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Target Posts Higher Earnings, Sales

11/14/2006 09:17:00 AM Eastern

Minneapolis — Target reported higher net earnings and total revenues for its fiscal third quarter ended Oct. 29.

Net earnings were $506 million compared with $435 million for last year’s third quarter.

Total revenues in the third quarter increased 11.2 percent to $13.6 billion from $12.2 billion in 2005, driven by the contribution from new store expansion, a 4.6 percent increase in comparable-store sales and the contribution from credit card operations.

Target noted that total revenues include retail sales and net credit card revenues. Comp-store sales are sales from stores open longer than one year.

“We continue to believe that our strategic discipline, consistent execution and commitment to deliver the right combination of innovation, design and value will delight our guests and produce profitable market share growth in this year's fourth quarter and well beyond,” said Bob Ulrich, Target’s chairman/CEO.

Earnings before interest expense and income taxes (EBIT) in the third quarter increased 15 percent to $957 million, compared with $831 million in the third quarter a year ago. Both core retail operations and credit card operations contributed to this EBIT growth. Within Target’s core retail operations, gross margin rate was slightly favorable to the prior year, while the company’s expense rate in the quarter was unfavorable to the prior year. (Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales.)

Earnings before taxes (EBT) in the third quarter totaled $808 million, representing an increase of $95 million, or 13.2 percent, from the same period in 2005. The contribution from the company's credit card operations to these results was $176 million, an increase of $68 million, or 62.9 percent, from a year ago.