Profits jump at Target, surprising analysts  U.S.-based retail heavyweight Target announced earnings from its latest fiscal quarter this week, delivering solid results that surpassed analysts' expectations.

Target, which is the second largest discount retail chain in the U.S. after Wal-Mart, reported Wednesday its third quarter profit climbed significantly from the year prior. The news comes on the heels of Wal-Mart's earnings release, in which the Arkansas-based retail chain said while revenue had climbed, higher business costs affected its profit margin.

Target, on the other hand, said profits increased by 3.7 percent in its third quarter, which ended on October 29. Company officials attributed the positive profit growth to strong earnings from its credit card division, as well as a number of new initiatives launched this year. The Italian fashion house Missoni crafted a lower-priced line of clothing for the Minnesota-based firm, and Target said sales were exceptionally strong, with many stores selling out within hours of unveiling the collection.

MarketWatch reports the company's earnings topped forecasts. Target said its profit climbed to $555 million from $535 million in 2010. Moreover, the company said sales jumped to $16.1 billion, representing a 5.4 percent uptick from the same period in 2010. Analysts had projected Target to log profits of 74 cents per share, but actual figures showed the company's profits hit 82 cents per share.

"Target reported impressive (third-quarter) results, with robust performance by the retail segment driving much of the earnings upside," Sanford C. Berstein & Co. analyst Colin McGranahan affirmed. "The company’s fourth-quarter guidance leaves ample room for further earnings upside."

Target also benefited from increased consumer spending. U.S. shoppers dug deeper into their wallets in October, as spending climbed by 0.5 percent from September. Confidence, however, is still tepid, and economists asserted the uptick in sales at stores was likely prompted by consumers reaching into their savings to fund new purchases.

Though revenue at its credit card segment declined compared to the same period the year prior, Target has aggressively marketed its branded card to customers, offering 5 percent discounts on purchases made with them. The division's profit increased 10 percent during the third quarter, bolstered by a reduction in bad debt expenses.
Share To:

Strategic Sourceror

Post A Comment:

0 comments so far,add yours