Target (TGT) reported Wednesday its net earnings for fiscal second quarter rose 14% as sales grew 3.8% in the quarter, due to the contribution of new stores as well as comparable-store sales.
The discount retailer said that for the quarter ended July 31, 2010, it earned $679 million, up from $594 million in the quarter ended August 1, 2009. Earnings per share in the second quarter increased 17% to 92 cents from 79 cents in the same period a year ago. This was in line with analyst estimates
Total revenue grew 3.1% to $15.5 billion, below estimates of $51.6 billion, according to Thomson Reuters. Retails sales increased 3.8% in the second quarter to $15.1 billion in 2010 from $14.6 billion in 2009, due to the contribution from new stores combined with a 1.7% increase in comparable-store sales. EBITDA and EBIT margins declined slightly because of higher expenses.
In the credit card segment, profit more than doubled to $149 million from $63 million a year ago, as bad debt expense declined 54.5% from $303 million in second quarter 2009 to $138 million this year. Average receivables decreased 15.1% to $7.1 billion in 2010 from $8.4 billion in 2009.
"Our retail segment generated strong profitability, overcoming softer-than-expected sales," said Chairman, president and CEO Gregg Steinhafel in a statement. "Growth in guest traffic and apparel sales remained robust, and teams across the company continued to exercise thoughtful control of expenses. Our credit card segment also enjoyed very strong results ... Regardless of the pace of recovery, we are well-positioned to continue to gain profitable market share."
In the second quarter, the company repurchased 17.5 million shares of its common stock at an average price of $51.72, for a total investment of $907 million.
Shares fell over 2.5% in premarket trading.
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