Store Numbers Right on Target
By Don Hogsett -- Home Textiles Today, 11/14/2005 12:00:00 AM
Driven by robust same-store sales, wider margins and a rapidly growing credit business, third quarter profits from continuing operations at Target Corp. jumped 34.5 percent, to $435 million from $324 million last year.
Net income declined 18 percent, to $435 million from $531 million, but the year-over-year comparison is skewed by one-time items related to the sale of Mervyn's, which inflated last year's profit by $207 million.
Sales during the third quarter climbed 11.7 percent, to $11.9 billion from $10.6 billion, and the crucial gauge of same-store sales improved 5.9 percent. Credit card sales raced ahead 18.1 percent, to $343 million from $290 million. Total revenues, including merchandise and credit sales, rose 11.9 percent, to $12.2 billion from $10.9 billion.
In another big lift to the bottom line, margins widened substantially, more than offsetting rising costs. Helped largely by a higher markup, average gross margin was strengthened 120 basis points, or 1.2 percentage points, to 32.3 percent from 31.1 percent during the same period a year ago. A lower markdown rate and a reduction in inventory shrinkage also helped to boost margins.
Hurt largely by the effects of three hurricanes, operating costs climbed 40 basis points, or four-tenths of a percentage point, to 23.5 percent from 23.1 percent.
Going forward, CEO Bob Ulrich said, “We will continue to grow market share profitably in this year's fourth quarter and well beyond.”
|Qtr. 10/29 (x000)||2005||2004||% change|
|a. Net income in the year-ago third quarter included $4 million in earnings from the subsequently sold Mervyn's unit, and a $203 million gain on the sale of Mervyn's. Excluding the one-time items relating to Mervyn's, earnings from continuing operations this year improved by 34.5 percent, to $435 million from $324 million.
b. Earnings in the prior-year nine months included $75 million in earnings from the discontinued Mervyn's operation, and a $1.2 billion gain on the sale of Mervyn's. Excluding the one-time items, nine-month profits this year rose by 36.7 percent, to $1.5 billion from $1.1 billion.
|Oper. income (EBIT)||831,000||633,000||31.2|
|Per share (diluted)||0.49||0.59||-16.3|
|Average gross margin||32.3%||31.1%||–|
|Oper. income (EBIT)||2,717.000||2,192,000||24.0|
|Per share (diluted)||1.65||2.59||-36.4|
|Average gross margin||32.5%||31.5%||–|
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