Target Corp has posted a jump in fourth-quarter profits, boosted by a stabilisation of its credit card business and better-than-expected holiday sales. Speaking on a conference call with analysts, chairman, president and CEO Gregg Steinhafel also said the retailer’s “broad assortment” had helped it weather the downturn.
“And as the economy recovers our unique combination of high-quality, affordably-priced home and apparel merchandise is perfectly aligned with today's more frugal consumer mindset,” he added. The company said that it earned US$936m in the quarter ended 30 January, up 53.7% from last year. Sales increased 3.2% to $20.18bn, the US discounter said.
Retail segment sales rose 3.7% in the fourth quarter to $19.7bn, boosted by new store openings. Same-store sales were up 0.6% in the period. The performance of Target's credit-card segment has weighed on the bottom line. However, fourth-quarter credit card expenses fell 37% and the unit swung to a profit in the latest quarter.
Commenting on the result, Mr Steinhafel said gains had been driven by “discipline” and “innovation.” “Fourth quarter retail segment performance was well above our expectations due to stronger-than-expected holiday sales, combined with well-controlled inventories and disciplined expense controls, he said.
Shoppers are also more confident and paying more visits to the 1,740 Target stores. “Once hesitant and even fearful, they now are taking pride in their new found financial discipline and their confidence is leading them to add a few more home and apparel items to their basket.
The retailer also singled out its Merona women's apparel line as one of its leaders beyond the holiday season. For the full-year, Target’s earnings were up 12.4% to $2.49bn or $3.30 per share, from $2.21bn of $2.86 per share the year before.
Fiscal sales increased 0.9% to $63.4bn from $62.9bn last time, while same-store sales fell by 2.5%. “In 2010, we expect our guest traffic trends and sales of discretionary categories to benefit from broader implementation of our new merchandise initiatives as well as a continued modest recovery in the economy, and believe Target will continue to gain profitable market share,” Mr Steinhafel said.
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