MINNEAPOLIS, Aug. 17 /PRNewswire/ -- Dayton Hudson Corporation (NYSE: DH) today reported earnings per share for the second quarter ended July 31, 1999 of 49 cents, compared with 36 cents in second quarter 1998, before a 1 cent extraordinary charge in the current quarter for debt repurchase. All earnings per share figures refer to diluted earnings per share. Net earnings increased 33 percent to $228 million, compared with $172 million in second quarter 1998, before an extraordinary charge of $4 million in the current quarter for debt repurchase.
"We are pleased with the company's performance in the second quarter, which was driven by exceptional strength at Target," said Bob Ulrich, Dayton Hudson chairman and chief executive officer.
For the first half, diluted earnings per share were 90 cents, compared with 70 cents in 1998, before a 1 cent extraordinary charge in both periods for debt repurchase. Net earnings were $422 million, up 27 percent compared with $332 million in the first six months of 1998, before a $4 million extraordinary charge in 1999 and a $2 million extraordinary charge in 1998 for debt repurchase.
Second-quarter 1999 pre-tax segment profit for the company increased 24 percent to $524 million, compared with $422 million in second quarter 1998. (Pre-tax segment profit is FIFO earnings from operations before securitization effects, interest, corporate and other, and unusual items.) Pre-tax segment profit in the first half increased 22 percent to $987 million, compared with $808 million in 1998.
Total revenues increased 9.9 percent in the quarter to $7.752 billion, compared with $7.056 billion last year.
Target's pre-tax profit in the quarter increased 27 percent to $430 million, compared with $337 million in the same period in 1998. Target's total revenues for the quarter increased 12.6 percent and comparable-store sales increased 6.5 percent. The gross margin rate improved significantly due to favorable markup and markdown performance, while the operating expense rate was modestly unfavorable.
Mervyn's pre-tax profit in the quarter increased 13 percent to $45 million, compared with $40 million in second-quarter 1998. Mervyn's total revenues for the quarter increased 1.5 percent and comparable-store sales increased 2.8 percent. The gross margin rate increased primarily due to favorable markup and the operating expense rate improved slightly.
Second-quarter pre-tax profit at the Department Store Division increased 9 percent to $49 million, compared with $45 million in 1998. The Department Stores' total revenues for the quarter increased 1.6 percent and comparable-store sales increased 2.7 percent. The gross margin rate was essentially even with the prior quarter while the operating expense rate improved modestly.
Pre-tax contribution from Guest Credit in the quarter increased over the prior year principally due to continued growth of the Target Guest Card. The results of Guest Credit are reflected within each division's operating results.
The LIFO provision was zero in both second quarter 1999 and 1998. Net interest expense and interest equivalent for the quarter decreased $3 million compared with second quarter 1998 due to a lower average portfolio interest rate, partially offset by higher average funded balances. The estimated annual effective income tax rate was 38.8 percent, compared with 39.5 percent last year.
During the quarter, the company repurchased 2.3 million shares of its common stock, at an average price of $63 per share. Since the inception of its share repurchase program, the company has bought $248 million of its common stock.
Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)c to the company's 1998 Form 10-K.
Dayton Hudson Corporation operates large-store general merchandise formats, including discount stores, moderate-priced promotional and traditional department stores. The company currently operates 1,212 stores in 44 states. This includes 881 Target stores, 267 Mervyn's stores and 64 Department Stores.
Dayton Hudson news releases are available through Company News on Call by fax at 800-758-5804 extension 342677 (DHCorp) or at http://www.prnewswire.com or http://www.dhc.com
(Tables Follow)
CONDENSED CONSOLIDATED Dayton Hudson Corporation
RESULTS OF OPERATIONS and Subsidiaries
(Millions of Dollars,
Except Per Share Data) Three Months Ended Six Months Ended
July 31, August 1, July 31, August 1,
(Unaudited) 1999 1998 1999 1998
Revenues $7,752 $7,056 $14,966 $13,524
Costs and Expenses
Cost of retail sales,
buying and occupancy 5,603 5,143 10,843 9,870
Selling, publicity and
administrative 1,333 1,214 2,557 2,288
Depreciation and amortization 212 193 418 377
Interest expense 98 101 192 197
Taxes other than income taxes 132 121 265 243
Total Costs and Expenses 7,378 6,772 14,275 12,975
Earnings Before Income Taxes
and Extraordinary Charges 374 284 691 549
Provision for Income Taxes 146 112 269 217
Net Earnings Before Extraordinary
Charges 228 172 422 332
Extraordinary Charges from Purchase
and Redemption of Debt, Net of Tax 4 -- 4 2
Net Earnings $224 $172 $418 $330
Basic Earnings Per Share:
Earnings Before Extraordinary
Charges $0.51 $0.38 $0.94 $0.74
Extraordinary Charges (0.01) -- (0.01) (0.01)
Basic Earnings Per Share $0.50 $0.38 $0.93 $0.73
Diluted Earnings Per Share:
Earnings Before Extraordinary
Charges $0.49 $0.36 $0.90 $0.70
Extraordinary Charges (0.01) -- (0.01) (0.01)
Diluted Earnings Per Share $0.48 $0.36 $0.89 $0.69
Dividends Declared
Per Common Share $0.10 $0.09 $0.20 $0.18
Weighted Average Common Shares
Outstanding (Millions):
Basic 441.1 439.6 441.7 439.1
Diluted 466.4 467.6 468.0 467.1
CONDENSED CONSOLIDATED STATEMENTS Dayton Hudson Corporation
OF FINANCIAL POSITION and Subsidiaries
(Millions of Dollars) July 31, August 1,
(Unaudited) 1999 1998
ASSETS
Current Assets
Cash and cash equivalents $238 $237
Retained securitized receivables 1,363 1,295
Merchandise inventories 3,973 3,697
Other 655 926
Total Current Assets 6,229 6,155
Property and Equipment, net 9,408 8,564
Other 778 589
Total Assets $16,415 $15,308
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Accounts payable $3,111 $2,852
Current portion of long-term
debt and notes payable 219 351
Other 1,529 1,462
Total Current Liabilities 4,859 4,665
Long-term Debt 5,178 5,132
Other 894 770
Shareholders' Investment 5,484 4,741
Total Liabilities and Shareholders' Investment $16,415 $15,308
Common Shares Outstanding (Millions) 440.7 439.9
(Millions of Dollars) Dayton Hudson Corporation
(Unaudited) and Subsidiaries
REVENUES
Three Months Ended Six Months Ended
July 31, August 1, July 31, August 1,
1999 1998 % Change 1999 1998 % Change
Target $5,961 $5,294 12.6% $11,449 $10,101 13.4%
Mervyn's 949 935 1.5 1,861 1,825 2.0
DSD 744 732 1.6 1,488 1,458 2.0
Corporate and other 98 95 2.7 168 140 19.7
TOTAL $7,752 $7,056 9.9% $14,966 $13,524 10.7%
COMPARABLE-STORE SALES
Comparable-store sales are sales from stores open longer than one year.
% Change % Change
Three Months Ended Six Months Ended
July 31, 1999 July 31, 1999
Target 6.5% 7.3%
Mervyn's 2.8 3.1
DSD 2.7 3.0
TOTAL 5.7% 6.3%
MERCHANDISE INVENTORIES (LIFO)
July 31, August 1,
1999 1998 % Change
Target $2,779 $2,653 5%
Mervyn's 621 538 15
DSD 437 458 (5)
Corporate and other 136 48 n/a
TOTAL $3,973 $3,697 7%
(Millions of Dollars) Dayton Hudson Corporation
(Unaudited) and Subsidiaries
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 Six Months Ended
July 31, August 1, July 31, August 1,
1999 1998 % Change 1999 1998 % Change
Target $430 $337 27% $800 $639 25%
Mervyn's 45 40 13 90 83 9
DSD 49 45 9 97 86 13
Total pre-tax
segment profit 524 422 24 987 808 22
Securitization
adjustment
(interest
equivalent) (12) (12) (24) (24)
Interest expense (98) (101) (192) (197)
Corporate and
other (40) (25) (80) (38)
Earnings before
income taxes
and extraordinary
charges $374 $284 32% $691 $549 26%
EBITDA
EBITDA is pre-tax segment profit before depreciation and amortization.
Three Months Ended Six Months Ended
July 31, August 1, July 31, August 1,
1999 1998 % Change 1999 1998 % Change
Target $571 $457 25% $1,075 $875 23%
Mervyn's 80 75 6 160 151 6
DSD 82 80 3 164 155 6
Total EBITDA $733 $612 20% $1,399 $1,181 18%
Three Months Ended Six Months Ended Twelve Months Ended
July 31, Aug 1, July 31, Aug 1, July 31, Aug 1,
1999 1998 1999 1998 1999 1998
Pre-tax Segment Profit as a % of Revenues:
Target 7.2% 6.4% 7.0% 6.3% 7.1% 6.5%
Mervyn's 4.8% 4.3% 4.9% 4.5% 5.9% 6.1%
DSD 6.6% 6.2% 6.5% 5.9% 8.7% 8.0%
EBITDA as a % of Revenues:
Target 9.6% 8.6% 9.4% 8.7% 9.3% 8.7%
Mervyn's 8.4% 8.1% 8.6% 8.3% 9.2% 9.3%
DSD 11.1% 11.0% 11.0% 10.6% 12.7% 11.9%
SOURCE Dayton Hudson Corporation
