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Target lowers earnings forecasts for quarter, year
April 16th, 2013
MINNEAPOLIS – Target Corp. has updated its forecast for first quarter comparable-store sales and earnings as well as full-year reported earnings following the sale of its credit card portfolio and settlement of its debt tender offers.
Management now expects first quarter comp-store sales to be nearly flat due to weaker-than-anticipated sales trends, especially in seasonal and weather-sensitive categories. Consequently, adjusted earnings per share are predicted to come in slightly below the low end of the company’s prior guidance range of $1.10 to $1.20 per diluted share.
Reported earnings for the first quarter are projected to be around 28 cents lower than adjusted earnings per share as a result of the following factors:
• Losses totaling about $445 million, or 41 cents per share, related to the early retirement of debt and to be classified in interest expense.
• Expected dilution of earnings related to Target’s Canadian segment totaling about 23 cents per share.
• Net accounting gains of about 36 cents per share stemming from the sale of Target’s entire consumer credit card receivables portfolio to TD Bank Group.
Target reaffirmed its previous full-year guidance for adjusted earnings of $4.85 to $5.05 per diluted share. Reported earnings for the year are calculated to be about 57 cents lower than adjusted earnings per share due to the following items:
• Losses on early debt retirement in the same amounts cited above.
• Expected dilution of earnings totaling about 45 cents per share from the Canadian segment.
• A net gain of approximately 29 cents per share from the credit card portfolio sale.
Target had previously issued estimates of the earnings impact of its Canadian operations and the sale of its credit card portfolio that were closely in line with the figures presented above. Also, as previously announced, with the completion of the sale of its credit card receivables Target will restate its quarterly financials for fiscal years 2010, 2011 and 2012, combining its U.S. retail and credit card segments into a single U.S. segment.