Target Corporation (NYSE: TGT) reported earnings from continuing operations for the first quarter ended April 30, 2005 of $494 million, or 55 cents per share, compared with $392 million, or 43 cents per share in the first quarter ended May 1, 2004. All earnings per share figures refer to diluted earnings per share.
"We are pleased with our first quarter results," said Bob Ulrich, chairman and chief executive officer of Target Corporation. "Our performance reflects our discipline in executing our strategy and our success in delighting our guests with the right combination of innovation, design and value. We are optimistic about our ability to sustain our competitive advantage and remain confident that we will continue to enjoy profitable market share growth throughout 2005 and beyond."
Total revenues in the first quarter increased 12.7 percent to $11.477 billion from $10.180 billion in 2004, driven by a 6.2 percent increase in comparable store sales combined with the contribution from new store expansion and our credit card operations. (Total revenues include retail sales and net credit revenues. Comparable-store sales are sales from stores open longer than one year.)
For the quarter, earnings before interest and income taxes (EBIT) increased 17.4 percent to $907 million, compared with $773 million in the first quarter 2004. The contribution from the company's credit card operations to EBIT was $142 million, an increase of $31 million, or 27.9 percent.
In the first quarter, the company's gross margin rate improved from the prior year, reflecting favorable markup and shortage performance, while the company's expense rate was unfavorable to prior year. (Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales.)
Net interest expense for the quarter decreased $32 million compared with first quarter 2004 reflecting the benefit of lower average funded balances resulting from the application of proceeds from the Mervyn's and Marshall Field's sale transactions, partially offset by a higher average portfolio interest rate.
The company's effective income tax rate for continuing operations for the first quarter was 37.9 percent in 2005 compared with 37.8 percent in 2004.
In June 2004, the company announced a $3 billion share repurchase program. Under this program, the company repurchased $453 million of its common stock during the first quarter of 2005, acquiring 9.2 million shares at an average price of $49.37 per share. Program to-date, the company has acquired 37.7 million shares of its common stock at an average price per share of $45.89, reflecting a total investment of approximately $1.73 billion. The company continues to expect that this share repurchase program will be completed within two to three years of its inception.
Target Corporation will webcast its first quarter earnings conference call at 9:30am CDT today. Investors and the media are invited to listen to the call through the company's website at http://www.target.com (scroll down to the bottom of the Home page and click on "Investors", then click on "webcasts"). A telephone replay of the call will be available beginning at approximately 11:30am CDT today through the end of business on May 13, 2005. The replay number is (402) 998-1599.
Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company's 2004 Form 10-K.
Target Corporation's continuing operations include large, general merchandise discount stores, as well as an on-line business called Target.com. At quarter-end, the company operated 1,330 Target stores in 47 states
Posted May 2005 Fashion News[borders/disc4aftr.htm]