View Count: 82 |  Publish Date: November 21, 2013
Target Profit Falls 46% as Economy Hurts Shoppers
By Renee Dudley - 2013-11-21T14:42:59Z Stock Chart for Target Corp (TGT)
You need to enable Javascript to play media on PlayTarget 3Q Net Falls 46% on Restrained Shoppers
Target Corp. (TGT), the second-largest U.S. discount retailer, said third-quarter profit fell 46 percent as U.S. consumers restrained spending and its Canadian expansion hurt earnings more than expected. The shares dropped.
Net income in the quarter ended Nov. 2 slid to $341 million, or 54 cents a share, from $637 million, or 96 cents, a year earlier, the Minneapolis-based company said today in a statement. The average of 21 analysts’ estimates compiled by Bloomberg was 62 cents. Revenue rose 1.9 percent to $17.3 billion, trailing the $17.4 billion average projection.
Target joins Wal-Mart Stores Inc. and Kohl’s Corp. (KSS) in posting third-quarter sales that trailed analysts’ estimates as shoppers held back on spending amid persistent unemployment and higher taxes. Target’s Canadian operations cut third-quarter profit by 29 cents a share, more than the 22 cents it expected, and will reduce earnings by as much as 32 cents this quarter.
“The low- to middle-income consumer is just not spending,” Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis, said about U.S. shoppers today in an interview. “They had high expectations when they moved to Canada, and they’re nowhere close to hitting those targets.”
He recommends buying Target shares.
Target fell 4.3 percent to $63.62 at 9:40 a.m. in New York and earlier slid as much as 4.4 percent for the biggest intraday decline since May 22. The shares gained 12 percent this year through yesterday, compared with a 16 percent gain for Wal-Mart Stores Inc. (WMT) and a 25 percent increase for the Standard & Poor’s 500 Index. Discount Retailers
While some households are benefiting from the recovering economy, the rising stock market and rebounding home values, a large swath of the population is being left behind. These lower-income families, which make up a large portion of the customer base at discount retailers such as Target and Wal-Mart, have seen stagnant incomes and higher payroll taxes while suffering amid the nation’s 7.3 percent unemployment rate. Average hourly wages in the U.S. have grown 2.1 percent or less annually starting in 2009.
Target said today that sales at stores open at least 13 months as well as through its website rose 0.9 percent. Analysts estimated a 1 percent gain.
Costs associated with the expansion in Canada, where the retailer added 23 stores in the third quarter, have been a drag on Target’s earnings. The Canadian unit generated $333 million in sales in the quarter and had $221 million in startup and operating expenses. It posted a $238 million loss before interest and taxes. The company said it remains on track to have 124 stores there by the end of the year.
Fourth-quarter adjusted earnings per share will be $1.50 to $1.60, Target said. Analysts estimate $1.57, on average.
To contact the reporter on this story: Renee Dudley in New York at
To contact the editor responsible for this story: Robin Ajello at

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Time: 15:48  |  News Code: 348836  |  Site: bloomberg
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