Minneapolis — Fiscal second-quarter sales at Target jumped 13.5 percent, hitting $11.7 billion, up from $10.3 billion in the same three months last year. Comp-store sales climbed 6.7 percent.
Earnings from continuing operations in the quarter, ended July 30, reached $540 million, compared with $360 million year-on-year. Prior-year results from continuing operations include a loss of $74 million from early retirement of debt.
Net income for the quarter hit $540 million, compared with $1.4 billion in the same period in 2004. The company had a gain on disposal of discontinued operations of $1 billion in the second quarter last year, stemming from the sale of Mervyn’s and Marshall Field’s. Net interest expense for the quarter decreased $97 million, compared with the second quarter last year.
For the second quarter, earnings before interest and income tax (EBIT) increased 24.6 percent to $979 million, compared with $786 million in the second quarter last year. The contribution from the retailer’s credit card operations to EBIT was $153 million, an increase of $33 million, or 27.5 percent.
Gross margin in the second quarter improved from the previous year, primarily due to higher markup. Favorability in markdowns and inventory shortage also contributed to the improvement. Target’s expense rate was unfavorable, compared with the prior-year period.
“We are pleased with the second quarter results,” said Bob Ulrich, chairman/CEO. “Our performance reflects our strategic discipline, consistent execution and ability to delight Target’s guests with the right combination of innovation, design and value.”
For the six months, sales rose 13.1 percent, hitting $22.8 billion, up from a year-over-year $20.2 billion. Earnings from continuing operations increased to $1 billion, from $752 million, a 37.6 percent climb. Net income for the first half dropped to $1 billion, from $1.8 billion. Again, there was a $1 billion gain in last year’s first half due to the sale of Mervyn’s and Marshall Field’s.