NEW YORK — Target Corp. Thursday said its second-quarter profits increased nearly 13 percent, largely due to higher food sales and revenue from its credit card business.
Net earnings in the quarter ended July 29 rose to $609 million, or 70 cents per share, compared with $540 million, or 61 cents per share, in the second quarter last year. Wall Street analysts' average forecast was 69 cents a share.
Total revenues in the quarter increased 11.3 percent, to $13.3 billion from $11.9 billion in the same period in 2005, driven by new store expansion and credit card operations. Same-store sales in the second quarter rose 4.6 percent. Sales for the period rose 11.1 percent, to $12.96 billion from $11.67 billion a year ago.
On a conference call with analysts, Target's chairman and chief executive officer, Bob Ulrich, said he was confident the Minneapolis retailer could sustain strong growth in spite of worrisome signs in the economy.
"We continue to believe Target will deliver strong sales and profit performance in 2006 and generate another year of profitable market share growth even in light of the challenges posed by the current economic environment," said Ulrich.
"For more than 10 years, we have executed successfully this approach by anticipating shifts in guest preferences, refining our merchandising and marketing to adapt to various economic challenges, and overcoming competitive threats to produce strong sales and earnings growth," he added. "Though the current marketplace continues to be highly competitive and the macroeconomic environment, in the near term, appears uncertain, we are confident that...we can translate our core strategy and brand promise into continued profitable market share growth."
The retailer considers Wall Street's average profit projection of $3.11 per share for the year to be reasonable.
Ulrich said the company is on track to open its 2,000th Target in the U.S. in 2011, when it will also hit the $100 billion annual sales mark.
To achieve those goals, the retailer will have to compete with an increasingly trend-conscious Wal-Mart, which has shown its willingness to attack Target's strength in apparel and design. Wal-Mart is remodeling stores and introducing new brands, such as Metro 7, for fashion-conscious women.
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