Volatility to rule Q2
Target had a great first quarter, and when senior executives detailed results last week during a conference call they used such phrases as “extremely pleased,” “superb execution,” “fantastic quarter” and “undisputed success” a lot, and for good reason.
First quarter same-store sales increased 2.4%, and earnings per share surged 30% to 90 cents. Gross margins expanded and expenses decline; always a good combination in retail. Despite the impressive showing which Target executives saw as evidence of the strength of the company’s business model and the “expect more, pay less” value proposition, they were quick to point out that the second quarter and even the rest of the year are filled with a great deal of uncertainty that will impact consumer spending.
Chairman, president and CEO Gregg Steinhafel said it best when he commented on volatility during the company’s first quarter conference call after he was asked a question about his comments that Target began the second quarter with below plan sales during the first two weeks of May.
“There’s going to be good months, bad months and some ups and downs, and I think we’re seeing an environment where that kind of volatility and unpredictability is just playing out in the consumer environment,” Steinhafel said.
Despite the slow start to the quarter, which CFO Doug Scovanner indicated was impacted by weather, the company still expects to see same-store sales increase in the range of 2% to 4%. It also indicated that it was comfortable with analysts’ median estimates for second-quarter earnings of 91 cents and full-year earnings of $3.81.
Hibbett reports strong Q1, raises outlook
BIRMINGHAM, Ala. Hibbett Sports reported that net sales for the first quarter ended May 1 increased 17% to $184.5 million compared with $157.7 million for the first quarter ended May 2, 2009. Comparable-store sales increased 14.5%.
Net income for the first quarter of Fiscal 2011 increased 58.9% to $17.3 million compared with $10.9 million for the first quarter of fiscal 2010. Earnings per diluted share increased 56.8% to 59 cents compared with 38 cents for the first quarter of fiscal 2010.
Jeff Rosenthal, president and CEO, stated, “The strong sales trend we experienced in the fourth quarter of last year continued throughout the first quarter of this year and into the second quarter. Our overall positive sales performance was driven by double-digit increases in footwear and apparel. The broad-based improvement and exceptional operating margin give us confidence in our optimistic outlook for the remainder of the year.”
The company increased its earnings guidance for fiscal 2011 to a range of $1.35 to $1.50 per diluted share based on mid- to high-single-digit increases in comparable-store sales for the full year.
Target prepares for hurricane season
MINNEAPOLIS Target announced that it will serve as a destination for consumers looking to prepare for hurricane season during National Hurricane Preparedness Week, May 23 to 29.
Target pointed to the number of services it offers including a 24-hour daily command center that monitors global events that could impact its customers and associates. The retailer also said its stores will remain open as long as possible during an emergency to help communities get the supplies they need and holds merchandise in its distribution centers in advance of hurricane season so that it can get supplies to stores as quickly as possible.
“We want our guests to know that before and after a crisis, communities can count on Target,” says Brad Brekke, VP Target assets protection.