May 17th, 2012

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Target Q1 Profit Rises; Lifts 2012 Earnings Forecast

Thursday, May 17th, 2012

Retail giant Target Corp. is toasting a slight increase in first quarter profits after sales outstripped the company’s expectations.

The retailer posted first quarter net earnings of $697 million or $1.04 per share, higher than last year’s $689 million or $0.99 per share.

Adjusted earnings per share rose to $1.11 from $0.99 in the same quarter last year. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share. Analysts’ estimates typically exclude special items.

Total revenues grew to $16.87 billion from $15.94 billion in the prior-year quarter. Analysts expected revenues of $16.83 billion.

“We’re very pleased with our first quarter earnings, which benefited from better-than-expected sales,” said Gregg Steinhafel, chairman, president, and chief executive officer of Target Corp. “While our outlook for the remainder of 2012 reflects continued economic uncertainty, we are confident in our strategy, keenly focused on delivering an affordable and inspirational merchandise assortment to our guests and committed to making thoughtful investments in our U.S. and Canadian business segments that we expect will reward our shareholders over time.”

Barclays Capital said of the results: “We are encouraged that Target has regained comp momentum seen prior to the holiday season, and believe the company remains well-positioned with the successful rollout of new merchandising initiatives.”

For the second quarter, the company expects adjusted earnings per share of $1.04 to $1.14 and GAAP earnings per share of $0.94 to $1.04. Analysts expect earnings of $0.99 per share.

For full-year 2012, the company has raised its guidance by 5 cents and now expects adjusted earnings per share of $4.60 to $4.80. Earlier, the company expected 2012 adjusted earnings per share of $4.55 – $4.75 and GAAP earnings per share of $4.05 – $4.25. Analysts expect earnings of $4.28 per share and GAAP earnings per share of $4.10 to $4.30.

Target posted a $55m loss in EBIT terms related to its Canadian activities, including start-up expenses, depreciation and amortisation related to its expected entry to the market in 2013.

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Sears Holdings Swings To Profit In Q1

Thursday, May 17th, 2012

Sears Holdings Corp. said Thursday gains from sale of certain assets helped it report a profit for the first quarter. The company also said its board has approved a plan for the partial spin-off of its interest in Sears Canada Inc. Sears Holdings shares rose about 10 percent in pre-market trading.

Announcing its preliminary results, the company said the recent-quarter results included gains on sale of assets of $233 million from the sale of certain U.S. and Canadian stores and leasehold interests. That helped Sears to report a first-quarter income from continuing operations attributable to shareholders of $189 million or $1.78 per share, versus a loss of $165 million or $1.53 per share last year. On average, 3 analysts polled by Thomson Reuters expected loss per share of $0.67 for the quarter.

Revenues for the quarter declined to $9.27 billion from $9.54 billion in the same quarter last year, but came above analysts’ estimate of $9.15 billion for the quarter. The decline in revenue was mainly due to the effect of having fewer Kmart and Sears full-line stores in operation, lower domestic comparable store sales as well as a decline in Sears Canada’s comparable-stores sales in the quarter, the company noted. Four analysts estimated revenues of $9.15 billion for the quarter.

First-quarter 2012 revenues included a decrease of $21 million due to changes in foreign currency exchange, the company added.Domestic comparable-store sales dropped 1.3 percent, comprised of declines of 1 percent at Sears Domestic and 1.6 percent at Kmart. Sears Canada’s comparable store sales fell 6.3 percent from a year ago.

Additionally, the board has approved plans to pursue a partial spin-off of its interest in Sears Canada Inc.. Sears Holdings, which currently owns about 95% of Sears Canada, expects to distribute shares of Sears Canada held by Holdings on a pro rata basis to holders of Holdings’ common stock such that following the spin-off, which is expected to complete this year, Sears Holdings would retain some 51% of Sears Canada. Sears expects to continue to include Sears Canada as a consolidated subsidiary in its consolidated financial statements even after the spin-off of the Canadian business.

Excluding one-time gains, its loss from continuing operations narrowed to $0.31 per share from $1.34 per share in 2011.

Sears Holdings gapped up sharply Thursday and is currently higher by 4.30 at $55.17. The stock has risen to nearly a one-week high.

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