Navistar International Corp.'s (NAV) fiscal second-quarter earnings plummeted 94% on slumping sales, with result falling short of analysts' expectations.

As the truck maker again lowered its sales view for industrywide retail sales of heavy-duty trucks and school buses, Navistar slashed its fiscal-year earnings target to $2.80 to $3.10 a share from $5.10 to $5.60.

"It is now clear that the economic recovery will take longer than had been originally expected," said Chairman and Chief Executive Daniel C. Ustian. "We are addressing this likelihood straight on by maintaining focus on our core product and market initiatives while taking the necessary steps that will allow us to adapt to the rapidly changing marketplace.

Despite the woes, Ustian said Navistar has been cutting costs and gaining market share, with the truck maker's military business also helping to offset the weakness in the consumer and commercial markets.

For the quarter ended April 30, Navistar reported earnings of $12 million, or 16 cents a share, down from $211 million, or $2.88 a share, a year earlier. The latest results included a 44-cent charge from January's settlement with Ford Motor Co. (F) regarding a diesel engine pact.

Revenue fell 29% to $2.81 billion.

Analysts polled by Thomson Reuters expected per-share earnings, excluding items, of 94 cents on revenue of $3.03 billion.

Gross margin fell to 18.3% from 19% amid the sales woes.

By segment, truck pretax profit slumped 73% while the engine business swung to a loss, with both hurting because of the demand declines. But the parts business, thanks to increased market share and military business, saw its pretax profit double on a 32% revenue jump.

The ongoing demand weakness prompted Navistar to again cut its retail-sales forecast for Class 6-8 trucks and school buses in the U.S. and Canada. It now projects 165,000 to 185,000 for the year ending Oct. 31, not the reduced view of 210,000 to 225,000 seen in March.

Shares closed Monday at $43.04 and were inactive premarket. The stock has doubled this year, but remains down 42% from a year earlier.

-By Kevin Kingsbury and Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com