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Bullseye (almost) for Target 3rd

Don Hogsett, Staff Staff -- Home Textiles Today, November 17, 2003

Fueled by continued growth at Target Stores and at its increasingly important credit card business, Target Corp. recorded a third-quarter profit of $302.0 million, up 8.7 percent from $277 million.

But all of the company's earnings growth, and all of its sales growth as well, came out of Target stores and credit cards, while Mervyn's and Marshall Field's, while still modestly profitable, posted deep declines in sales and earnings.

Continuing to drive the parent's growth is the fast-track Target Stores division, where pre-tax profits climbed by 12.5 percent, to $604.0 million from $537.0 million last year. Target sales shot up by 13.9 percent, to $9.6 billion from $8.5 billion.

An increasingly strong contribution came out of the company's growing credit card portfolio, where pre-tax profits raced ahead by 17.4 percent, to $1162 million from $138 million.

Put another way, the credit card business made almost four times as much money during the period as Mervyn' and Marshall Field's combined. And the business is a genuine cash cow — for every dollar in credit card sales, the business turned a profit of 53 cents.

Lagging far behind, but still making money — if a lot less of it — are the Marshall Field's and Mervyn's groups, whose profits, while meager, still help build all the new Target stores going up around the country.

Earnings at Mervyn's declined by 41.8 percent during the third quarter, to $31 million from $52 million last year, while sales fell 10.1 percent, to $825 million from $917 million.

Marshall Field's profits sank even further, by 54.7 percent, to $15 million from $34 million. Department store sales fell by 6.3 percent,. to $634 million from $677 million.

Target Corp.

Qtr. 11/1 (x000) 2003 2002 % chg
a-Net retail sales, excluding credit revenues. Third-quarter credit revenues totaled $344 million, up 11.0 percent from $310 million last year. For the nine months, credit revenues totaled $1.0 billion, up 21.3 percent from $845 million a year ago.
Sales $10,942,000a $9,884,000a 10.7
Oper. income (EBIT) 942,000 898,000 4.9
Net income 302,000 277,000 8.7
Per share (diluted) 0.33 0.30 8.3
Average gross margin 32.0% 31.8%
SG&A expenses 24.6% 23.9%
Nine months 2003 2001 % chg
Sales 31,567,000 29,011,000 8.8
Oper. income (EBIT) 3,027,000 2,886,000 4.9
Net income 1,009,000 966,000 4.4
Per share (diluted) 1.10 1.06 4.1
Average gross margin 32.3% 32.1%
SG&A expenses 24.0% 23.2%


Third quarter segment results

Target Stores 2003 2002 % change
Sales $9,638,000 $8,459,000 13.9
Same-store sales 6.7% NA
Pre-tax profit 604,000 537,000 12.5
Mervyn's 203 2002 % change
Sales 825,000 917,000 -10.1
Same-store sales -11.1% NA
Pre-tax profit 31,000 52,000 -41.8
Marshall Fields 2003 2002 % change
Sales 634,000 677,000 -6.3
Same-store sales -4.9 NA
Pre-tax profits 15,000 34,000 -54.7
Credit Cards
Sales 344,000 310,000 11.0
Pre-tax profit 162,000 138,000 17.4


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