Nothing exciting or dreadful came out of Target's
The discount retailer reported net income up 13% at $686 million, or $0.80 per share. Revenues increased 9.5% to $14.6 billion, helped along by a 4.9% increase in same-store sales, new store expansion, and of course, its credit card operations, which are often given credit (pun intended) for helping bring about impressive earnings. Operating income increased by 11.8% to $1.2 billion.
Target met quarterly expectations, and also said that the expectation for earnings of $3.60 per share for the year is "within the range of likely outcomes." I guess given the current climate and nervousness about near-term consumer spending, that could be interpreted as good news, even if it sounds a bit wishy-washy.
The credit card business at Target is an interesting factor. William Ackman's Pershing Capital Management recently took a stake in Target, believing shares to be undervalued, and many have speculated that Ackman plans to agitate for the company to sell off its credit card business. Pershing Capital is well known for pushing for increased shareholder value; one of its well-known moments was when it pressured Wendy's
Target's credit card business represented $163 million in earnings before taxes for the quarter, a 34% increase on a year-over-year basis.
Nobody's forgotten the fact that discount rival Wal-Mart
Target's currently trading at 14 times forward earnings -- about on par with its anticipated fiscal 2008 earnings growth rate -- and while that doesn't sound exactly cheap (not outrageous, either), it's got a lot to like for the long term, and not least of which is the fact that it's got a good brand, a great eye for merchandise, and the discount strategy that can hold up even in difficult times. In the retail universe, I'd say investors wouldn't be irrational to take aim for Target.
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Take aim at a few related items:
- Despite its discount pricing, earlier this month my Foolish colleague Seth Jayson didn't think Target particularly cheap.
- Check out last quarter at Target.