Minneapolis -- Target Corp. reported Wednesday a profit of $961 million for the fourth quarter, down from $981 million in the year-ago period. The profit slip reflected expenses related to its Canadian market entry along with a spending slowdown during the holiday period. It was Target's weakest holiday season performance since 2008. But its adjusted results beat analysts' estimates and it forecast first-quarter earnings above Wall Street's view. (For commentary on Target’s results, click here.)
“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.” said Gregg Steinhafel, chairman, president and CEO, Target.
On a conference call with analysts, Target said it will open its first 24 Canadian stores in April, with a total of 124 locations planned by yearend. In the U.S., plans call for 15 to 20 new stores, including three CityTarget locations, and some 100 remodels.
"We expect to open many more new stores this year than in any year in our history," Steinhafel said during the call.
Target’s revenue in the fourth quarter climbed 7% to $22.73 billion, from $21.29 billion in the same period last year. Analysts forecast $22.69 billion in revenue. Industry experts said the chain’s holiday showing was partially hurt by the disappointing performance of its collection of gifts sold in partnership with Neiman Marcus. The line launched on Dec. 1, and Target sharply discounted the goods before Christmas Eve.
As previously reported, sales at U.S. stores increased 6.8% to $22.4 billion in the fourth quarter from $20.9 billion last year. Same-store sales inched up 0.4%.
"We're pleased with Target's fourth quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty," Steinhafel said.
For the full-year, sales increased 5.1% to $72.0 billion from $68.5 billion in 2011, with a 2.7% increase in comparable-store sales combined with the contribution from new stores and one additional accounting week.