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Target Sales Increase 11.2%

11/11/2004 09:45:00 AM Eastern

Minneapolis — Highlighted by strong growth and continued market share gains — particularly in light of last year’s solid sales and earnings performance — Target registered an 11.2 percent rise in fiscal third quarter sales and a 14.4 percent hike in earnings from continuing operations before interest expense and income taxes.

Target third-quarter sales hit $10.6 billion, up from a year-ago $9.6 billion. Comp-store sales rose 4.5 percent.

For the quarter, earnings before interest and income taxes moved up 14.4 percent to $644 million, compared with $563 million in the same three months in 2003. Target said its gross margin rate for the quarter improved, primarily due to improvement in markup, while the retailer’s expense rate was unfavorable, compared with the prior year, primarily due to lease accounting adjustments.

Net income in the third quarter, ended Oct. 30, climbed 78.2 percent to $537 million from $302 million. The current figure includes a $203 million gain on the disposal of continued operations.

During the third quarter, Target completed its sale of its Mervyn’s department store subsidiary, and a transaction to sell Mervyn’s Minnesota stores to The May Department Stores also was completed in the third quarter. Target had completed the sale of its Marshall Field’s stores to May in the second quarter.

For the nine months, Target sales jumped 11.9 percent, hitting $30.8 million, compared with $27.5 million the previous year. Comp-store sales increased 5.2 percent.

Earnings from continuing operations before interest expense and income taxes for the nine months increased 16.6 percent, hitting $2.2 billion from $1.9 billion. Net earnings for the period more than doubled, reaching $2.4 billion from $1 billion. The current figure includes a $1.2 billion gain on the disposal of discontinued operations.

Total number of stores increased to 1,313 for the period ending with the third quarter, up from 1,227, in the same time frame last year.

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