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Target Corp sales grow on back of new store additions
Feb '09
Target Corporation reported net earnings of $609 million for the fourth quarter ended January 31, 2009, compared with $1,028 million in the fourth quarter ended February 2, 2008. Earnings per share in the fourth quarter decreased 34.4 percent to 81 cents from $1.23 in the same period a year ago. All earnings per share figures refer to diluted earnings per share.

“Our financial results for both the fourth quarter and 2008 fiscal year reflect the impact of unprecedented economic conditions on both of our business segments,” said Gregg Steinhafel, chairman, president and chief executive officer.

“In 2009, we are focused on continuing to grow our market share profitably - offering even more compelling prices on quality products in combination with a superior shopping experience. At the same time, we will continue to be thoughtful in our deployment of capital, ensuring that we preserve liquidity and make prudent investment decisions to create long-term shareholder value. We believe this will position Target to emerge as an even stronger retail leader when the consumer environment improves.”

Retail Segment Results:
Sales declined 1.6 percent in the fourth quarter 2008 to $19.0 billion from $19.3 billion in 2007, due to a 5.9 percent decline in comparable store sales, partially offset by the contribution from new stores. Retail segment earnings before interest expense and income taxes (EBIT) were $1,251 million in the fourth quarter of 2008, down 22.9 percent from $1,622 million in 2007.

Fourth quarter gross margin rate decreased 1.4 percentage points, driven by increases in markdowns combined with the mix impact of faster sales growth in non-discretionary, lower margin-rate categories.

The company reduced its fourth quarter selling, general and administrative (SG&A) expense by $27 million from fourth quarter 2007, even in light of the previously announced impact of the January 2009 workforce reduction, and the cost of operating 91 more stores by year-end 2008 compared with a year ago. The company's success in controlling expenses has been driven by continued productivity gains in stores combined with disciplined and thoughtful control across the company.

For fiscal 2008, sales increased 2.3 percent to $62.9 billion from $61.5 billion in 2007, due to the contribution from new stores, partially offset by a 2.9 percent decline in comparable store sales. Full year retail segment EBIT declined 6.0 percent to $4.1 billion in 2008 from $4.3 billion in 2007.

Gross margin rate for fiscal 2008 decreased 0.4 percentage points, as the impact of sales mix was partially offset by rate improvements within categories. Selling, general and administrative (SG&A) expense rate for the fiscal year was flat to 2007, reflecting strong expense control throughout the year in the face of very soft sales trends.

Credit Card Segment Results:
Average receivables in the fourth quarter increased 9.6 percent to $9.1 billion in 2008 from $8.3 billion in 2007. Average receivables directly funded by Target declined 36.2 percent in the fourth quarter to $3.6 billion from $5.6 billion in 2007, reflecting JPMorgan Chase's investment in the receivables portfolio.

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