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Sales at Target Corp. increased 3 percent in the third quarter to $15.2 billion in 2010 from $14.8 billion in 2009, due to a 1.6 percent increase in comparable-store sales combined with the contribution from new stores, the Minneapolis-based retailer reported.
“We’re pleased with Target’s third quarter financial performance, and we are well-positioned for the fourth quarter,” said Gregg Steinhafel, Target chairman, president and CEO. “We’ve built our holiday season plans to create excitement and provide our guests unbeatable value. In addition, our guests can save more than ever with our new 5 percent REDcard rewards program. Based on our merchandising and marketing plans, combined with the expected impact of REDcard rewards and our newly completed remodel program, we expect Target’s fourth quarter comparable-store performance will be the best of any quarter in the last three years.”
Target reported net earnings of $535 million for the quarter ended Oct. 30, compared to $436 million for the same period a year ago. Diluted earnings per share in Q3 increased 28.5 percent to 74 cents from 58 cents in the same period a year ago. Retail segment earnings before interest expense and income taxes were $816 million, an increase of 3.2 percent from $791 million in 2009. Third-quarter segment profit increased to $130 million from $60 million a year ago, as bad debt expense declined 64 percent from $301 million in third quarter 2009 to $110 million this year.
Net interest expense for the quarter increased $3 million from third quarter 2009, driven by a higher average portfolio interest rate, partially offset by lower average debt balances reflecting lower average credit card receivables.
The company’s effective tax rate for the third quarter was 30.8 percent in 2010, down from 36.1 percent in 2009, primarily as a result of the favorable resolution of various state income tax matters which increased earnings per share by approximately 6 cents in third quarter 2010.
Target operates 1,752 stores in 49 states nationwide.