Target Reports First Quarter 2017 Earnings

By a News Reporter-Staff News Editor at Investment Weekly News -- Target Corporation (NYSE: TGT) reported a first quarter 2017 comparable sales decline of 1.3 percent. First quarter GAAP earnings per share (EPS) from continuing operations were $1.22, compared with $1.02 in first quarter 2016, which included $261 million of pre-tax early debt retirement losses. The Company reported Adjusted EPS of $1.21, down 6.1 percent from $1.29 in 2016. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

1 Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items. See the "Miscellaneous" section of this release, as well as the tables of this release, for additional information about the items that have been excluded from Adjusted EPS.

"Target's first quarter financial performance was better than our expectations, reflecting strong execution by our team as they delivered for our guests in a very choppy environment. After starting the quarter with very soft trends, we saw improvement later in the quarter, particularly in March," said Brian Cornell, chairman and CEO of Target. "We are in the early stage of a multi-year effort to position Target for profitable, consistent long-term growth, and while we are confident in our plans, we are facing multiple headwinds in the current landscape. As a result, we will continue to plan our business prudently while preparing our team to chase business when we have an opportunity." Fiscal 2017 Earnings Guidance In second quarter 2017, Target expects a low single digit decline in comparable sales, and both GAAP EPS from continuing operations and Adjusted EPS of $0.95 to $1.15.

For full-year 2017, the Company continues to expect a low single digit decline in comparable sales.

Target did not update its full year guidance for GAAP EPS from continuing operations and Adjusted EPS, but acknowledged that better-than-expected first quarter performance increases the probability that the Company will finish the year above the midpoint of its prior guidance. Segment Results First quarter 2017 sales decreased 1.1 percent to $16.0 billion from $16.2 billion last year, reflecting a comparable sales decline of 1.3 percent, partially offset by the contribution from new stores. Digital channel sales grew 22 percent and contributed 0.8 percentage points of comparable sales growth. Segment earnings before interest expense and income taxes (EBIT), which is Target's measure of segment profit, were $1,178 million in first quarter 2017, a decrease of 11.0 percent from $1,323 million in 2016.

First quarter EBITDA and EBIT margin rates were 10.9 percent and 7.4 percent, respectively, compared with 2016 results of 11.5 percent and 8.2 percent, respectively. First quarter gross margin rate was 30.5 percent, compared with 30.9 percent in 2016, reflecting increased digital channel fulfillment costs. First quarter SG&A expense rate was 19.6 percent in 2017, compared with 19.4 percent in 2016, reflecting the impact of higher compensation and marketing expenses, partially offset by continued expense discipline across the organization. Interest Expense and Taxes from Continuing Operations The Company's first quarter 2017 net interest expense was $144 million, compared with $415 million last year. This decrease was driven almost entirely by a $261 million charge related to the early retirement of debt in first quarter 2016.

First quarter 2017 effective income tax rate from continuing operations was 34.5 percent, compared with 31.6 percent last year. The increase was primarily due to the recognition of $17 million of excess tax benefits related to share-based payments for the three months ended April 30, 2016, and the net tax effect of our global sourcing operations. Capital Returned to Shareholders In first quarter 2017, primarily under a pre-existing trading plan implemented in 2016, the Company repurchased 4.9 million shares of common stock at an average price of $61.68, for a total investment of $305 million. The Company also paid dividends of $332 million, compared with $336 million in first quarter 2016.

Keywords for this news article include: Finance, Target Corporation.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2017, NewsRx LLC