Holiday Sales Help Target Beat Q4 Expectations; 2012 Outlook Rosy

(RTTNews.com) - America's second biggest discount-store operator Target (TGT) on Thursday announced results for the fourth quarter that topped analysts' expectations, as deep discounts spurred robust sales during the holiday shopping season.

While profits declined 5 percent from last year and earnings per share remained flat, the company issued some hopeful guidance for the current year, predicting first quarter and full-year 2012 earnings above Street view.

For the fourth quarter, adjusted earning per share grew over 8 percent.

"Target generated strong financial performance in 2011, overcoming sluggish economic growth, restrained consumer spending and an intensely promotional holiday season," CEO and chairman Gregg Steinhafel said.

Larger rival Wal-Mart Stores, Inc. (WMT) reported Tuesday a 15 percent drop in fourth-quarter profit, reflecting higher costs. This was despite a turnaround in U.S. sales and continued strong performance at overseas stores. However, total U.S. comparable store sales grew 1.5 percent.

Target also said it will continue to invest in its store, online and mobile channels, and priming to foray into the Canadian market, with its first temporary store opening there today. This move is a year ahead of the official launch of its 135 Target stores across Canada in early 2013.

Looking ahead to the first quarter, Target projects adjusted earnings to be between $0.97 and $1.07 per share, while analysts are expecting earnings of $0.96 per share.

For fiscal 2012, the company expects adjusted earnings in a range of $4.55 to $4.75 per share. Street is currently looking for full-year 2012 earnings of $4.27 per share.

The retailer reported net earnings of $981 million for the fourth quarter, down 5.2 percent from $1.04 billion in the prior-year quarter. However, earnings per share remained flat with last year at $1.45.

Excluding items, adjusted earnings for the quarter grew 8.3 percent to $1.49 per share from $1.38 per share in the year-ago quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $1.40 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter increased 3.0 percent to $21.29 billion from $20.66 billion in the same quarter last year, and topped nineteen Wall Street analysts' consensus estimate of $21.21 billion by a whisker.

The noted that results for the fourth quarter also came in at the high end of its guidance range.

Sales in the firm's U.S. retail segment grew 3.3 percent to reach $20.94 billion from last year, due to a 2.2 percent increase in comparable-store sales combined with the contribution from new stores.

Credit card profit for the quarter was $98 million, compared to $151 million in fourth quarter 2010. The company's credit card segment revenues dropped to $351 million from $384 million a year ago.

TGT closed Wednesday's regular trading session at $52.97, up $0.44 on a volume of 6.77 million shares, higher than the three-month average volume of 5.85 million shares. In the past 52-week period, the stock has been trading in a range of $45.28 to $56.00.

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