Target Corp. on Wednesday posted first-quarter results that beat Wall Street's expectations by 4 cents on a strong sales gain.
Target said net income jumped 17.5 percent to $651 million, or 75 cents a diluted share, from $554 million, or 63 cents, in the same year-ago quarter. Wall Street was expecting earnings per share of 71 cents. Total revenues gained 9.2 percent to $14 billion from $12.9 billion, which included a sales increase of 9 percent to $13.6 billion from $12.5 billion. Same-store sales increased 4.3 percent. Credit card revenues also helped to boost the company's bottom line, which jumped 13 percent in the quarter to $418 million from $370 million.
"Overall, we continued to increase our market share growing our total sales at 9 percent, a much more rapid pace than the growth rate of the overall U.S. market for similar or identical merchandising," said Bob Ulrich, chairman and chief executive officer, in a conference call to Wall Street analysts.
In the same call, Gregg W. Steinhafel, president, said sales included "better-than-average performance in newborn-infant-toddler, electronics and nondiscretionary categories like health and beauty, pharmacy and consumables."
Steinhafel said to sustain the discounter's competitive advantage, Target is launching several initiatives in the second quarter. Earlier this month, the company debuted Patrick Robinson's Greek-inspired fashion. In July, Target will be introducing Libertine by the British fashion duo Cindy Greene and Johnson Hartig. The retailer plans to continue to differentiate itself by increasing its private label brands in its food business.
Todd Slater of Lazard Capital Markets, in a research note Wednesday after the company posted results, wrote that his firm is "maintaining its 2007 earnings per share estimate of $3.68, above $3.60 guidance that was in line with consensus. We think guidance will be proven conservative, if the consumer remains healthy and credit delinquencies continue to improve."
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"