Target tops Q2 estimates, upbeat outlook
Target Corp (NYSE:TGT) announced Wednesday it beat Street estimates in its second quarter on strong same store sales growth, prompting the company to release a guidance above analysts' expectations.
For the three months ending July 31, the discount retail giant posted net income of $704 million, or $1.03 per share, up 3.7% compared to $679 million, or $0.92 per share, a year ago.
Revenues rose 4.6% to $16.2 billion. Analysts had expected earnings of $0.97 per share on $16.17 billion in sales.
The positive results prompted the company to release an earnings outlook in the range of $0.70 to $0.75 per share for the third quarter, and between $4.15 and $4.30 per share for the full year.
Street estimates are $0.71 per share for the current quarter, and $4.13 per share for the full year.
"We're very pleased with our second quarter financial results, which benefited from an acceleration in the pace of our comparable-store sales growth," said president and CEO, Gregg Steinhafel.
Indeed, the company posted same store sales growth, or those of locations open at least one year, of 3.9%.
Target attributed the hike to a 0.5% rise in the number of customer transactions, and a 3.5% increase in the average transaction amount.
However, Target's growth strategies pushed down gross margins for the quarter by 40 basis points to 31.6%.
In its US retail segment, Target posted a 5.1% increase in sales, to $15.9 billion. The company's US credit card business drummed up $345 million in revenues, a 15% drop from a year ago, largely on a 12.4% drop in average receivables, the company said.
Still, Target's provision for losses, or the money it sets aside to cover bad debts, was $15 million, down from $138 million in the second quarter last year, driven by improved trends in key measures of risk, it added.
And, as expected, its new Canadian business posted a $36 million loss before taxes, due to start-up expenses and depreciation. Target expects to enter the Canadian market in 2013.
During the quarter, the company repurchased approximately 14.3 million shares of its common stock, at an average price of $48.11 per share, for a total of $688 million.
Target's stock on the New York Stock Exchange rose 5.65% before the bell today, to $52.16 per share.
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