Bullseye (almost) for Target 3rd

By Don Hogsett -- Home Textiles Today, 11/17/2003 12:00:00 AM

MINNEAPOLIS —

Fueled by continued growth at Target Stores and at its increasingly important credit card business, Target Corp. recorded a third-quarter profit of $302.0 million, up 8.7 percent from $277 million.

But all of the company's earnings growth, and all of its sales growth as well, came out of Target stores and credit cards, while Mervyn's and Marshall Field's, while still modestly profitable, posted deep declines in sales and earnings.

Continuing to drive the parent's growth is the fast-track Target Stores division, where pre-tax profits climbed by 12.5 percent, to $604.0 million from $537.0 million last year. Target sales shot up by 13.9 percent, to $9.6 billion from $8.5 billion.

An increasingly strong contribution came out of the company's growing credit card portfolio, where pre-tax profits raced ahead by 17.4 percent, to $1162 million from $138 million.

Put another way, the credit card business made almost four times as much money during the period as Mervyn' and Marshall Field's combined. And the business is a genuine cash cow — for every dollar in credit card sales, the business turned a profit of 53 cents.

Lagging far behind, but still making money — if a lot less of it — are the Marshall Field's and Mervyn's groups, whose profits, while meager, still help build all the new Target stores going up around the country.

Earnings at Mervyn's declined by 41.8 percent during the third quarter, to $31 million from $52 million last year, while sales fell 10.1 percent, to $825 million from $917 million.

Marshall Field's profits sank even further, by 54.7 percent, to $15 million from $34 million. Department store sales fell by 6.3 percent,. to $634 million from $677 million.

Target Corp.

Third quarter segment results