Higher profits from its retail business has failed to offset a fall in third-quarter earnings at US discount retailer Target Corp.
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The company said today (17 November) that net earnings reached US$369m for the three months to 1 November, down from $483m a year earlier. Revenue inched up 1.9% to $15.11bn.
Profit from Target’s credit card business lumped 83% as the company invested less in the business and saw the unit hit by higher costs linked to bad debts and lower interest rates.
That performance took the shine off rising retail profits. The company saw EBIT from its retail business rise 7.9% to $772m. Sales grew by 1.7% to $14.6bn thanks to store expansion; comparable-store sales fell 3.3%.
“Our third-quarter financial results reflect the significant macroeconomic challenges facing our retail and credit card segments,” said president and CEO Gregg Steinhafel.
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By GlobalData“As we look to this holiday season and 2009, our entire Target organisation is focused on providing compelling reasons for our guests to shop at Target in these difficult times – by delivering exceptional value, a broad assortment of outstanding merchandise and a superior store experience.”
Nevertheless, Target signalled its caution on the outlook for the economy with news that it had cut its expected capital spending for 2009 by $1bn.
“The current environment and our financial outlook have naturally reduced our appetite for investment in our business, and we have also temporarily suspended substantially all of our share repurchase activity,” said CFO Doug Scovanner.
