"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Wednesday, November 17, 2010

Target beats estimates and becomes a credit card company (no growth in retail)

MINNEAPOLIS--(BUSINESS WIRE)-- Target Corporation (NYSE: TGT) today reported net earnings of $535 million for the quarter ended October 30, 2010, compared with $436 million in the quarter ended October 31, 2009. Earnings per share in the third quarter increased 28.5 percent to 74 cents from 58 cents in the same period a year ago. All earnings per share figures refer to diluted earnings per share.

“We’re pleased with Target’s third quarter financial performance, and we are well-positioned for the fourth quarter,” said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. “We’ve built our holiday season plans to create excitement and provide our guests unbeatable value. In addition, our guests can save more than ever with our new 5% REDcard rewards program. Based on our merchandising and marketing plans, combined with the expected impact of REDcard rewards and our newly completed remodel program, we expect Target’s fourth quarter comparable-store performance will be the best of any quarter in the last three years.”

Retail Segment Results
Sales increased 3.0 percent in the third quarter to $15.2 billion in 2010 from $14.8 billion in 2009, due to a 1.6 percent increase in comparable-store sales combined with the contribution from new stores. Retail segment earnings before interest expense and income taxes (EBIT) were $816 million in third quarter 2010, an increase of 3.2 percent from $791 million in 2009.

Third quarter EBITDA and EBIT margin rates were 8.8 percent and 5.4 percent, respectively, compared with 9.0 percent and 5.3 percent in 2009. These changes were the result of a modest decline in the gross margin rate, offset by favorability in the selling, general and administrative (SG&A) expense rate and the depreciation and amortization (D&A) expense rate.

Third quarter gross margin rate was 30.6 percent, down from 30.8 percent in 2009. The impact of sales mix on gross margin rate was essentially neutral, as sales increased at a similar pace in both higher-margin and lower-margin categories.

Third quarter SG&A expense rate was 21.8 percent, down from 21.9 percent in 2009.

Credit Card Segment Results
Third quarter segment profit increased to $130 million from $60 million a year ago, as bad debt expense declined 64 percent from $301 million in third quarter 2009 to $110 million this year.

Third quarter average receivables decreased 16.3 percent to $6.9 billion in 2010 from $8.2 billion in 2009. Average receivables directly funded by Target increased in the third quarter to $2.8 billion from $2.7 billion in 2009.

Annualized segment pre-tax return on invested capital was 18.5 percent in the third quarter 2010, compared with 9.0 percent a year ago.

Grandpa's Recap (Target...the New Credit Card Company)

Quarter 3, 2010

  • Retail Sales: up 3% year over year
  • Credit Card Revenue: down 22.1% year over year
  • Credit Card bad debt expense declined 64 percent from $301 million in third quarter 2009 to $110 million this year. (Gotta love Mark-to-Model)
  • Net earnings of $535 mil versus $436 mil 2009 (up 22.5% year over year)
Target is still a retail operation....aren't they"
  • Quarter 3, 2010
  • $405 mil net earnings from their traditional retail operations
  • $130 mil net earnings from credit card operations (24.2%)
  • Quarter 3, 2009
  • $376 mil net earnings from their traditional retail operations
  • $60 mil net earnings from credit card operations (15.9%)

Net income excluding credit card operations,
Quarter 3, 2010 retail only earnings increased
7.7% over Quarter 3, 2009.
 (stock up 3.6% today and 15% YTD)

Target...What's In Your Wallet?

No comments:

Post a Comment