somewhere in the middle of recent retail earnings. They're nothing like the stellar results from Home Depot or TJX Companies, but not the worrying woes seen by Macy’s, Kohl’s, or J.C. Penney, either.

Excluding gains from its sale of its pharmacy and clinic business to CVS and other restructuring charges, first quarter earnings were at $1.29 per share on revenue of $16.20 billion, compared to $17.12 billion year over year. That was a mixed bag against expectations of earnings of $1.19 per share on revenue of $16.31 billion, according to a Thomson Reuters consensus estimate. 

“We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment,” Cornell said in a statement. "With an outstanding team, a resilient business model and a strong balance sheet, we plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape.”

Target's 23% boost in digital sales didn’t touch the retailer’s 34% increase in the previous quarter, but it’s still healthy. One problem for Target, or any retailer, is that e-commerce and omnichannel sales often enjoy much slimmer margins than in-store sales, thanks to higher costs and price pressures.