Target Corp. on Tuesday posted robust second-quarter and first-half results, which were boosted in part by better-than-average performance in apparel, as the retailer reaffirmed full-year earnings projections.
For the three months ended Aug. 4, net income gained 12.6 percent to $686 million, or 80 cents a diluted share, from $609 million, or 70 cents, in the same year-ago quarter as revenues rose 9.5 percent to $14.62 billion from $13.35 billion. The revenue increase was bolstered by a 9.3 percent gain in sales to $14.17 billion and a 4.9 percent increase in same-store sales. The balance of the revenues came from its credit card operation.
For the first half, net income climbed 15.1 percent to $1.34 billion, or $1.55 a diluted share, from $1.16 billion, or $1.33, last year as revenues rose 9.4 percent to $28.66 billion from $26.21 billion. The revenue gain included a 9.2 percent increase in sales to $27.79 billion.
“We continue to believe Target will deliver strong sales and profit performance in 2007 and generate another year of profitable market share growth. We also continue to believe that $3.60 remains within the range of likely outcomes for our full-year 2007 earnings per share,” said Robert Ulrich, chairman and chief executive officer, in a statement.
In a conference call to Wall Street analysts, Ulrich said the company’s outlook for the remaining two quarters of 2007 and for the year overall “envisions that Target will continue to generate a mid-single-digit increase in comparable-store sales as our guests continue to find more reasons to shop at Target more often and to spend more on each visit. In addition, we expect both our new stores and our credit card operations to remain meaningful contributors to our overall earnings.”
Gregg Steinhafel, president, said the company is planning its business “more conservatively” to reflect the “difficult economic environment facing our guests.”
While sales were better-than-average in women’s apparel, electronics and nondiscretionary categories such as health and beauty, footwear and intimate apparel had sales that were weaker than average.
In May the company debuted Patrick Robinson’s Greek-inspired fashion, and last month introduced Libertine by the British fashion duo Cindy Greene and Johnson Hartig. Earlier this month, the discounter featured jewelry by L.A. designer Dominique Cohen. Target will launch this month Soap and Glory, a bath and body line from the U.K. developed by Bliss Spa founder Marcia Kilgore. Next month, Target’s GO International will feature English designer Alice Temperley.
Second-quarter results were helped by the opening of 42 new stores, including 32 general merchandise stores and 10 Super Target sites. Net closings and relocations, the company’s total store count at the end of the quarter was 1,537 units in 47 states, which includes its first ever three-level sales floor location in Glendale, Calif., said Steinhafel.