), the operator of general merchandise and food discount stores
in the United States, posted fourth-quarter fiscal 2013 results.
The company's adjusted earnings of $1.30 per share dropped 21.2%
from $1.65 in the year-ago quarter. This relates to results from
U.S. operations only.
The quarterly earnings including U.S. and Canadian operations
but excluding other one-time items came in at 90 cents a share,
sharply down from $1.47 reported in the prior-year quarter.
Analysts polled by Zacks had projected earnings of 85 cents a
share for the quarter.
Management hinted that massive data breach hurt the company's
results. Target faced its worst security breach when information
related to credit and debit card data of approximately 70 million
customers were hacked.
Let's Unveil the Picture
Total revenue dropped 5.3% to $21,516 million from the
prior-year quarter and also fell short of the Zacks Consensus
Estimate of $21,541 million. Sales for the U.S. segment, which
now comprise of U.S. Retail and U.S. Credit Card segments after
the sale of U.S. credit card portfolio in Mar 2013, came in at
$20,893 million and fell 6.6% year-over-year.
Minneapolis, Minnesota based company, Target, said that
comparable-store sales for the quarter slipped 2.5% compared with
0.4% increase registered in the prior-year quarter. The number of
transactions edged down 5.5%, however, the average transaction
amount climbed 3.2% in the quarter.
Gross profit at the U.S. segment tumbled 7.1% to $5,769
million, whereas gross margin contracted 20 basis points to
27.6%. Segment operating income dipped 22.4% to $1,413 million,
whereas operating margin shriveled 130 basis points to 6.8%.
Target's credit card penetration increased 150 basis points to
10%, whereas debit card penetration expanded 390 basis points to
10.9% during the quarter. Total store REDcard penetration climbed
to 20.9% from 15.5% in the year-ago quarter.
We believe Target's P-fresh remodel program, 5% REDcard
Rewards program and Price Match strategy will help in augmenting
sales performance and continue to drive traffic. Moreover, in
order to expand its global footprint, the company is eying
Canadian market and is operating 124 general merchandise stores.
Sales generated during the quarter were $623 million.
Target's credit and debit cards penetration in Canada came in
at 1.6% and 1.7%, respectively. Total store REDcard penetration
came in at 3.2%.
Other Financial Details
During the quarter, Target did not buyback any shares but paid
dividends of $272 million. In fiscal 2013, the company has bought
back about 21.9 million shares at a price of $67.41, aggregating
$1.47 billion, and paid dividends of $1 billion.
The company ended the quarter with cash and cash equivalents
(including short-term investments of $3 million) of $695 million,
long-term debt and other borrowings of $12,622 million and
shareholders' equity of $16,231 million.
Target, which competes with
Costco Wholesale Corporation
Wal-Mart Stores Inc.
), currently operates 1,793 stores, of which 289 are general
merchandise stores, 1,245 are expanded grocery assortment, 251
are SuperTarget stores and 8 are CityTarget stores.
Strolling Through Guidance
Target now projects adjusted earnings in the range of 60 cents
to 75 cents a share for the first quarter and between $3.85 and
$4.15 per share for fiscal 2014.
The current Zacks Consensus Estimates for the first quarter
and fiscal 2014 are 90 cents and $4.34, respectively, which could
witness a downward revision in the coming days.
Stock That Warrant a Look
Currently, Target holds a Zacks Rank #4 (Sell). Another stock
that warrants a look is
The Hain Celestial Group, Inc.
) carrying with a Zacks Rank #2 (Buy).
COSTCO WHOLE CP (COST): Free Stock Analysis
HAIN CELESTIAL (HAIN): Free Stock Analysis
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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