Target Corporation (TGT, Financial) encountered a market reaction that sent its shares down by more than 5% at the beginning of Tuesday despite the company successfully meeting consensus holiday quarter projections. The company offered positive full-year earnings projections because Q1 profit concerns will lessen throughout the year despite existing trade barriers affecting consumers.

• Warning! GuruFocus has detected 5 Warning Signs with TGT.

The first quarter brought Target comparable sales results, which rose by 1.5% higher than analyst estimates of 1.2%. The hardlines and apparel sectors showed sales growth at four percentage points above their Q3 run and digital sales matched this rate for annual comparisons. The company recorded decreased operating margins of 4.7% compared to 5.8%, while gross margins dropped to 26.2% from 26.6%, mainly due to enhanced digital fulfillment expenses alongside supply chain costs and elevated promotional markdowns.

Target delivered earnings per share of $2.41, above the consensus estimate of $2.25, even though it reported earnings last year of $2.98. Target used $506 million to acquire shares which resulted in an available share repurchase capacity of about $8.7 billion. According to CEO statements, Target plans to invest in digital platforms and maintain its store network while enhancing supply chain operations in order to achieve sustainable profitable growth. Target anticipates EPS will land between $8.80 and $9.80 for the full year ahead as their net sales will experience approximately 1% growth.