Fourth-quarter net income decreased 8.2% to $1.03 billion, or $1.23 per share. Target's total revenue just barely inched up, increasing 0.8% to $19.87 billion. However, it's interesting to note that Target's credit card revenue increased 20.7% to $532 million. Same-store sales increased just 0.2% in the quarter.
Target's shares don't seem to be reflecting any negativity today, though. Maybe it's that the results were better than some expected. (For example, the earnings-per-share figure beat analysts' expectations by a penny.) Also, the company said it's still contemplating a transaction regarding its credit card business. Of course, there are some nagging negatives, too, such as its failure to generate positive free cash flow for the year, as well as increased interest expense because of its larger debt load.
At any rate, Target's results aren't surprising, given many signs of consumer spending slowdown (and, of course, the housing slowdown). And it's certainly not alone in its woes in the retail space. In other retail news today, Home Depot
For the long term, I still like Target. I think it's a class act in retail, and I still think its position as a discounter puts it in a comfortable strategic position, even if sales are showing some sluggishness now. Target still has a great brand and shopping experience, and plenty of room for growth. Indeed, analysts expect Target to generate 15% growth over the next five years. However, given the economic pressures that are playing out, there's no denying that the short term may be tough for Target.
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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy. Wal-Mart and Home Depot are Motley Fool Inside Value recommendations. Costco is a Motley Fool Stock Advisor pick.