Fort Worth, Texas – Increased smartphone demand and lower
advertising expenditures helped drive third-quarter sales and earnings growth
Total net sales and operating revenues rose 6.2 percent to $1 billion
for the three months ended Sept. 30, while net income increased 23 to $46
Comparable store and kiosk sales also rose 6.2 percent, due to
increased sales of post-paid smartphones, prepaid wireless handsets, power
products and wireless airtime, plus the addition of the T-Mobile carrier
The gains were partially offset by a year-over-year decline in
sales of digital converter boxes and related television antennas, from $30.2
million to $7.7 million, as the transition from analog-to-digital broadcasts concluded.
Accessories were also impacted by the completion of the broadcasting
changeover. The category fell 12 percent during the quarter but declined 2.1
percent excluding the impact of converter boxes.
Gross margin slipped from 47.6 percent to 45.4 percent year over
year due to a higher mix of lower-margin handsets and product assortment
transitions during the quarter. The gross margin decline was partially offset
by declining sales of lower-margin converter boxes.
Consolidated selling, general and administrative expenses (SG&A)
were pared back to $371.1 million, or 35.3 percent of sales compared with 38.5
percent of sales for the year-ago period
due to lower advertising and insurance expenses. But the lower expenses were
partially offset by higher employee commissions due to increased wireless sales,
plus additional compensation for employees hired to support the rollout of
wireless kiosks to all Target stores, which is
xpected to be complete by the end of June 2011.
“We are pleased with our third-quarter results,” chairman/CEO Julian
Day said in a statement. “In addition to the continued growth in our
wireless business, we are encouraged by the improvements in our non-wireless
product categories, including accessories and power. We plan to maintain our
focus on enhancing the quality of our operations and service, strengthening our
product offerings, and revitalizing and contemporizing our brand, while at the
same time looking for further opportunities to broaden the base of customers we
Executive VP and chief financial officer Jim Gooch added that the
company’s strong balance sheet allowed it to make strategic investments in “a
more contemporary and productive product assortment in our non-wireless
platforms” as well as in the Target Mobile program.