Target 4Q hurt by Canada investment, weak holiday

Published on NewsOK Modified: February 27, 2013 at 5:39 pm •  Published: February 27, 2013

For now, Target, which has 1,778 stores across the U.S., is focusing on its launch in Canada. The company plans to open 24 Canadian stores by early April, one of five waves that should add up to 124 stores open before the end of the year. In addition, the chain plans to open 15 to 20 new stores in the U.S. It is the most new stores the company has opened in one year in its history.

"This is a big investment, people are going to be anxious to see how those are trending," said Yarbrough, the Edward Jones analyst.

For the three months ended Feb. 2, Target earned $961 million, or $1.47 per share, for the period ended Feb. 2. That's down from $981 million, or $1.45 per share, a year earlier.

Removing costs related to its investment in Canada stores and interest expense, earnings were $1.65 per share. Analysts expected earnings of $1.47 per share, on average, according to research firm FactSet, but some may have included the Canadian expense in their projections. Target had forecast adjusted earnings between $1.64 and $1.74 per share.

Revenue climbed 7 percent to $22.73 billion from $21.29 billion. This met Wall Street's expectations.

During the quarter, revenue at stores open at least a year edged up 0.4 percent. This figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

For the full year, the Minneapolis company earned $3 billion, or $4.52 per share. A year earlier it earned $2.93 billion, or $4.28 per share. Adjusted earnings were $4.76 per share. Annual revenue increased 5 percent to $71.96 billion from $68.47 billion.

Target's outlook for 2013 was brighter. The chain foresees first quarter adjusted earnings of $1.10 to $1.20 per share. Analysts predict earnings of $1.05 per share. It expects revenue in stores open at least one year to be flat to up 2 percent.

The chain's fiscal 2013 outlook is for adjusted earnings between $4.85 and $5.05 per share. Wall Street expects earnings of $4.87 per share.

In a call with investors, Chief Financial Officer John Mulligan said he expects revenue in stores open at least one year to be in line with the current year's 2.7 percent rise.

Target's stock fell 93 cents, or 1.5 percent, to close at $63.12 Wednesday.