Target’s net profits for the third quarter ended Nov. 2 declined 46 percent to $341 million from $637 million in last year’s quarter, falling below the company’s expectations. Earnings per share of 54 cents fell 46 percent from 97 cents in the third quarter of 2012, a result of the higher-than-expected dilution of 29 cents related to the Canadian segment.
Comp-store sales increased 0.9 percent in the quarter, which is near the low end of the retailer’s prior guidance.
Sales in the third quarter rose 4 percent to $17.26 billion, from $16.6 billion in the prior year’s third quarter. But Target cut its outlook for the year to EPS of $4.59 to $4.69 from its earlier projection of EPS of $4.70 to $4.90, pointing again to costs associated with the Canadian operations.
“Profits and sales in Canada have not met our expectations, but we remain confident in their potential,” said Gregg Steinhafel, chairman, president and chief executive officer of Target. “Our Canadian segment will contribute meaningfully to Target sales over time. The shortfall will moderate next year, leading to significant improvement in Canadian profit.”
Segment earnings before interest expenses and income taxes were $977 million, a decline of 11.4 percent from $1.1 billion in 2012.Earnings before interest, taxes, depreciation and amortization were 8.7 percent in the third quarter. The gross margin rate decreased to 30 percent from 30.3 percent last year.
“The gross domestic product continues to grow at a painfully slow pace while household income remains constrained,” said Steinhafel. “Household incomes have seen additional pressure from this year’s payroll tax increase. The recovery took a dramatic step backward during the government shutdown. The competition has become increasingly focused on promotions to gain the attention of value-conscious consumers and clear discretionary categories.”
Target borrowed a phrase from Wal-Mart: everyday low prices. “Low everyday prices and our price-matching policies offer unbeatable value in the marketplace,” said Steinhafel.
Home and apparel saw small declines in comp sales, while apparel, hardlines and beauty experienced strong growth online in the third quarter. “We’re pleased with [3.1] Phillip Lim for Target,” said Kathryn Tesija, executive vice president, merchandising and supply chain. “It’s our best designer launch ever, both in stores and online, with very clean sell-throughs. The launch of holiday is off to a good start. We’re very pleased with apparel overall. The softest part of apparel has been in kids.”
Target will open at 8 p.m. on Thanksgiving, an hour earlier than last year.
The retailer returned $271 million to shareholders in the third quarter, but didn’t repurchase any shares. “We will resume repurchasing shares when conditions are appropriate,” said John Mulligan, executive vice president and chief financial officer. The company expects fourth-quarter EPS of around $1.26 and is planning flat comp store sales in the U.S., given the six fewer shopping days between Thanksgiving and Christmas, the state of mind of the consumer and the competitive environment.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion