Target's Q1 Earnings Fall 13%, Sales Flat
By Alan Wolf -- TWICE, 5/20/2009
Minneapolis — New store openings helped Target’s retail sales grow 0.4 percent to $14.4 billion during its fiscal first quarter as earnings fell 13 percent to $522 million.
Same-store sales declined 3.7 percent for the three months, ended May 2, but retail segment earnings before interest expense and income taxes (EBIT) edged up 0.3 percent to $962 million.
First-quarter gross margin rate was flat, with favorable markup and markdown performance offset by faster sales growth in lower-margin, non-discretionary categories, the company said.
First-quarter selling, general and administrative (SG&A) expense rate improved year over year thanks to “well-controlled dollar growth in a continued soft sales environment,” and the timing of recognition of certain expenses, Target said.
Target’s first-quarter earnings per share, which declined 6.8 percent but exceeded analysts’ estimates, reflected “disciplined execution of our strategy in a difficult environment,” according to chairman, president and CEO Gregg Steinhafel.
Steinhafel attributed the retail earnings uptick to “outstanding gross margin and expense rate performance,” and said first-quarter results for the company’s credit card segment were “stable, profitable and consistent with our expectations.
“We believe this improved stability and predictability in key aspects of both our retail and credit card segments reflects the resilience of our strategy and underscores our ability to generate substantial value for our shareholders over time,” he said.
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