Target meets modest Q2 expectations, readies home for updates

HTT Staff -- Home Textiles Today, 8/15/2012 1:11:13 PM

Minneapolis - Target Corp.'s second quarter earnings were flat at $704 million thanks to start-up expenses for its Canadian expansion as well as modest sales and comp increases.

The retailer will enter the Canadian market in 2013 with 25 store openings in 18 communities in Ontario in March and April, followed by dozens of others throughout Canada into 2014.

Target's second quarter sales in the U.S. increased 3.5% to $16.5 billion from $15.9 billion last year, with comps up 3.1%.

Although shoppers stuck largely to less consumables, apparel had a strong quarter and domestics and seasonal led in the home department, according to evp of merchandising Kathryn Tesija.

Target.com reported flat sales for the quarter, and the retailer is making improvements to speed, capability and product assortment. Tesija said the plan is to "make sure that what we carry in store is also carried online." A large part of that effort focuses on home and apparel.

Other in-store and online initiatives include:

• The September rollout of Target's next installment of The Shops at Target, which is focused on home and apparel, "and we've partnered with four distinctive boutiques to co-create exclusive collections prices to range from $3 to $120," Tesija said.
• The October launch of the Nate Berkus collection across home. The exclusive assortment will span 150 home products with prices ranging from $6 to $150.
• The third quarter introduction of Target's new private label home brand, Threshold. The initial offering will include a small assortment of entertaining essentials, accents and decorative accessories. The rollout is expected to be completed across all of Target's home categories by summer 2013.
• Target's fourth quarter collaboration with luxury department store Neiman Marcus on Dec. 1. The joint holiday program will span 50 products across several categories, including home décor.

Year to date, net earnings were up a slight 0.6% to $1.401. Sales increased 4.8% to $32.989 billion, and comps were up 4.2%.

Target also raised its guidance for the fiscal year and now expects adjusted EPS of $4.65 to $4.85 and GAAP EPS of $4.20 to $4.40.

The company noted "the difference between the GAAP and adjusted EPS range of 14 cents in the third quarter reflects the expected EPS impact of expenses related to the company's Canadian market entry.