MINNEAPOLIS, May 12 /PRNewswire-FirstCall/ -- Target Corporation
(NYSE: TGT) today 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.
Other Factors
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.
Miscellaneous
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.
Target Corporation news releases are available at http://www.target.com or
http://www.prnewswire.com .
(Tables Follow)
TARGET
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended
(Millions, except per share data) April 30, May 1, %
(Unaudited) 2005 2004 Change
Sales $11,171 $9,909 12.7 %
Net credit revenues 306 271 12.7
Total revenues 11,477 10,180 12.7
Cost of sales 7,556 6,769 11.6
Selling, general and administrative
expense 2,495 2,172 14.8
Credit expense 179 174 2.6
Depreciation and amortization 340 292 16.4
Earnings from continuing operations
before interest expense and
income taxes 907 773 17.4
Net interest expense 111 143 (22.8)
Earnings from continuing operations
before income taxes 796 630 26.6
Provision for income taxes 302 238 26.9
Earnings from continuing operations 494 392 26.4
Earnings from discontinued
operations, net of $25 tax - 40 -
Net earnings $494 $432 14.6 %
Basic earnings per share:
Continuing operations $0.56 $0.43 30.0
Discontinued operations - 0.04 -
Basic earnings per share $0.56 $0.47 17.9 %
Diluted earnings per share:
Continuing operations $0.55 $0.43 30.3
Discontinued operations - 0.04 -
Diluted earnings per share $0.55 $0.47 18.2 %
Weighted average common shares
outstanding:
Basic 887.0 912.6
Diluted 893.5 921.4
TARGET
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SUBJECT TO RECLASSIFICATION
(Millions) April 30, May 1,
(Unaudited) 2005 2004
ASSETS
Cash and cash equivalents $1,152 $614
Accounts receivable, net 4,857 4,340
Inventory 5,407 4,473
Other current assets 1,039 889
Current assets of discontinued operations - 2,083
Total current assets 12,455 12,399
Property and equipment, net 17,328 15,507
Other non-current assets 1,512 1,331
Non-current assets of discontinued
operations - 1,910
Total assets $31,295 $31,147
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Accounts payable $5,110 $4,355
Current portion of long-term debt and
notes payable 4 1,359
Other current liabilities 2,059 1,610
Current liabilities of discontinued
operations - 907
Total current liabilities 7,173 8,231
Long-term debt 9,005 9,529
Deferred income taxes 973 632
Other non-current liabilities 1,097 964
Non-current liabilities of
discontinued operations - 257
Shareholders' investment 13,047 11,534
Total liabilities and shareholders'
investment $31,295 $31,147
Common shares outstanding 883.3 913.4
TARGET
CONSOLIDATED STATEMENTS OF CASH FLOWS
SUBJECT TO RECLASSIFICATION Three Months Ended
(Millions) April 30, May 1,
(Unaudited) 2005 2004
OPERATING ACTIVITIES
Net earnings $494 $432
Earnings from and gain on disposal of
discontinued operations, net of tax - 40
Earnings from continuing operations 494 392
Reconciliation to cash flow:
Depreciation and amortization 340 292
Bad debt provision 106 111
Loss on disposal of fixed assets, net 6 7
Other non-cash items affecting earnings 60 21
Changes in operating accounts
providing/(requiring) cash:
Accounts receivable originated at Target 90 82
Inventory (23) 58
Other current assets 151 124
Other non-current assets (2) 10
Accounts payable (669) (601)
Accrued liabilities (59) (97)
Income taxes payable 163 33
Other (6) -
Cash Flow Provided by Operations 651 432
INVESTING ACTIVITIES
Expenditures for property and equipment (768) (632)
Proceeds from the disposal of fixed assets 4 1
Change in accounts receivable
originated at third parties 16 89
Cash Flow Required by Investing Activities (748) (542)
FINANCING ACTIVITIES
Reductions of long term debt (511) (108)
Dividends paid (71) (64)
Repurchase of stock (450) (15)
Stock option exercises 36 48
Cash Flow Required for Financing Activities (996) (139)
Net Cash Provided by Discontinued Operations - 155
Net Decrease in Cash and Cash Equivalents (1,093) (94)
Cash and Cash Equivalents at Beginning
of Period 2,245 708
Cash and Cash Equivalents at End of Period $1,152 $614
Target Corporation
(Millions)
(Unaudited)
NUMBER OF STORES, RETAIL SQUARE FEET and COMPARABLE STORE SALES
Retail square feet in thousands; reflects total square feet less office,
warehouse and vacant space.
Number of
Stores Retail Square Feet
April May April May
30, 1, 30, 1, %
2005 2004 2005 2004 Change
Target General Merchandise Stores 1,189 1,130 143,288 134,626 6.4
SuperTarget Stores 141 119 24,936 21,100 18.2
Total 1,330 1,249 168,224 155,726 8.0 %
Three Months Ended
April May
30, 1,
2005 2004
Continuing Operations Comparable
Store Sales 6.2% 7.3%
CREDIT CARD CONTRIBUTION
OF CONTINUING OPERATIONS
Three Months Ended
April 30, May 1,
2005 2004
Revenues
Finance charges, late fees and other
revenues $279 $251
Merchant fees
Intracompany 15 14
Third-party 27 20
Total revenues 321 285
Expenses
Bad debt provision 106 111
Operations and marketing 73 63
Total expenses 179 174
Pre-tax credit card contribution $142 $111
As a percent of average receivables
(annualized) 10.7% 9.2%
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Three Months Ended
April 30, May 1,
2005 2004
Allowance at beginning of period $387 $352
Bad debt provision 106 111
Net write-offs (99) (114)
Allowance at end of period $394 $349
As a percent of period-end receivables 7.5% 7.4%
SUPPLEMENTAL DATA
April 30, May 1,
2005 2004
Period-end receivables $5,251 $4,689
Total past due as a percent of
period-end receivables * 3.0% 3.9%
* Accounts with three or more payments past due.
Three Months Ended
April 30, May 1,
2005 2004
Total revenues as a percent
of average receivables (annualized): 24.1% 23.7%
Net write-offs as a percent
of average receivables (annualized): 7.4% 9.5%
Average receivables $5,322 $4,798
SOURCE Target Corporation
05/12/2005
CONTACT: investors, Susan Kahn, +1-612-761-6735, or financial media,
Cathy Wright, +1-612-761-6627, or +1-847-615-1538, both of Target Corporation
Web site: http://www.target.com
(TGT)
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