MINNEAPOLIS — Fueled by a better than expected retail performance, Target Corp. posted robust profit and sales increases in its first quarter.
Fueled by a better than expected retail performance, Target Corp. posted robust profit and sales increases in its first quarter.
The discount store chain said Wednesday that net earnings for the quarter ended May 1 came in at $671 million, or 90 cents per diluted share, up from $522 million, or 69 cents per diluted share, a year earlier.
Target noted that the result was the highest earnings per share from continuing operations in the company’s history, excluding holiday-driven fourth-quarter results.
The first-quarter earnings topped the average estimate of 87 cents per share of analysts surveyed by Thomson Financial. Their forecast ranged from a low of 73 cents to a high of 90 cents.
On the retail side, sales increased 5.5% in the first quarter to $15.2 billion from $14.4 billion a year ago, which Target attributed to a 2.8% increase in comparable-store sales and the contribution from new stores. Retail segment earnings before interest expense and income taxes (EBIT) were $1.1 billion in the first quarter, a gain of 15.2% from $962 million in 2009.
"We’re very pleased with our first-quarter financial results, which were the result of disciplined execution by our teams in a stronger-than-expected economic environment," Target chairman and chief executive officer Gregg Steinhafel said in a statement. “Our retail segment delivered results well above our expectations, as sales of higher margin discretionary items were particularly strong, especially in apparel.
"Profitability in our credit card segment was also well above expectations, as declining risk levels led to a sharp reduction in bad debt expense compared with a year ago," Steinhafel added. "Going forward, we will continue our relentless focus on delighting our guests by delivering the right fashion, great quality at low prices, and a superior guest experience in our stores and online."
In the credit card segment, first-quarter profit jumped 188% to $111 million from $39 million a year ago, as bad debt expense fell 33% from $296 million in first-quarter 2009 to $197 million this year, according to Target.
The company also noted that the first-quarter selling, general and administrative (SG&A) expense rate was 20.6%, down from 20.9% in 2009. Target attributed the improvement to continued strong productivity improvements in stores, along with disciplined expense control companywide.
Target said it currently operates 1,740 stores in 49 states.