Target Ends Year on Strong Note After Holiday Boost
Target Corporation's fourth-quarter earnings jumped 10.5 percent over the same period last year, driven by strong sales in the holiday season and lower expenses from shoppers' bad credit card debts.
For the quarter that ended January 29, the Minneapolis-based retail giant reported a profit of $1.04 billion, or $1.45 per share, up from $936 million, or $1.26 per share, a year earlier. Target's revenue, meanwhile, rose 2.4 percent to $20.66 billion-below the $20.76 billion forecast by analysts polled by Thomson Reuters. Its same-store sales-sales at stores open for at least a year and an industry barometer-also rose 2.4 percent, outperforming its larger rival Walmart, whose same-store sales fell 1.8 percent over the holiday quarter.
Meanwhile, revenue for the full fiscal year totaled $67.4 billion, up 3.1 percent from $65.3 billion the previous year. The increase was attributed to a 2.1 percent increase in same-store sales-sales at stores open at least a year and an industry barometer-and sales at newly opened stores. Net earnings for the full fiscal year rose 17.3 percent to $2.9 billion, or $4 per share.
“We're very pleased with our fourth quarter and full-year 2010 financial results, which reflect strong performance in both of our business segments,” Gregg Steinhafel, CEO of Target, said in a statement. “In 2011, we will continue to focus on driving sales and traffic and providing an enhanced shopping experience through key strategic initiatives that include our ambitious remodel program, 5 percent REDcard Rewards, and the launch of our new Target.com platform.”
In addition to strong sales in the fourth quarter, Target got a lift from its credit card business. The company said that its credit card arm generated a profit of $151 million, nearly four times more than last year, which it attributes to consumers' improving finances. Bad-debt expenses within the company's credit-card segment fell to $83 million from $284 million a year earlier.
In October, Target rolled out its REDcard Rewards discount program, which gives its store credit- and debit-card users a 5 percent discount on most purchases. The company also has increased its fresh food merchandise offerings and remodeled stores through its PFresh program.
Steinhafel said that beyond 2011, the company plans to expand its footprint in new ways. The company will open its first “City Target” stores-smaller, urban versions of the suburban big-box merchant-in 2012 and open 100 to 150 Canadian Target stores in 2013 and 2014.
Target serves customers at 1,750 stores in 49 states nationwide and on its Web site. It is Minnesota's second-largest public company based on revenue.