Target’s 4Q Profit Declines 5.2 Percent

NEW YORK (AP) — Target Corp. reported a 5.2 percent drop in earnings for the fourth quarter, as big discounts to get tight-fisted shoppers to buy during the holiday season eroded profits.

The discounter, however, offered a full-year profit outlook that was above Wall Street estimates.

Target, like others including rival Wal-Mart Stores Inc., stepped up price cutting during the holiday shopping season in November and December to get bargain-hunting shoppers to spend. But that hurt margins and the retailer, based in Minneapolis, had reduced its fourth-quarter earnings outlook in January.

Target said Thursday that gross profit margin slipped to 28.4 percent in the fourth quarter, down from 28.7 percent in the year-ago period.

The company said Thursday it earned $981 million, or $1.45 per share, in the three months ended Jan. 28. That compares with $1.04 billion, or $1.45 per share, in the year-ago period.

Revenue rose 3.3 percent to $20.94 billion. Revenue at stores opened at least a year rose 2.2 percent for the period.

Analysts had expected $1.40 per share on revenue of $21.23 billion, according to FactSet.

Target became a discount-store darling when it began offering stylish clothes and trendy decor under the same roof where shoppers could find toothpaste and cereal. Yet sales growth has been uneven since the Great Recession. Shoppers are looking elsewhere for lower prices. And rivals are copying its 12-year-old formula of partnering with designers.

Target announced in January that it is teaming up with unique specialty shops to offer limited edition merchandise, from dog biscuits to platform shoes, as it attempts to further distinguish itself from rivals. The temporary shops will be launched in May.

Earlier this year, Target also confirmed reports that it will test expanded displays of Apple products in 25 stores.

These initiatives are on top of two other strategies that the discounter has implemented to increase customer traffic and boost sales— its larger food offerings and its 5 percent discount for customers who pay with Target-branded credit and debit cards. The discounts began in late 2010.

Target said Thursday that it expects earnings per share for the full year to be in the range of $4.55 to $4.75. That reflects expected expenses related to its entry in the Canadian market. Analysts expect $4.27 per share for the year, according to FactSet.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • Tom

    This is not huge surprise! We are in a slow recovery which means is people are still looking for good deals. But customers are always looking for a good deal no matter what the economy is doing that time of the year!

  • The Crux of the Buscuit

    They should just eliminate health insurance and any 401k matches they make, this will help insure that the stock holders and senior execs don’t have to feel any pain. After all, we all know the workers are greedy, lazy, worthless bums that are just taking advantage of the wealthy investors and managements largess….

  • not so sure

    I dislike Target since it is so generic. No good deals like there used to be.

  • Mommy24Under6

    Target RULES! Love, love, love my Target (they should steal that slogan from Cub, LOL!). I only wish there was Super Target in Mankato – I’d never shop any place else. I always stop at the Super Target near my sister’s house in Prior Lake when I visit – I attempt to go once a month and do my “big” grocery shopping trip there. Have saved a boat load, even compared to the evil Wally World that everyone else is so in love with.

    • Tom

      @ Mommy24Under6

      And besides one of the big differences between Target and Wally World is that the employees at Target actually know things while the the employees at Wally world dont know anything or tell you that is handled by a third party.

      I love Target!

      • not so sure

        Tom actually the invisible difference between Target and Walmart is the poverty line. I’m in the top 2% of income earners but hate Target and Walmart for different reasons but feel like everything at Target is like paying MSRP on your new car. I just feel ripped off. At least with Walmart, you feel like amongst the chaos and Somolis, you can find discounts to the MSRP. All that said, my wife does the shopping and loves Target. She gladly pays more to avoid stepping over the poverty line.

  • shel

    I LOVE Target too! They are far better than WM and Sam’s. I find grocery prices at the lowest or near the lowest than most other stores. Target is also a good corporate citizen — far better than most!

  • politiciansSUX

    Why do my posts complaining about their outsourcing keep getting deleted? They brought this on themselves. People that used to make good money can not longer afford to shop at Target nor Best Buy because they outsourced their IT and offshore what is not outsourced. Serves Target and Best Buy right for these practices.

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