10-QPeriod: Q3 FY2010

TARGET CORP Quarterly Report for Q3 Ended Oct 31, 2009

Filed December 4, 2009For Securities:TGT

Summary

Target Corporation's fiscal third quarter results for the period ending October 31, 2009, indicate a challenging economic environment impacting consumer spending. While overall revenues saw a slight increase year-over-year, net earnings experienced a modest rise to $436 million from $369 million in the prior year's comparable quarter. The company maintained a disciplined approach to expenses, which, combined with improved gross margin rates, helped offset a slight decrease in comparable-store sales. The credit card segment, despite a challenging consumer credit environment, demonstrated stability and modest profitability. The company ended the quarter with a solid cash flow from operations, supporting its financial obligations and dividend payments. Management expressed cautious optimism for the fourth quarter, anticipating profit growth driven by easier year-over-year comparisons and strategic adjustments in the credit card segment.

Financial Highlights

44 data points
Beta

Revenue

$15.28B

33.0% Gross Margin

Net Income

$436.00M

2.9% Net Margin

EPS (Diluted)

$0.58

Total Assets

$45.98B

Free Cash Flow

$578.00M

Financial Statements
Beta
Revenue$15.28B
Cost of Revenue$10.23B
Gross Profit$5.05B
SG&A Expenses$3.25B
Interest Expense$191.00M
Net Income$436.00M
EPS (Basic)$0.58
EPS (Diluted)$0.58
Shares Outstanding (Basic)751.80M
Shares Outstanding (Diluted)755.70M

Key Highlights

  • 1Total revenues increased slightly to $15.28 billion for the third quarter of fiscal 2009, up from $15.11 billion in the same period last year.
  • 2Net earnings for the third quarter were $436 million, or $0.58 per diluted share, compared to $369 million, or $0.49 per diluted share, in the prior year's quarter.
  • 3Comparable-store sales decreased by 1.6% for the third quarter, indicating ongoing consumer caution.
  • 4The company's gross margin rate improved to 30.8% from 30.6% in the prior year's quarter, driven by better markdown performance and lower transportation costs.
  • 5Selling, general, and administrative (SG&A) expenses as a rate of sales improved to 21.9% from 22.1%, reflecting productivity gains.
  • 6Cash flow provided by operations was a strong $3.03 billion for the first nine months of the fiscal year.
  • 7The company declared a dividend of $0.17 per share for the quarter, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Total revenues increased slightly to $15.28 billion. However, comparable-store sales experienced a modest decline of 1.6%, reflecting the challenging macroeconomic conditions and cautious consumer spending during the period.

Net earnings rose to $436 million ($0.58 per diluted share) from $369 million ($0.49 per diluted share) in the prior year's third quarter. This improvement was supported by an increase in gross margin rate and disciplined control over selling, general, and administrative expenses.

The Credit Card Segment showed stability and modest profitability despite a challenging consumer credit environment. Segment profit for the third quarter increased to $60 million from $35 million in the prior year, benefiting from improved terms and controlled expenses, although offset by higher bad debt expense.

Target anticipates strong profit growth in the fourth quarter due to easier year-over-year comparisons. While expecting continued modest negative comparable-store sales, the company projects an increase in its retail gross margin rate and modest portfolio profitability in the credit card segment.