Target Earnings Recap: REDcard Usage and Expansion Expenses Key Drivers

Retailer Target Corp (NYSE:TGT) announced third quarter results that beat its own guidance and analysts’ estimates.

Earnings were $555 million (82 cents a share) compared to $535 million (74 cents a share) a year ago. Target (NYSE:TGT)  had estimated earnings to come in at 70 cents to 75 cents a share, while analysts forecast 74 cents on average. The retailer incurred expenses on its plan to open stores in Canada by 2013. Adjusting for these expenses, earnings would have been higher at 87 cents.

Key drivers for results include higher usage of the Target REDcards, which were used for 9.5 % of sales as against only 5.5% last year. Also helping were gross margins that fell less than expected, and lower expenses on the expansion into Canada. Though credit card revenue fell 8.2%, credit card expenses fell more than proportionately by 44.9%. Same store sales rose 4.3% and the amount spent per transaction also climbed 4.1%.

In the fourth quarter, Target (NYSE:TGT) should see the benefit of its 5% discount offering on Target cards, launched on Oct 17. On-line shoppers are being wooed with free shipping offers this holiday season, and Black Friday has Target in the act with stores opening at midnight.

For the fourth quarter, Target (NYSE:TGT) expects earnings per share of $1.43 to $1.53 while analysts are forecasting $1.47 a share.

Here’s how big box retailers are trading on the news:

  • Target Corp. (NYSE:TGT): The shares recently traded at $54.26, up $1.08, or 2.03%. Its market capitalization is $36.64 billion. They have traded in a 52-week range of $45.28 to $60.97. Volume today was 4,160,875 shares versus a 3-month average volume of 7,035,880 shares. The company’s trailing P/E is 12.89, while trailing earnings are $4.21 per share. The company pays a dividend of $1.20 per share for a dividend yield of 2.30%. About the company: Target Corporation operates general merchandise discount stores in the United States. The Company’s merchandising operations include general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards. Get the most recent company news and stock data here >>
  • Wal-Mart Stores Inc. (NYSE:WMT): The shares recently traded at $56.77, down $0.69, or 1.2%. Its market capitalization is $195.67 billion. They have traded in a 52-week range of $47.77 to $57.90. Volume today was 2,998,369 shares versus a 3-month average volume of 11,667,200 shares. The company’s trailing P/E is 12.08, while trailing earnings are $4.70 per share. The company pays a dividend of $1.46 per share for a dividend yield of 2.50%. About the company: Wal-Mart Stores, Inc. operates discount stores, supercenters, and neighborhood markets. The Company’s discount stores and supercenters offer merchandise such as apparel, housewares, small appliances, electronics, and hardware. Walmart’s markets offer a full-line supermarket and a limited assortment of general merchandise. The Company operates nationally and internationally. Get the most recent company news and stock data here >>
  • Costco Wholesale Corporation (NASDAQ:COST): The shares recently traded at $83.60, down $0.88, or 1.04%. Its market capitalization is $36.23 billion. They have traded in a 52-week range of $66.02 to $86.34. Volume today was 372,662 shares versus a 3-month average volume of 2,789,460 shares. The company’s trailing P/E is 25.32, while trailing earnings are $3.30 per share. The company pays a dividend of $0.96 per share for a dividend yield of 1.20%. About the company: Costco Wholesale Corporation operates wholesale membership warehouses in multiple countries. The Company sells all kinds of food, automotive supplies, toys, hardware, sporting goods, jewelry, electronics, apparel, health and beauty aids, as well as other goods. Get the most recent company news and stock data here >>
  • Big Lots Inc. (NYSE:BIG): The shares recently traded at $40.66, down $0.4, or 0.97%. Its market capitalization is $2.67 billion. They have traded in a 52-week range of $27.82 to $44.44. Volume today was 86,868 shares versus a 3-month average volume of 1,343,600 shares. The company’s trailing P/E is 14.05, while trailing earnings are $2.89 per share. About the company: Big Lots, Inc. is a broadline closeout retailer that operates stores across the United States. The Company’s stores offer an assortment of merchandise, including consumables, seasonal products,furniture, housewares, toys, and gifts. Get the most recent company news and stock data here >>

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