Target
Written on May 22, 2008
Profits dropped almost 8% at Target Corp. on softer-than-expected sales and higher costs, but the discount retailer still beat Wall Street earnings estimates for its first quarter.
The nation’s second-largest discount retailer on Tuesday reported a profit of $602 million, or 74 cents per share, in the three months ended May 3, down from $651 million, or 75 cents per share, during the same period last year.
Analysts surveyed by Thomson Financial expected 71 cents per share.
Minneapolis-based Target (TGT, Fortune 500) said revenue rose 5 percent to $14.8 billion from $14 billion. Analysts predicted $14.92 billion.
Its shares rose 20 cents to $55.12 in morning trading.
President and Chief Executive Gregg Steinhafel said in a statement that the profit "met our expectations despite softer-than-expected sales performance." He added that "the current economic environment remains challenging."
The company said profit margins declined slightly from last year because sales grew faster in low-margin categories, which generally includes food and essentials like paper towels.
Sales at established stores fell 0.7% no teletrack payday loans. Retail profits not counting interest and taxes fell 2% to $959 million.
In its credit card operation, Target said it earned $199 million before interest and taxes, down almost 10% from a year ago.
Net credit card write-offs increased to an annualized rate of 7.6%, versus 6% a year ago. It wrote off $161 million in bad debts, up almost 62% from a year ago.
Target said it closed its transaction to sell 47% of its credit card receivables to JPMorgan Chase (JPM, Fortune 500) on Monday, for $3.6 billion.
The company runs 1,613 Target stores in 47 states.
Filed in: finance.