Target turns in a solid year aided by tax benefit
Fourth quarter earnings per share at Target advanced 17% to $1.45 compared with $1.24 the prior year, thanks to a seven-cent-a-share tax benefit, and quarterly profits were slightly more than $1 billion compared with $936 million the prior year. Fourth-quarter sales increased 2.8% to $20.3 billion compared with $19.7 billion the prior year and were aided by a 2.4% increase in same-store sales.
Target chairman, president and CEO Gregg Steinhafel said the company was very pleased with its fourth quarter and full year 2010 financial results as they reflected strong performance in its retail and credit card business segments. Looking forward, Steinhafel said 2011 would be a year in which the company would focus on driving sales and traffic and providing an enhanced shopping experience through strategic initiatives, such as an ambitious remodel program, the 5% REDcard Rewards program and the relaunch later this year of Target.com platform.
“Beyond 2011, we plan to expand our store footprint in new ways, opening our first City Target stores in 2012 and opening 100 to 150 Canadian Target stores in 2013 and 2014. We believe these transformational initiatives position Target for profitable growth in 2011 and many years to come, and will create meaningful shareholder value over time.”
CityTarget is the name given recently to the company’s small format stores.
Overall growth in profits occurred despite margin pressures that resulted from food and consumables comprising a larger portion of the company’s sales as the ambitious remodeling program referenced by Steinhafel results in a significant expansion of those categories.
Fourth-quarter gross margins declined to 28.7% compared with 29.1% due to the impact of the PFresh remodeling program. However, the company also managed to control expenses as evidenced by a decline in its selling, general and administrative expense rate, which dropped to 18.1% from 18.5%.