Fourth-quarter net income increased 19% to $1.12 billion, or $1.29 per share, but bear in mind that Target's results included an extra week compared to last year. Earnings did defeat analysts' expectations, though, as Target benefited from the holiday season included in the fourth quarter.
Target's revenues increased 16.3% to $19.7 billion. Again, that figure included an extra week, and Target reported a 4.8% increase in same-store sales for the quarter. Significantly, Target's credit card operations continue to bolster its business, posting a 17% increase in revenue to $441 million. Inventory increased just 7%, which is good news, too, since retail watchers never like to see inventory increase more quickly than sales.
Drilling down a bit deeper, though, we find that Target generated $934 million in free cash flow, which is down 12% from the $1.06 billion in free cash flow it generated last year. Cash and equivalents decreased 51% to $813 million, although it's worthwhile to note that Target has been repurchasing shares and paying down debt.
It's a good thing Target had a strong showing -- last quarter, Wal-Mart
Target's one of my personal favorites, though it faces considerable competition from Wal-Mart, Costco
I can understand why investors are celebrating Target today, given its strong quarter, continued competitive strengths, and room for even greater growth. I also believe that Target's well-positioned for the long term. On the other hand, I'd consider it sensible to wait for a cheaper price before taking stock in Target.
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Alyce Lomax does not own shares of any of the companies mentioned.