Bloomberg – FedEx Corp. posted quarterly profit that beat analysts’ estimates as U.S. consumers bolstered by a better labor market increased holiday orders from online retailers.

Demand in the home delivery and SmartPost programs helped fuel a 76 percent gain in net income at FedEx, an economic bellwether because it moves goods ranging from pharmaceuticals to financial documents. The company also said today it was buying 27 new Boeing Co. freighters.

“The domestic economy is in better shape than most forecasters” say because of consumer spending, said David Campbell, a Thompson Davis & Co. analyst in Richmond, Virginia. Christmas season retail spending will buoy results this quarter, which ends Feb. 29, Campbell said in an interview.

The residential delivery gains helped the Memphis, Tennessee-based company weather declining volumes in Asia that damped express division shipments between countries by 3 percent. Chief Executive Officer Fred Smith plans to park some aircraft flown along overseas routes in the second half and the company is delaying delivery of some larger Boeing 777 jets.

Today’s results were for the quarter that ended in November, a month in which U.S. unemployment fell to 8.6 percent, the lowest since March 2009. New claims for jobless benefits slid last week to the lowest in three years, signaling that the U.S. labor market is healing, and consumer confidence rose to the highest in two months, reports today showed.

Improved Consumer Confidence

“Consumer confidence remains at very low levels, but we have seen improvement recently,” Mike Glenn, executive vice president for market development, said on an earnings call with analysts and investors. “We’re well positioned to take advantage of this increasing trend of e-commerce sales.”

FedEx advanced 6.3 percent to $82.15 at 11:24 a.m. in New York, the biggest intraday gain since Aug. 11.

The company projected earnings of $1.25 to $1.45 a share in the current quarter, in line with the $1.31 average estimate from 21 analysts in a Bloomberg survey.

“They’re benefiting from the growth we’re seeing in online shopping,” Kevin Sterling, an analyst with BB&T Capital Markets in Richmond, Virginia, said in a telephone interview. In ground shipments, “not only are they getting volumes, they’re also getting pricing.”

Profit for the three months through November rose to $497 million, or $1.57 a share, from $283 million, or 89 cents, a year earlier, the company said in a statement. That topped the $1.53 average estimate of 22 analysts in a Bloomberg survey.

Sales climbed 10 percent to $10.6 billion, in line with estimates.

Fuel Efficiency

The Boeing 767s ordered today will be about 30 percent more fuel-efficient than the MD10 jets they’re replacing, some of which are more than 40 years old, FedEx said. Three of the jets will be delivered in fiscal 2014 and six a year from 2015 through 2018. The order is valued at $4.7 billion at catalog prices, though carriers typically negotiate discounts.

FedEx will delay receipt of 11 Boeing 777s now on order. Two will be deferred from fiscal 2013, five from 2014 and one a year from 2015 through 2018, FedEx said. The company is also exercising two options for 777 jets, which will be shipped at the end of its delivery schedule.

The 777 is Boeing’s largest twin-engine jet, and the freighter version has a list price of $280.1 million.

FedEx’s timetable shift is a continuation of efforts during the quarter to adjust the company’s network, particularly in Asia, “as recent destocking trends have impacted demand for our FedEx Express services,” said Chief Financial Officer Alan Graf.

Boeing 777 Postponement

FedEx originally planned to retire its aging MD10s by using MD11s domestically, and replacing MD11s in international markets with Boeing 777s, Chief Executive Officer Fred Smith said on the call. When Boeing continued production of its 767 model, the company decided to use the 767 to replace its MD10s domestically and continue using the MD11 internationally, he said.

“So our international capacity hasn’t changed at all,” Smith said. “We’ll simply operate the MD-11s in the international system a bit longer. And the 777s and the MD-11s are not that much different in capacity. The big differences is in efficiency and range in the 777.”

–Editor: James Langford

To contact the reporter on this story: Natalie Doss in New York at ndoss@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

Forbes – Wal-Mart, America’s largest big-box retailer, reported a revenue gain for its third quarter, its first gain in two years. The company, which also operates Sam’s Club stores in the U.S., said that an improvement in sales and leveraged operating expenses contributed to an 8% increase in sales. Profit slipped 2.9% from the year before, however. Shares fell 2.3% to $57.51.

Net income was $3.3 billion, or 97 cents per share, down from $3.43 billion or 95 cents per share the year before. The results came in a penny below the analyst consensus.

Home Depot Profit Rises On Post-Irene Repairs

Steve Schaefer
Forbes Staff

Upside Risk For Q4 GDP Estimate Of 2.5% On String Of Positive Data

Agustino Fontevecchia
Forbes Staff
International sales growth included benefits from currency exchange rates and acquisitions. Sales increased 15% on a constant-currency basis, helped by continued strength in emerging markets. Excluding fuel, comparative store sales increased 1.9% during the quarter.

The store’s management sounded optimistic about holiday sales in its comments, saying it will rely on competitive low prices for the fourth quarter. Domestic stores also recently brought back the layaway program, which the company had discontinued in 2006. CEO Mike Duke said, ”Both Walmart U.S. and Sam’s Club exceeded comp sales guidance, and I’m pleased that the sales momentum positions us exceedingly well for the holidays. We also are pleased with the growth in both sales and operating income for Walmart International.

Consumer spending, which accounts for around 70% of the U.S. gross domestic product, improved at its fastest pace in almost a year last month. The Commerce Department said that retail sales rose 0.5% in October, after a 1.1 rise in September. Economists were expected a weaker 0.3% increase. Excluding auto sales, retail increased 0.6% last month. Electronics sales increased 3.7% and food and beverage sales increased 1.1%. Sales at clothing stores, however, fell 0.7%, the most in a year.

The company forecast fourth-quarter earnings to come between $1.42 and $1.48, right on top of the average analyst forecast for $1.45. It predicts that profit for the full year will beat last year by 8% on the high end, between $4.45 and $4.51 per share.

Bloomberg – United Parcel Service Inc. may hire 55,000 holiday workers this year, a 10 percent increase from 2010, to help with shipping gains bolstered by online shopping.

More than 120 million packages may be delivered in the week before Christmas, up 6 percent from last year, the world’s largest package-delivery company said today in a statement.

Projected employment and volume gains at UPS and competitor FedEx Corp., both economic proxies because of their deliveries, indicate broader growth while countering indicators of a slowing recovery. FedEx said last month it would hire 20,000 seasonal employees, an 18 percent gain.

UPS’s hiring speaks to “the strength of online shopping despite the softness in the economy,” said Kevin Sterling, a BB&T Capital Markets analyst in Richmond, Virginia, who has a “buy” recommendation on UPS. Web-based purchasing compresses the peak-shipping period because “people try to delay and look for the best deals,” he said.

At FedEx, shipments from Thanksgiving in the U.S. through Christmas may increase 12 percent, with retail inventory such as apparel, personal consumer electronics, luxury goods and items from large Internet retailers accounting for a large portion of holiday volumes, the Memphis, Tennessee-based company said in a statement on Oct. 24.

UPS expects volume of about 25 million packages, or 60 percent more than normal, on five days this year, compared with just one in 2010. The Atlanta-based company expects each of the peak shipping days to occur within the 10 days before Christmas.

–With assistance from Heather Perlberg in New York. Editors: James Langford, John Lear

To contact the reporter on this story: Natalie Doss in New York at ndoss@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

Wall Street Journal – Weak demand from consumers in the U.S. and Europe for electronics manufactured in China has sapped strength from international air-freight volumes, a stark illustration of the slowdown in global trade.

FedEx Corp. posted improved earnings for its fiscal first quarter Thursday, but the world’s largest air-cargo carrier reduced its full-year profit guidance, echoing recent warnings that Asian shipments have been particularly weak.

“We were on track for [Asian volume] growth in June, and then in July we saw a sudden deceleration that continued all through August,” FedEx Chief Financial Officer Alan B. Graf Jr. said. “There’s been no real pickup” since then, he added.

His comments echo those from rival United Parcel Service Inc., which said last week that it also has seen a “fairly recent” dip in Asian volumes. Other sector observers have forecast weakening demand as well, with the International Air Transport Association warning this week that the softness could last until the middle of next year.

Neither FedEx nor UPS forecast a double-dip recession, instead saying that slow growth is likely to continue. Both shipping giants are closely watched as economic bellwethers because of the breadth of goods that they transport.

FedEx said Thursday that its profit rose 22% to $464 million, or $1.46 a share, from $380 million, or $1.20 a share, a year earlier. Revenue increased 11% to $10.5 billion. Even so, the company cut its full-year profit outlook amid expectations that economic growth will slow.

The company lowered its forecast for growth in U.S. gross domestic product this year to 1.8%, from a previous view of 2.5%. For 2012, it said it now expects gross domestic product to rise 2.5%, compared with 3% previously.

FedEx Chief Executive Fred Smith attributed the company’s decision to revise its forecasts to jittery consumer sentiment as policy makers in the U.S. and Europe joust over economic measures.

“The consumer just doesn’t have an appetite” for spending more, Mr. Smith told analysts during a post-earnings conference call. As a result, “we don’t anticipate a significant peak [shipping season] this year.”

Mr. Graf, FedEx’s chief financial officer, added that retailers have responded to the weak consumer sentiment “by managing inventory levels very conservatively.”

The trend has been most evident in FedEx’s international priority business, where volume slumped 4% in the fiscal first quarter after rising 6% the previous quarter and 10% in the most recent fiscal year. The company said the bulk of the decline was the result of lower electronics shipments out of China.

“The primary driver is slower sales of electronic products,” Mr. Smith said.

Still, it said some electronics shipments that it initially expected in its first quarter likely will take place in the current quarter. It also said year-over-year volume comparisons were affected by particularly strong numbers last year, when retailers were restocking after the downturn.

Regardless, numerous signs have been pointing to slower demand in the U.S. for Asian products as the global economy teeters.

Exports from China to the U.S. in August rose 15% from a year earlier to $30.1 billion, according to Chinese government data, down from 28% for full-year 2010. And in Taiwan—which is widely considered a bellwether for U.S. and European economic growth due to the high-end electronic components its companies produce—the situation is even more dire, with August exports growing only 7.2% from the same period a year earlier, the lowest growth rate since October 2009.

That reflects in part weakening consumer demand for the electronic gadgets made in Chinese factories run by companies headquartered in Taiwan, such as Quanta Computer Inc. and Compal Electronics Inc., the world’s two biggest manufacturers of laptop computers by revenue. Quanta and Compal make personal computers and other gadgets on a contract basis for brands such as Hewlett-Packard Co. and Dell Inc.

Compal, which typically ships 70% to 80% of its orders by air, has seen orders from the U.S. fall in the third quarter, according to a person familiar with the matter. The person said the outlook for U.S. demand was “not good,” and that the company is relying on surging demand in China to make up for the drop in orders so it can maintain flat shipment growth in the third quarter.

Quanta, meanwhile, is laying off workers from the division that manufactures Research In Motion Ltd.’s PlayBook tablet PC due to declining orders, according to a person familiar with the situation at Quanta. The person said the company also expects a broad slowdown in shipments to the U.S. and to Europe in the third quarter.

Brandon Fried, executive director of the Airforwarders Association, said recent air-freight demand clearly has been disappointing.

“When we first saw evidence of the recovery, there was always this question of whether it was simply a restocking of shelves” in the wake of the recession, Mr. Fried said.

“I still think there’s evidence of a recovery, but it’s weaker than hoped for,” he said. Air-freight volumes won’t firm up “until the consumer starts feeling confident again. Right now, in many countries, you don’t have that.”

Write to Bob Sechler at bob.sechler@dowjones.com

Washington Post – NEW YORK — Sometimes, a fashion launch is just too enticing.

Target Inc.’s entire website crashed Tuesday, the day the cheap chic retailer launched the online sale of its limited offerings of Missoni for Target, a partnership with the Italian luxury knitwear designer.

The collection, which includes plates to clothes, is a fraction of the price of the real duds. Items include a dinnerwear set, priced at $31, featuring the trademark zig-zag patterns, $29.99 silk floral dresses and $12.99 bath towels.

Target, based in Minneapolis, posted on its Web site: “Woof! We are suddenly extremely popular. You may not be able to access our site momentarily due to unusually high traffic. Please stay here and we’ll try to get you in as soon as we can!”

Target is known for creating a lot of buzz for its limited partnerships with designers and fashion brands, including the latest success with Liberty of London, which was launched in February 2010.

It was not immediately clear when the site would be back up.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

WASHINGTON (Reuters) – U.S. consumer spending rose at its fastest pace in five months in July, backing views the economy was not falling back into recession, although pending sales of previously owned homes fell.

The Commerce Department said on Monday consumer spending increased 0.8 percent on strong demand for motor vehicles, after slipping 0.1 percent in June.

Economists had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent.

When adjusted for inflation, spending rose 0.5 percent last month, the largest gain in 1-1/2 years and the first increase since April.

The spending data was the latest to suggest the economy started the third quarter with some strength after growth almost stalled in the first half of the year. It gave hope that output would continue to expand, though at a moderate pace.

“If anybody was concerned about this recession risk people were taking about, this personal spending number seems to be another point against that recession argument,” said Jeffrey Greenberg, an economist at Nomura Securities in New York. “It seems at least through July, the economy was not too poor.”

But the risks of a new recession have risen following a sharp drop in stock prices and the erosion of consumer sentiment. Those risks were underscored by a separate report showing pending home resales fell 1.3 percent last month.

The housing market is being choked by an oversupply of properties and is one of the economy’s weak spots. Pending home sales lead existing home sales by a month or two and the decline in contracts signed pointed to a fall in August sales.

U.S. stocks rallied on spending data and a possible merger between two big banks in Greece. Prices for U.S. government debt fell, while the dollar eased against a basket of currencies.

ECONOMY NOT FALLING APART

So far data such as industrial production, retail sales and employment data have been consistent with a slow economic growth scenario rather than an outright contraction in output.

Consumer spending braked sharply to a 0.4 percent annual pace in the second quarter after advancing 2.1 percent in the first three months of the year.

The overall economy grew at a 1 percent pace in the second quarter after expanding only 0.4 percent in the prior quarter.

Despite the rise in spending last month, economists remain worried about the slow pace of income growth. Income gained 0.3 percent after advancing 0.2 percent in June.

Disposable income increased 0.3 percent, but when adjusted for inflation fell 0.1 percent — the first decline since September.

“The economy is not falling apart, but we need better income growth if we are going to get decent growth and that remains a question mark,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

“Firms may be waiting to see better consumer demand before hiring but if they don’t hire, income gains will be soft and spending will lag.”

With spending outstripping real disposable income, savings fell to an annual rate of $582.8 billion from $638.6 billion in June.

Real spending on durable goods increased 2 percent last month, likely reflecting a pick-up in motor vehicle sales as the shortage of autos caused by the supply disruptions from Japan eased.

The report also showed inflation pressures remain elevated. The personal consumption expenditures price index, or PCE, rose 0.4 percent after slipping 0.1 percent in June.

Compared to July last year, the index was up 2.8 percent, the largest increase since October 2008, after advancing 2.6 percent in June.

The core PCE index — excluding food and energy – rose 0.2 percent for the second straight month.

The core index, which is closely watched by Federal Reserve officials, increased 1.6 percent in the 12 months through July, the largest increase since May 2010, after rising 1.4 percent in June. The Fed would like to see it close to 2 percent.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

Bloomberg – Consumer borrowing in the U.S. rose in May for the eighth straight month, led by a boost in credit card use and student loans.
Credit increased by $5.08 billion after a revised $5.67 billion gain in April, the Federal Reserve said in Washington today. Economists projected a $4 billion increase, according to the median forecast in a Bloomberg News survey.
Consumers may be ramping up credit-card debt as gasoline prices and unemployment climbed. At the same time, high fuel costs are probably keeping households from spending on big- ticket items like autos.
“While consumers are still taking on some amount of additional credit it’s very restricted,” Lindsey Piegza, an economist at FTN Financial in New York, said before the report. “Some of the biggest impacts have been rising oil prices, rising gasoline prices and simply the downward pressure on consumers’ disposable income.”
The median forecast was based on a survey of 37 economists. Estimates ranged from an increase of $6.5 billion to a decrease of $3 billion.
Revolving debt, which includes credit cards, rose by $3.37 in May after decreasing $877 million in April, according to the central bank’s data. It was the first gain this year and the biggest since June 2008.
School Loans
Non-revolving debt, including educational loans and loans for autos and mobile homes, climbed $1.71 billion for the month after increasing by $6.54 billion in April. The figure included a $5.5 billion boost in federal government lending for education before seasonal adjustment. The Fed’s report doesn’t track debt secured by real estate, such as home equity lines of credit.
Unemployment climbed to 9.2 percent in June as the U.S. economy added 18,000 jobs, Labor Department figures showed today. Slow employment gains are likely dimming Americans’ outlooks, making households hesitant to spend.
Consumer spending, which accounts for about 70 percent of economic activity, unexpectedly stagnated in May, Commerce Department figures showed on June 27, as high fuel and food prices kept consumers from opening their wallets.
Americans also curbed spending on autos. High retail gasoline prices and lingering supply chain disruptions from the March earthquake and tsunami in Japan drove auto demand down to 11.4 million in June, its slowest pace in 12 months. General Motors Co. (GM) and Ford Motor Co. (F) reported on July 1 that the auto- makers’ U.S. sales rose 10 percent in June, missing analysts’ estimates.
Fuel Costs
The elevated gas prices earlier in the year weighed on consumer confidence, David Nelms, chief executive officer of Discover Financial Inc., said in an interview with Bloomberg News on June 24. The Riverwoods, Illinois-based credit-card company is relying on an uptick in new U.S. consumers borrowing from Discover rather than waiting for existing customers to borrow more, Nelms said in the interview.
“Many of our customers have deleveraged and paid down some of their debt over the last couple of years since the financial crisis,” he said.
To contact the reporter on this story: Jillian Berman in Washington jberman13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

WASHINGTON (Reuters) – The Supreme Court threw out on Monday a massive class-action sex-discrimination lawsuit against Wal-Mart Stores Inc, the biggest ever such case, in a major victory for the world’s largest retailer and for big business in general.

The justices unanimously ruled that more than 1 million female employees nationwide could not proceed together in the lawsuit seeking billions of dollars and accusing Wal-Mart of paying women less and giving them fewer promotions.

The Supreme Court agreed with Wal-Mart, the largest private U.S. employer, that the class-action certification violated federal rules for such lawsuits.

It accepted Wal-Mart’s argument that the female employees in different jobs at 3,400 different stores nationwide and with different supervisors do not have enough in common to be lumped together in a single class-action lawsuit.

The ruling was cheered by the U.S. Chamber of Commerce business group as the most important class action case in more than a decade but denounced by women’s groups.

It represented a major victory for Wal-Mart, which also has faced legal battles including an attempt to unionize and to block the giant retailer from opening stores in New York and other places.

“We are pleased with today’s ruling and believe the court made the right decision. Wal-Mart has had strong policies against discrimination for many years,” the Bentonville, Arkansas-based company said in a statement.

Wal-Mart shares were up 18 cents to $53.02 in late trading after rising as much as 1.3 percent earlier in the day.

Gisel Ruiz, a company executive vice president, said the ruling effectively ended the class-action lawsuit.

Theodore Boutrous, Wal-Mart’s lead attorney in the case, told reporters, “This decision will have a significant impact on other class actions.”

The court rejected class-action status but three remaining female plaintiffs still can pursue their individual claims.

CLASS ACTION ENDS BUT LITIGATION DOESN’T

Lawyers for the plaintiffs acknowledged the ruling raised substantial hurdles to bring such challenges forward but warned that Wal-Mart may regret this route because it could lead to lengthier litigation in many more courtrooms.

“I think it is a big win for very large companies because I think part of the message from the majority’s decision is … there are companies that are too big to be held accountable in a single forum for these kinds of practices,” said Joseph Sellers, a lawyer for the women who sued the retailer.

He said they were considering options that included pursuing class-action lawsuits with smaller groups of women or proceeding individually, noting that more than 12,000 people have contacted them about discrimination at Wal-Mart.

Two employees of Wal-Mart and its Sam’s Club stores who were leading the class-action effort were disappointed with the ruling but said that they would continue their claims.

“We still are determined to go forward and we still are determined to present our case in court and I believe that we will prevail there,” said Wal-Mart employee Betty Dukes.

The ruling in the biggest business case of the high court’s 2010-11 term could affect pending class-action lawsuits against the tobacco industry and Costco Wholesale Corp.

White House spokesman Jay Carney said ending pay discrimination was a key priority for President Barack Obama but that the U.S. government was not a party to the lawsuit.

“Our lawyers are studying the decision right now to determine what effects it might have,” Carney said.

The Obama administration did not take a position in the top court case, although the federal government’s Equal Employment Opportunity Commission previously supported the workers.

MOST IMPORTANT CLASS-ACTION RULING SINCE 1960S

Christopher Landau, an attorney at the Chicago-based Kirkland & Ellis law firm, called it the most important class-action decision since the 1960s. “The days of ‘drive-by’ class certification are over,” he said.

Justice Antonin Scalia concluded for the court majority that the Wal-Mart class was not properly certified.

“Because respondents wish to sue about literally millions of employment decisions at once, they need some glue holding the alleged reasons for all those decisions together,” he said.

The court’s four other conservatives joined all of Scalia’s ruling. The court’s four liberals joined part of it but dissented in another part.

Large class-action lawsuits make it easier for big groups of plaintiffs to sue corporations and they have led to huge payouts by tobacco, oil and food companies.

Companies such as Wal-Mart have sought to limit such lawsuits to individual or small groups of plaintiffs. The Supreme Court, with a conservative majority that often ruled for businesses, has rejected huge class-action lawsuits.

The Supreme Court case is Wal-Mart Stores Inc v. Betty Dukes, No. 10-277.

(Additional reporting by Jessica Wohl in Chicago, Moira Herbst in New York and Jeremy Pelofsky and Matt Spetalnick; Editing by Doina Chiacu and Bill Trott)

NEW YORK (AP) — Target Corp. raised its quarterly dividend by 5 cents to 30 cents, a 20 percent increase, as it sought to placate investors after a 22 percent decline in its stock price this year.

The dividend is payable Sep. 1 to shareholders of record Aug. 18.

The retailer’s announcement comes ahead of its annual shareholders meeting Wednesday. Investors are expected to grill management on why the company is having trouble getting shoppers, who are buying food and other staples, to cross the aisle to clothing and other discretionary items.

“Target’s primary focus has been expanding its super centers and food business and trying to increase traffic,” said Ken Perkins, president of research firm RetailMetrics LLC. “But they have taken their eye off the ball in apparel and home goods. The merchandise doesn’t seem to be as fresh.”

Investors have punished Target’s shares, now trading at about $47, the low end of their 52-week range of $46.53 and $60.97. The Dow Jones U.S. Retail Index has soared 18 percent from a year ago and 12 percent since the beginning of the year.

A year ago, Target was reaping the benefits from moves it made to cater to shoppers focused on necessities like paper towels and milk. During the depths of the Great Recession in 2009, Target had started expanding food sections and advertising low prices, a departure from the “cheap chic” image it had long cultivated that set it apart from competitors.

Target also hoped to get a boost from a 5 percent discount for its debit card and credit card holders, started last October.

Target promised investors that revenue at stores opened at least a year would accelerate this year to increase between 4 percent and 5 percent. Last year, the increase was just 2.1 percent.

But an uneven economic recovery and some merchandising missteps by Target have resulted in a disappointing start to the year.

Higher-income shoppers, feeling better about their fortunes, are returning to department stores like Macy’s. Low-income shoppers are under more financial duress because of higher gas and food prices. They’re being drawn more to dollar stores, which have added more name-brand food and are more conveniently located.

But Target isn’t just a victim of circumstances, analysts say. They say its newfound emphasis on necessities may have gone too far, turning off shoppers who had been going there for small luxuries like dresses or home accessories. In addition, competitors like J.C. Penney Co. and Kohl’s Corp. have added more exclusive, affordable lines from fashion designers. That could be stealing middle-income customers from Target. In home furnishings, Bed, Bath & Beyond is becoming an increasing threat.

Groceries also typically have lower profit margins than other merchandise in Target stores.

For the latest quarter, which ended April 30, Target posted a modest 2 percent increase in revenue at stores open at least a year, and the company’s 2.8 percent increase in the measure for May was below the 3.5 percent forecast from analysts surveyed by Thomson Reuters.

The 5 percent cardholder discount has helped get Target’s highest-income shoppers to spend more, analysts say, but that’s only a marginal benefit when the rest of its customers are sticking to basics.

Customer traffic slowed in the second half of May, Target executives said last week, and higher gas prices and other inflation crimped spending more than they expected. That increases pressure on Target in the second half of the year to reach the annual revenue goal.

The shareholders’ meeting is being held in new store in Pittsburgh, set to open next month. Target’s stock fell 28 cents to $46.78 in afternoon trading Wednesday.

Target, based in Minneapolis, operates 1,752 Target stores in 49 states.

NEW YORK (Reuters) – Wal-Mart Stores Inc (NYSE:WMT – News) said on Monday it agreed to buy social media company Kosmix for an undisclosed sum, as the world’s largest retailer aims to win over more tech-savvy U.S. shoppers.

Wal-Mart said Kosmix’s founders and team will operate as part of a newly formed group called @WalmartLabs that will create technologies and businesses around shopping online or with smart phones.

“We are expanding our capabilities in today’s rapidly growing social commerce environment,” said Eduardo Castro-Wright, Walmart’s vice chairman. “Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping.”

Earlier on Monday, Wal-Mart’s chief executive Mike Duke said in a statement that his top priority for this year was to turn around same-store sales at its U.S. discount chain.

Kosmix’s founders, who sold their first company Junglee to Amazon.com Inc (NasdaqGS:AMZN – News) in 1998, will continue to be based in California’s Silicon Valley.

(Reporting by Martinne Geller, editing by Gerald E. McCormick)