Retailer Target Corporation said its third fiscal quarter ended November 1, 2014 adjusted EPS of $0.54 was above the expected range of $0.40 to $0.50.
However, the adjusted earnings per share were 2.9 per cent lower from $0.56 earnings per share, the retailer booked in the corresponding quarter of fiscal 2013-14.
In the reporting quarter, US sales increased 1.9 per cent to $17.3 billion from $16.9 billion in last year’s third quarter, reflecting a 1.2 per cent hike in comparable sales combined with sales from new stores.
US segment earnings before interest expense and income taxes (EBIT) reached $927 million in third quarter of 2014, down 5.2 per cent from $977 million in same period of previous year.
Target said its third quarter of 2014 EBITDA and EBIT margin rates stood at 8.5 per cent and 5.4 per cent, respectively, also down from 8.7 per cent and 5.8 per cent in 2013.
Third quarter of 2014 gross margin rate declined to 29.5 per cent from 30.0 per cent, which it said reflects an increase in promotional activity this year.
Reflecting disciplined expense control, third quarter SG&A expense rate fell to 21.0 per cent in 2014 compared with 21.2 per cent in 2013 in the US.
Driven by sales from non-mature stores and a comparable-sales increase of 1.6 per cent, third quarter of 2014 Canadian segment sales surged 43.8 per cent to $479 million from $333 million last year,.
According to Target, third quarter of 2014 Canadian comparable sales reflect results in 82 Canadian stores that became mature at various points this year, including 34 that became mature during the third quarter.
“Comparable sales were negatively impacted by market densification later in 2013, which redistributed sales from earlier store openings,” Target explained.
Loss before interest and tax at the Canadian operations reached $211 million in the quarter under review compared with also a loss of $238 million in the year earlier quarter.
Reflecting continued impact of inventory clearance, third quarter of 2014 gross margin rate in Canada rose higher to 19.5 per cent from 14.8 per cent in third quarter of 2013.
Target said third quarter of 2014 Canadian operations SG&A expense rate of 49.0 per cent compares with 66.6 per cent from last year’s quarter, which had reflected pre-opening costs.
The Company’s third quarter of 2014 net interest expense of $165 million was essentially flat to last year. The reporting quarter’s income tax rate was 31.3 per cent as against 36.6 per cent last year.
Target Corp paid dividends of $330 million in third quarter of 2014, up 21.4 per cent from $271 million last year and it did not repurchase any shares of its common stock during the third quarter. (AR)
