MINNEAPOLIS, March 2 /PRNewswire/ -- Dayton Hudson Corporation (NYSE: DH)
today reported earnings per share for the fourth quarter ended Jan. 30, 1999
of 97 cents before unusual items, compared with 76 cents in fourth quarter
1997. Including unusual items, fourth-quarter earnings per share were 90
cents in the quarter, compared with 76 cents in the prior year. All earnings
per share figures refer to diluted earnings per share. Fourth-quarter net
earnings increased 28 percent to $453 million before unusual items, compared
with $356 million in 1997. Including unusual items, net earnings were
$423 million in the current period.
"We are pleased with our results in 1998, which reflect the third
consecutive year of significantly improved earnings and revenue growth," said
Bob Ulrich, Dayton Hudson chairman and chief executive officer. "We are
entering fiscal 1999 with good momentum and believe we are poised to deliver
another year of continued growth in sales and earnings."
For the full year, diluted earnings per share were $2.06, compared with
$1.64 in 1997, before unusual items in both periods. Including unusual items,
full-year earnings per share were $1.98, compared with $1.59 in 1997. Net
earnings were $970 million, up 25 percent compared with $775 million in fiscal
1997, before unusual items in both periods. Including unusual items,
full-year net earnings were $935 million, compared with $751 million in 1997.
Unusual items in fourth-quarter and full-year 1998 include the beneficial
effect of the change in our effective income tax rate of $20 million, or
4 cents per share, due to the favorable outcome of our inventory shortage tax
matter. In addition, in fourth quarter 1998 we finalized plans to outsource
our mainframe computer data center operations, resulting in a $42 million
pre-tax charge (6 cents per share). Fourth quarter 1998 also includes an
extraordinary charge of $24 million, net of tax, or 5 cents per share, related
to the redemption of long-term debt. Unusual items for the quarter and full
year are included in a table that follows.
Fourth-quarter 1998 pre-tax segment profit for the company increased
20 percent to $865 million, compared with $718 million in fourth quarter 1997.
(Pre-tax segment profit is FIFO earnings from operations before securitization
effects, interest, corporate and other, and unusual items.) Pre-tax segment
profit for the full year increased 16 percent to $2.097 billion, compared with
$1.807 billion in 1997.
Total revenues increased 13.2 percent in the quarter to $10.139 billion,
compared with $8.953 billion last year. For fiscal 1998 total revenues
increased 11.5 percent to $30.951 billion, compared with $27.757 billion in
1997. Comparable-store revenues increased 6.1 percent in the quarter and
5.2 percent for the fiscal year.
Target's pre-tax profit in the fourth quarter increased 26 percent to
$646 million, compared with $512 million in the same period in 1997. For the
full year, Target's pre-tax profit increased 23 percent to $1.578 billion,
compared with $1.287 billion in 1997. Target's full-year profit margin rate
was 6.8 percent, compared with 6.3 percent last year, reflecting modest
improvement in the gross margin rate, slight improvement in the operating
expense rate and continued growth in contribution from Guest Credit. Target's
total revenues for the quarter increased 13.9 percent and for the full year
increased 13.2 percent. Target's comparable-store sales in the quarter
increased 6.8 percent, and for the full year increased 6.1 percent.
Mervyn's pre-tax profit in the quarter was $104 million, even with
fourth-quarter 1997. For the full year, Mervyn's pre-tax profit was
$240 million, compared with $280 million in 1997. Mervyn's full-year profit
margin rate declined to 5.7 percent, compared with 6.6 percent last year,
primarily due to a decline in the gross margin rate. The operating expense
rate also was unfavorable principally due to lower sales leverage. Mervyn's
total revenues for the quarter increased 3.4 percent and for the full year
decreased 1.2 percent. Mervyn's comparable-store sales in the quarter
increased 4.4 percent, and for the full year increased 0.9 percent.
Fourth-quarter pre-tax profit at the Department Store Division increased
12 percent to $115 million, compared with $102 million in 1997. For the full
year, the Department Stores' pre-tax profit increased 16 percent to
$279 million, compared with $240 million in 1997. The Department Stores'
full-year profit margin rate was 8.5 percent, compared with 7.6 percent last
year, due to a significant improvement in the gross margin rate. The
Department Stores' total revenues for the quarter increased 4.2 percent, and
for the full year increased 3.9 percent. The Department Stores'
comparable-store sales in the quarter increased 3.5 percent, and for the full
year increased 4.5 percent.
Pre-tax contribution from Guest Credit in the fourth quarter increased
over the prior year principally due to continued growth of the Target Guest
Card. For the full year, pre-tax contribution from Guest Credit increased
18 percent to $320 million, from $272 million last year. The results of Guest
Credit are reflected within each division. At year end, accounts receivable
serviced totaled $2.456 billion, up 4 percent from $2.355 billion last year
(of these amounts, $800 million represents sold securitized receivables.)
Fourth quarter and full year 1998 results include a pre-tax LIFO credit of
$18 million, compared with a 1997 charge of $6 million in the same periods.
In 1998 net interest expense and interest equivalent decreased $3 million
compared with the prior year due to a lower average portfolio interest rate
partially offset by higher average funded balances. The company's full-year
tax rate was 38.2 percent, compared with 39.5 percent last year, due to the
favorable outcome of our inventory shortage tax matter.
Forward-looking statements in this release should be read in conjunction
with the cautionary statements in Exhibit (99) to the company's second-quarter
1998 Form 10-Q.
Dayton Hudson Corporation operates large-store general merchandise
formats, including discount stores, moderate-priced promotional and
traditional department stores. The company currently operates 1,182 stores in
41 states. This includes 851 Target stores, 268 Mervyn's stores and 63
Department Stores.
Dayton Hudson news releases are available through Company News on Call by
fax at 800-758-5804 extension 342677 (DHCorp) and at www.prnewswire.com or
http://www.dhc.com
(Tables Follow)
Dayton Hudson Corporation and Subsidiaries
CONDENSED CONSOLIDATED
RESULTS OF OPERATIONS
(Millions of Dollars, Three Months Ended Total Year
Except Per Share Data)
January 30, January 31, January 30, January 31,
1999 1998 1999 1998
Revenues $10,139 $8,953 $30,951 $27,757
Costs and Expenses
Cost of retail sales,
buying and occupancy 7,431 6,666 22,634 20,320
Selling, publicity and
administrative 1,561 1,307 5,077 4,532
Depreciation and
amortization 203 173 780 693
Interest expense, net 97 95 398 416
Taxes other than income
taxes 142 124 506 470
Total Costs and
Expenses 9,434 8,365 29,395 26,431
Earnings Before Income Taxes
and Extraordinary Charges 705 588 1,556 1,326
Provision for Income Taxes 258 232 594 524
Net Earnings Before
Extraordinary Charges 447 356 962 802
Extraordinary Charges from
Purchase and Redemption of
Debt, Net of Tax 24 -- 27 51
Net Earnings $423 $356 $935 $751
Earnings Per Share:
Basic Earnings Per Share:
Earnings Before Extraordinary
Charges $1.00 $0.80 $2.14 $1.80
Extraordinary Charges (.05) -- (.06) (.12)
Basic Earnings Per Share $0.95 $0.80 $2.08 $1.68
Diluted Earnings Per Share:
Earnings Before Extraordinary
Charges $0.95 $0.76 $2.04 $1.70
Extraordinary Charges (.05) -- (.06) (.11)
Diluted Earnings Per Share $0.90 $0.76 $1.98 $1.59
Dividends Declared Per
Common Share $0.09 $0.09 $0.36 $0.33
Average Common Shares
Outstanding (Millions)
Basic 441.3 437.4 440.0 436.1
Diluted 468.8 464.6 467.3 463.7
Dayton Hudson Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION
(Millions of Dollars) January 30, January 31,
1999 1998
ASSETS
Current Assets
Cash and cash equivalents $255 $211
Retained securitized receivables 1,656 1,555
Merchandise inventories 3,475 3,251
Other 619 544
Total Current Assets 6,005 5,561
Property and Equipment, net 8,969 8,125
Other 692 505
Total Assets $15,666 $14,191
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities
Accounts payable $3,150 $2,727
Current portion of long-term
debt and notes payable 256 273
Other 1,651 1,556
Total Current Liabilities 5,057 4,556
Long-Term Debt 4,452 4,425
Other 846 750
Shareholders' Investment 5,311 4,460
Total Liabilities and
Shareholders' Investment $15,666 $14,191
Common Shares Outstanding
(Millions) 441.8 437.8
Dayton Hudson Corporation and Subsidiaries
(Millions of Dollars)
REVENUES
Three Months Ended Total Year
January 30, January 31, % Change January 30, January 31, % Change
1999 1998 1999 1998
Target $7,598 $6,673 13.9% $23,056 $20,368 13.2%
Mervyn's 1,346 1,302 3.4 4,176 4,227 (1.2)
DSD 1,019 978 4.2 3,285 3,162 3.9
Corporate
and other 176 -- n/a 434 -- n/a
TOTAL $10,139 $8,953 13.2% $30,951 $27,757 11.5%
COMPARABLE-STORE SALES
Comparable-store sales are sales from stores open longer than one year.
% Change % Change
Three Months Ended Total Year
(Unaudited) January 30, 1999 January 30, 1999
Target 6.8% 6.1%
Mervyn's 4.4 0.9
DSD 3.5 4.5
TOTAL 6.1% 5.2%
MERCHANDISE INVENTORIES (LIFO)
January 30, January 31
1999 1998 % Change
Target $2,427 $2,388 1.6 %
Mervyn's 502 435 15.2
DSD 430 428 0.4
Corporate and other 116 -- n/a
TOTAL $3,475 $3,251 6.9%
Dayton Hudson Corporation and Subsidiaries
(Millions of Dollars)
PRE-TAX SEGMENT PROFIT AND EARNINGS RECONCILIATION
Pre-tax segment profit is first-in, first-out (FIFO) earnings from
operations before securitization effects, interest, corporate and other,
and unusual items.
Three Months Ended Total Year
January 30, January 31, January 30, January 31,
1999 1998 % Change 1999 1998 % Change
Target $646 $512 26% $1,578 $1,287 23%
Mervyn's 104 104 -- 240 280 (14)
DSD 115 102 12 279 240 16
Total pre-tax
segment profit 865 718 20 2,097 1,807 16
LIFO provision credit
/ (expense) 18 (6) 18 (6)
Securitization
adjustments:
SFAS 125 gain/(loss) -- -- (3) 45
Interest equivalent (12) (13) (48) (33)
Interest expense,
net (97) (95) (398) (416)
Mainframe
outsourcing (42) -- (42) --
Corporate and other (27) (16) (68) (71)
Earnings before
income taxes
and extraordinary
charges $705 $588 20% $1,556 $1,326 17%
EBITDA
EBITDA is pre-tax segment profit before depreciation and amortization.
Three Months Ended Total Year
January 30, January 31, January 30, January 31,
(Unaudited) 1999 1998 % Change 1999 1998 %Change
Target $779 $628 24% $2,074 $1,724 20%
Mervyn's 140 135 3 378 406 (7)
DSD 147 128 15 414 368 12
TOTAL $1,066 $891 19% $2,866 $2,498 15%
Pre-tax Segment Profit as a % of Revenues
Target Mervyn's DSD
Three Months Ended January 30, 1999 8.5% 7.7% 11.3%
Three Months Ended January 31, 1998 7.7% 8.0% 10.5%
Year Ended January 30, 1999 6.8% 5.7% 8.5%
Year Ended January 31, 1998 6.3% 6.6% 7.6%
EBITDA as a % of Revenues Target Mervyn' DSD
Three Months Ended January 30, 1999 10.2% 10.4% 14.4%
Three Months Ended January 31, 1998 9.4% 10.4% 13.1%
Year Ended January 30, 1999 9.0% 9.0% 12.6%
Year Ended January 31, 1998 8.5% 9.6% 11.6%
Dayton Hudson Corporation and Subsidiaries
(Millions of Dollars, except Per Share Data)
EARNINGS ANALYSIS
Earnings
Three Months Ended Total Year
Jan. 30, Jan. 31, Jan. 30, Jan. 31,
(Unaudited) 1999 1998 1999 1998
Net earnings before unusual items $453 $356 $970 $775
Favorable outcome of inventory
shortage tax matter 20 -- 20 --
Securitization gain (pretax 1998
$35 mil, 1997 $45 mil) -- -- 21 27
Securitization loss (pretax 1998
$38 mil) -- -- (23) --
Net SFAS 125 gain/(loss) -- -- (2) 27
Mainframe outsourcing (pretax
1998 $42 mil) (26) -- (26) --
Net earnings before
extraordinary charges 447 356 962 802
Extraordinary charges for
debt repurchase (24) -- (27) (51)
Net earnings $423 $356 $935 $751
Diluted Earnings Per Share
Three Months Ended Total Year
Jan. 30, Jan. 31, Jan. 30, Jan. 31,
(unaudited) 1999 1998 1999 1998
Net earnings before unusual items $.97 $.76 $2.06 $1.64
Favorable outcome of inventory
shortage tax matter .04 -- .04 --
Securitization gain (pretax 1998
$35 mil, 1997 $45 mil) -- -- .05 .06
Securitization loss (pretax 1998
$38 mil) -- -- (.05) --
Net SFAS 125 gain/(loss) -- -- -- .06
Mainframe outsourcing (pretax
1998 $42 mil) (.06) -- (.06) --
Net earnings before
extraordinary charges .95 .76 2.04 1.70
Extraordinary charges for
debt repurchase (.05) -- (.06) (.11)
Net earnings $.90 $.76 $1.98 $1.59
LIFO PROVISION: CREDIT / (EXPENSE)
Three Months Ended Total Year
Jan. 30, Jan. 31, Jan. 30, Jan. 31,
1999 1998 1999 1998
Target $-- $-- $-- $--
Mervyn's 6 -- 6 --
DSD 12 (6) 12 (6)
TOTAL $18 $(6) $18 $(6)
Per Share $.02 $(.01) $.02 $(.01)
