Target Posts Q4 Earnings Boost in Wake of Canada Exit
As Target Corp. regroups following its recent exodus from the Canadian market, the Minneapolis-based retailer reports boosts in sales and earnings for the fourth quarter and full 2014 fiscal year.
Q4 same-store sales increased 3.8 percent, reflecting a 3.2 percent increase in comparable transactions. Digital channel sales contributed 0.9 percentage points to comparable sales growth. Adjusted Q4 earnings per share of $1.50 bested the company’s most recent guidance of $1.43 to $1.47 per share.
Meanwhile, Target’s full-year comparable sales grew 1.3 percent, with digital sales growth of more than 30 percent contributing 0.7 percentage points to 2014 comparable sales growth. Full-year adjusted earnings per share are $4.27, down 2.6 percent from last year. The retailer paid dividends of $1.2 billion in FY 2014, an increase of 19.8 percent over 2013.
Strong performance in signature categories
“We’re pleased with our fourth quarter financial results, which were driven by better-than-expected sales and particularly strong performance in our signature categories-style, baby, kids and wellness,” said Brian Cornell, Target's chairman and CEO. “We’re seeing early momentum in our efforts to transform Target, and our team is entering the new fiscal year with a singular focus on continuing to differentiate our merchandise assortment and shopping experience while controlling costs by reducing complexity and simplifying the way we work. We’re confident that these efforts will allow us to grow our earnings while returning cash to our shareholders in 2015 and beyond, driving improvements in Target’s return on invested capital and creating long-term value for our shareholders.”
Overall, Q4 sales rose 4.1 percent to $21.8 billion from $20.9 billion last year, reflecting the 3.8 percent increase in same-store sales combined with sales from new stores. Full-year 2014 sales increased 1.9 percent to $72.6 billion from $71.3 billion last year, reflecting a 1.3 percent increase in comparable sales combined with sales from new stores.
In January, Target's board of directors approved a plan to discontinue operating stores in Canada, triggering a pretax impairment loss and other charges of $5.1 billion in Q4. After-tax losses from discontinued operations were $3.6 billion, or $5.59 per share, for Q4 and $4.1 billion for full-year 2014, or $6.38 per share.
In ongoing response to the company's data breach during Q4 2013, Target incurred related expenses of $4 million in Q4 2014 and full-year net expense of $145 million. Q4 and full-year 2013 net expense related to the data breach was $17 million, reflecting $61 million of gross expense partially offset by the recognition of a $44 million insurance receivable.
Target Corp. operates 1,790 stores and Target.com.