Sales at Target US operations grow under one percent in Q1

First quarter EBITDA margin rate was 10.4 percent, compared with 11.2 percent in the revised U.S. Segment and 10.3 percent in the historical U.S. Retail Segment in first quarter 2012. First quarter EBIT margin rate was 7.5 percent, compared with 8.1 percent in the revised U.S. Segment and 7.3 percent in the historical U.S. Retail Segment in first quarter 2012.

First quarter gross margin rate increased to 30.7 percent in 2013 from 30.2 percent in 2012, reflecting category rate improvements combined with a 0.2 percentage-point benefit from changes to the Company’s vendor agreements, partially offset by the impact of the Company’s integrated growth strategies.

First quarter SG&A expense rate was 20.3 percent in 2013, compared with 2012 rates of 19.0 percent in the revised U.S. Segment and 19.9 percent in the historical U.S. Retail Segment. Compared with the U.S. Segment in first quarter 2012, the SG&A expense rate increase was primarily driven by a smaller benefit from credit card income (including the impact of profit-sharing with TD Bank) and an increase in technology investments. In addition, the change in Target’s vendor agreements increased first quarter 2013 SG&A rate by approximately 0.2 percentage points, offsetting the equivalent benefit to the gross margin rate.

Canadian Segment Results

Target opened its first 24 Canadian stores in March 2013, which generated sales of $86 million in the first quarter with a gross margin rate of 38.4 percent. EBIT for the first quarter was $(205) million, as gross margin of $33 million was offset by $238 million in start-up expenses, operating expenses, depreciation and amortization related to the Company’s market entry. Canadian operations reduced Target’s GAAP earnings per share by 24 cents in first quarter 2013.

Target