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Target Corporation Cites Weather As Reason For Weak Earnings

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Target Corporation (NYSE:TGT) posted a lower-than-expected earnings performance for the first quarter of fiscal 2013. The company said that soft sales and weather related categories affected its results.

Target Corporation Logo

The company reported an income of $498 million or $0.77 per share for the first quarter. During the same period last year, Target Corporation reported a profit of $697 million or $1.04 earnings per share.

According to the company, its adjusted earnings per share for the first quarter was $1.05, a decline of 5 percent from $1.11 in the same period in 2012.

Target Corporation (TGT) Results:

Target Corporation (NYSE:TGT) said that its current results include losses related to the early retirement of debt of $0.41 per share, EPS dilution of $0.24 related to the Canadian segments, and net accounting gains of $0.36 related to the sale of the company’s entire consumer credit card receivable portfolio to TD Bank Group (NYSE:TD).

In a statement, Gregg Steinhafel, chairman, president, and CEO of the company said,  “Target’s first quarter earnings were below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weather-sensitive categories. While we are disappointed in our first quarter performance, we remain confident in our strategy, and we continue to invest in initiatives, including Canada, our digital channels and CityTarget, that will drive Target’s long-term growth.”

For the second quarter of 2013, Target Corporation (NYSE:TGT) expects to achieve adjusted earnings per share of around $1.09 to $1.19 and GAAP EPS of approximately $0.90 to $1.00 For the full fiscal 2013, the company expects to deliver $4.70 to $4.90 adjusted EPS, down from its previous guidance of $4.85 to $5.05. Its GAAP EPS is expected to be around $4.12 to $4.32.

In the United States, Target Corporation (NYSE:TGT) reported $16.6 billion sales, up by 0.5 percent from $16.5 billion last year. According to the company, its segment earnings before interest expense and income taxes (EBIT) were $1.2 billion, down by 7.5 percent from $1.3 billion in 2012. Its first quarter EBITDA margin rate was 10.4 percent while its gross margin rate was 30.7 percent.

During the period, Target Corporation (NYSE:TGT) opened 24 stores in Canada. The company aims to operate 124 stores in the country by the end of 2013. The stores delivered $86 million sales with 38.4 percent gross margin. According to the company its $33 million gross margin was offset by $238 million start-up expenses, operating expenses, depreciation and amortization related to its entry in the market.

Target Corporation returned $779 million capital to shareholder through dividend payments and shares buyback. The company repurchased 8.5 million shares worth $547 million. The stock price of  the company is down by more than 3 percent to $68.90 per share on Wednesday around 11:20 AM in New York.

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