Summary
Target Corporation's (TGT) third quarter 2013 report highlights a challenging period, particularly in its Canadian operations. While U.S. segment sales saw a modest increase, overall GAAP diluted earnings per share declined significantly compared to the prior year, driven by various factors including the ongoing integration and costs associated with the Canadian market entry. The company completed the sale of its U.S. consumer credit card portfolio to TD Bank Group, recognizing a substantial gain, which provided a significant cash infusion. Despite the GAAP earnings decline, the company reported adjusted diluted earnings per share that were closer to prior year levels, excluding certain one-time impacts like Canadian expansion costs, credit card portfolio sale adjustments, and debt retirement losses. The company continued to invest in its business, including store remodels and technology, and remained committed to returning capital to shareholders through dividends and share repurchases. However, the significant operating losses in Canada and increased SG&A expenses in the U.S. segment are key areas to monitor.
Financial Highlights
46 data points| Revenue | $17.26B |
| Cost of Revenue | $11.85B |
| Gross Profit | $5.13B |
| SG&A Expenses | $3.63B |
| Operating Income | $739.00M |
| Interest Expense | $145.00M |
| Net Income | $341.00M |
| EPS (Basic) | $0.54 |
| EPS (Diluted) | $0.54 |
| Shares Outstanding (Basic) | 631.30M |
| Shares Outstanding (Diluted) | 637.40M |
Key Highlights
- 1GAAP diluted earnings per share decreased by 44.3% to $0.54 for the three months ended November 2, 2013, compared to $0.96 in the prior year period.
- 2The company recognized a $391 million gain on the sale of its U.S. consumer credit card portfolio to TD Bank Group in March 2013.
- 3Canadian Segment reported significant operating losses, with an EBIT of $(238) million for the three months ended November 2, 2013, and ongoing start-up costs and inventory challenges.
- 4U.S. Segment sales increased by 2.0% to $16,925 million for the three months ended November 2, 2013, but Segment Profit decreased by 11.4%.
- 5Total REDcard Penetration increased to 19.9% for the three months ended November 2, 2013, up from 14.0% in the prior year period, indicating strong customer adoption of loyalty programs.
- 6Share repurchases were suspended during the three months ended November 2, 2013, but for the nine months ended November 2, 2013, $1,474 million was invested in repurchasing 21.9 million shares.
- 7The company repaid $1.5 billion of debt collateralized by credit card receivables and used $1.4 billion of sale proceeds to repurchase additional debt in the first quarter of 2013.