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MINNEAPOLIS -- First-quarter profits at Target Corp. here rose 12 percent on increased revenue from its stores and credit program. The fast-growing discounter posted earnings of $554 million, or 63 cents per share, in the first quarter of 2006 vs. earnings of $494 million, or 55 cents a share, in the same period last year.
Total revenue was $12.86 billion for the quarter ended April 29, up 12 percent from a year ago, while same-store sales rose 5.1 percent for the first quarter. Earnings from the company's credit card business grew 60 percent to $162 million, helping drive the revenue growth.
"We are pleased with our first quarter results," said Bob Ulrich, Target's chairman and c.e.o., "and believe they reflect our continued success in delighting our guests with the right combination of innovation, design and value. Our performance underlies our confidence that we will continue to generate profitable market share growth and reinforces our belief in our ability to achieve a mid-teen percentage increase in EPS for the full year 2006."
Earnings before interest and income taxes (EBIT) in the first quarter of 2006 rose 12.2 percent, in line with revenue growth, to $1.017 billion, vs. $907 million in the year-ago period. Target attributed this EBIT growth to more rapid profit growth in its credit card operations and the benefit of a nonrecurring $28 million pre-tax adjustment to depreciation and amortization, partially offset by unfavorable expense rate performance. The company's gross margin rate was also slightly unfavorable compared with last year.
Under Target's $5 billion share repurchase program, the company repurchased $350 million of its common stock during the first quarter of 2006, acquiring 6.6 million shares at an average price of $53.11 per share. So far, the company has bought 58.1 million shares of its common stock at an average price per share of $48.54, reflecting a total investment of about $2.82 billion. Target said that it expects to continue to execute this program mainly in open-market transactions, subject to market conditions, and plans to complete the total program by the end of 2008, or sooner.
Target currently operates 1,418 stores in 47 states.