10-QPeriod: Q3 FY2012

TARGET CORP Quarterly Report for Q3 Ended Oct 29, 2011

Filed November 23, 2011For Securities:TGT

Summary

Target Corporation reported solid results for the third quarter of fiscal year 2011, with consolidated revenues increasing by 5.1% to $16.4 billion. Net earnings rose to $555 million, or $0.82 per diluted share, from $535 million, or $0.74 per diluted share, in the same period last year. The company saw growth in its U.S. Retail Segment, driven by a 4.3% increase in comparable-store sales and favorable Selling, General, and Administrative (SG&A) expense rates. The U.S. Credit Card Segment also showed improvement, with declining bad debt expense contributing to increased segment profit. Looking ahead, Target is preparing for its expansion into Canada, having secured leasehold interests for up to 220 Zellers locations and planning to open 125 to 135 stores primarily in 2013. The company also announced its intention to sell its credit card receivables portfolio, contingent on favorable strategic and financial conditions. Management expressed confidence in the company's liquidity and ability to fund anticipated expansion and strategic initiatives.

Financial Highlights

48 data points
Beta

Revenue

$16.40B

31.9% Gross Margin

Net Income

$555.00M

3.4% Net Margin

EPS (Diluted)

$0.82

Total Assets

$48.45B

Free Cash Flow

-$732.00M

Financial Statements
Beta
Revenue$16.40B
Cost of Revenue$11.16B
Gross Profit$5.24B
SG&A Expenses$3.52B
Operating Income$1.04B
Interest Expense$200.00M
Net Income$555.00M
EPS (Basic)$0.82
EPS (Diluted)$0.82
Shares Outstanding (Basic)673.20M
Shares Outstanding (Diluted)678.30M

Key Highlights

  • 1Consolidated revenues increased by 5.1% to $16.4 billion in Q3 FY2011.
  • 2Diluted earnings per share (EPS) grew to $0.82, a 10.2% increase year-over-year.
  • 3U.S. Retail Segment comparable-store sales increased by 4.3%, with a 5.4% rise in segment sales.
  • 4U.S. Credit Card Segment profit increased due to a significant reduction in bad debt expense.
  • 5Target is actively pursuing the sale of its credit card receivables portfolio.
  • 6The company is on track with its expansion into Canada, having acquired leasehold interests for future store locations.
  • 7Inventory levels increased by 3.6% to support strategic initiatives and expanded retail square footage.

Frequently Asked Questions

Target reported consolidated revenues of $16.4 billion for the third quarter of fiscal year 2011, an increase of 5.1% compared to the prior year. Net earnings were $555 million, resulting in diluted earnings per share of $0.82, up from $0.74 in the same period last year.

The U.S. Retail Segment showed strong performance with a 5.4% increase in sales, driven by a 4.3% rise in comparable-store sales. The company also experienced improvements in its EBITDA and EBIT margin rates, primarily due to a favorable selling, general, and administrative (SG&A) expense rate.

Target is progressing with its Canadian expansion, having secured leasehold interests for up to 220 Zellers sites. The company plans to open 125 to 135 Target stores in Canada, primarily during 2013. Start-up costs for this venture were incurred during the quarter.

Yes, in January 2011, Target announced its plan to actively pursue the sale of its credit card receivables portfolio. The company is currently in negotiations and intends to complete a transaction only if appropriate strategic and financial conditions are met.