Target Corp. executives on Wednesday were crowing about a strong first quarter that included a 5.3 percent comparable-store sales increase, the largest since the third quarter of 2005.
Net earnings for the first quarter were $697 million, or $1.04 a share. Adjusted earnings per share for the three months ended April 28 were $1.11, up 11.5 percent from 99 cents for the first quarter of 2011. All EPS figures refer to diluted earnings per share.
Sales increased 6.1 percent to $16.5 billion from $15.6 billion in 2011, due to the 5.3 percent increase in comp-store sales and the contribution from new stores. Segment earnings before interest, expense and income taxes (EBIT) were $1.19 billion in the first quarter of 2012, a 12.9 percent jump from $1.06 billion in 2011.
“We emerged from the recession leaner and healthier than ever,” said Gregg Steinhafel, chairman, president and chief executive officer of Target Corp. “Our first-quarter earnings exceeded our expectations.”
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Expenses related to Target’s Canadian market entry reduced EPS by about 8 cents in the first quarter. The retailer also invested in store remodels, bringing the total number of remodels to 1,100.
Capital expenditure for this year will total $3.3 billion for the U.S. and $800 million for Canada, where Target plans to open 125 to 135 stores by 2014.
“We’re strengthening our Web platform,” said Kathryn A. Tesija, executive vice president of merchandising. “We’re investing capital and resources into the seamless integration of our online mobile platform and social media.”
For the second quarter of 2012, Target expects adjusted EPS of $1.04 to $1.14 and generally accepted accounting principles EPS of 94 cents to $1.04. Full-year 2012 guidance has been raised by 5 cents and is now expected to be adjusted EPS of $4.60 to $4.80 and GAAP EPS of $4.10 to $4.30.
“We’re pleased with the initial results of The Shops at Target,” Tesija said of the retailer’s latest partnership platform featuring store owners. “It’s differentiated merchandise at prices our guests can afford.”
Tesija said the retailer will “continue to work with designers and brands to create exclusives such as Todd Oldham’s new Kids Made Modern tools to inspire art.” Target is rolling out a new Assets collection of one-piece swimsuits and tankinis and in July will introduce new fits for Merona men’s wear.
“Apparel sales this spring helped our mix quite a bit [in the first quarter],” Steinhafel said. “Our owned brands have been strong across the board. We now have 10 owned brands that do more than $1 billion [each] at retail. You’re going to see us continue to focus on this very important part of our merchandising strategy.”