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Target Fourth Quarter Results Top Estimates, Gives Rosy Outlook


America's second biggest discount-store operator Target, Inc. (TGT) announced Wednesday results for the fourth quarter that topped analysts' expectations. Profit declined 2 percent from last year, reflecting higher provisions for income taxes and expenses related to Canadian market entry. The company also provided earnings guidance for the first quarter and full-year 2013, both above Street view.

The Minneapolis, Minnesota-based retailer reported net earnings of $961 million for the fourth quarter, down 2 percent from $981 million in the prior-year quarter. However, earnings per share edged up 0.9 percent to $1.47 from last year at $1.45 on lower share count.

Excluding items, adjusted earnings for the quarter was $1.65 per share, compared to last year's $1.49 per share.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $1.48 per share for the fourth quarter. Analysts' estimates typically exclude special items.

The company noted that total expenses related to investments in Target's Canadian market entry reduced Target's earnings per share by about $0.18 in latest quarter.

Total revenues for the quarter increased 6.8 percent to $22.73 billion from $21.29 billion in the same quarter last year, and topped nineteen Wall Street analysts' consensus estimate of $22.69 billion by a whisker.

Sales in the firm's U.S. retail segment grew 6.8 percent to reach $22.37 billion from last year, due to a 0.4 percent increase in comparable-store sales combined with the contribution from new stores and one additional accounting week.

Credit card segment profit for the quarter grew to $141 million from $98 million in fourth quarter 2011. The company's credit card segment revenues edged up to $356 million from $351 million a year ago. Average receivables decreased 4.6 percent to $6.1 billion from last year.

Meanwhile, Target agreed to sell its U.S. consumer credit card receivables in late October to TD Bank Group (TD, TD.TO), with the deal expected to close in the first six months of 2013.

For fiscal 2012, the company reported net earnings of $3.0 billion or $4.52 per share, higher than $2.93 billion or $4.28 per share in the prior year. Excluding items, adjusted earnings for the year was $4.76 per share, compared to last year's $4.41 per share. Total revenues for the full year increased 4.9 percent to $73.30 billion from $69.87 billion in the previous year.

Analysts expected the company to report full-year 2012 earnings of $4.40 per share on annual revenues of $73.16 billion.

Looking ahead to the first quarter, Target projects adjusted earnings to be between $1.10 and $1.20 per share, while analysts are expecting earnings of $1.05 per share.

For fiscal 2013, the company expects adjusted earnings in a range of $4.85 to $5.05 per share. Street is currently looking for full-year 2013 earnings of $4.82 per share.

"We believe these results position us well to deliver on significant plans in 2013, including completion of the largest store opening program in our company's history with 124 stores in Canada and additional Target and CityTarget locations in the U.S., investing in new processes and technology that will improve our guests' multichannel experience and closing the sale of our credit card receivables," Chairman, President and CEO Gregg Steinhafel said.

TGT closed Wednesday's regular trading session at $64.05, up $0.95 on a volume of 8.10 million shares. In the past 52-week period, the stock has been trading in a range of $54.68 to $65.80.

by RTTNews Staff Writer

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