Target Corp. earnings climb 6% to $254M

MINNEAPOLIS — Boosted by continued strength at its core Target Stores chain, and getting a modest lift from an earnings rebound at Mervyn's, first-quarter profits at Target Corp. rose by 6.2 percent, to $254 million from $239 million last year.

Sales at the diversified retail chain rose by 7.7 percent, to $8.2 billion from $7.6 billion last year, with Target Stores the only gainer, with a solid 10.7 percent increase. Both Mervyn's and Marshall Field's posted declines, down 2.0 percent and 4.2 percent, respectively.

The big money market in a straitened retail environment remains the core Target Store business, where pre-tax profits climbed by 7.7 percent, to $502 million from $467 million. Despite the lower level of sales, Mervyn's managed to boost its pre-tax profit by 3.9 percent, to $48 million form $46 million a year ago. But Marshall Field's, like most American department stores, was hard hit in the currently weak retail environment, its pre-tax profits falling by 20.7 percent, to $23 million from $29 million.

Putting modest pressure on the bottom line, average gross margin narrowed by 30 basis points, to 31.4% from 31.7% a year ago. But given the higher level of sales, gross margin dollars still moved up by 7.7 percent, to $8.3 million from $7.7 million.

Despite the current slowdown, ceo Robert Ulrich said he's confident the company can meet scaled-back targets for this year, and is buoyant about Target's long-term earnings prospects. "We remain comfortable that we are well positioned to meet near-term economic and competitive challenges and deliver reasonable growth in earnings per share for the full year. Over the long-term, we remain confident in our ability to achieve average annual earnings per share growth of 15 percent or more."