BOSTON — Target continually pushes its competitive edge as the trendiest, most lifestyle-focused discounter.
The strategy paid off in the fourth quarter of 2004.
The second-largest U.S. discounter on Thursday posted fourth-quarter earnings that beat Wall Street’s expectations, with gains driven by sales comps that outperformed Wal-Mart Stores Inc.
For the three months ended Jan. 29, Target Corp.’s net income inched up 0.1 percent to $825 million, or 91 cents a diluted share, versus $823 million, or 90 cents, last year. The results included a gain from the sale of its Marshall Field’s and Mervyn’s operations. Earnings from continuing operations were $809 million, or 90 cents a share, beating Wall Street consensus by one cent.
Total revenues rose 11.1 percent to $15.19 billion from $13.68 billion. Results included a sales gain from the Target stores division of 11.1 percent to $14.88 billion from $13.39 billion and a 10.6 percent rise in credit card revenues to $317 million from $287 million. Same-store sales gains for stores open at least one year were 5.4 percent for the quarter. This compares with Wal-Mart’s 1.5 percent gain.
“We are pleased with our performance and our many accomplishments during 2004, including our strong growth and continued market share gains at Target and the successful sale of our Mervyn’s and Marshall Field’s divisions,” said Bob Ulrich, chairman and chief executive officer of Target Corp., in a statement.
In a conference call, Target Stores president Gregg Steinhafel said the company had a “particularly strong apparel year.”
Aside from Dotty Loves, a new tween lifestyle brand that will include apparel, Steinhafel did not offer details on any upcoming launches.
Last year, Target reshuffled its apparel holdings, moving away from Cherokee in favor of Baby Boomer-friendly Linden Hill and new activewear collection C9 by Champion.
The company is using the Web site, Target.com, to expand its apparel presentation, offering smaller sizes of Isaac Mizrahi and larger sizes of shoes, for example. Those categories represent “large direct-sales opportunities” said vice chairman Gerald Storch. Sales on the Web site grew at a high double-digit rate, according to Storch.
The Minneapolis-based retailer is also pushing forward with other softline businesses. An Isaac Mizrahi home collection will launch in March. The retailer will also add California Closets organizers, Sean Conway garden accessories, and Fieldcrest’s bed and bath linens.
Last year, Target rolled out Rachel Ashwell’s Simply Shabby Chic, Build-A-Bear toys and Boots cosmetics.
The Dotty Loves brand will include apparel, jewelry, cosmetics, hair accessories and room décor, priced from 99 cents to $19.99, said Steinhafel.
The company’s Global Bazaar — a mélange of imported home goods themed by region (Asia, Mexico and Europe, for example) — helped lead the discounter to strong January sales. It also had Steinhafel considering whether Target shoppers were ready for a broader variety of higher-priced items.
During the quarter, the company repurchased $300 million of its common stock, or 6.1 million shares at an average price of $49.51 per share.
For the year, earnings soared 76.7 percent to $3.20 billion, or $3.51, from $1.81 billion, or $1.97, a year ago. Total revenues rose 11.5 percent to $46.84 billion from $42.03 billion, which included a retail sales gain of 11.6 percent to $45.68 billion from $40.93 billion.