Wednesday, 19 August 2009 at 16:05
Target Corp., the second-largest US discount retailer, reported second-quarter profit that fell less than analysts estimated. The shares rose in early US trading.
Net income declined to $594 million, or 79 cents a share, from $634m, or 82 cents a share, a year earlier, Minneapolis-based Target said today in a Business Wire statement. Analysts estimated profit excluding some items of 66 cents, the average in a Bloomberg survey. The retailer said July 9 it would meet or exceed a median estimate of 64 cents.
Target said at the time that its gross margin, the revenue remaining after deducting the cost of goods sold, was better than expected and its credit-card group benefited from a modest improvement in risk trends. Sales in the retail unit declined 2.7 per cent to $14.6 billion in the quarter ended August 1.
“Despite continued pressure on discretionary items, Target continues to manage its inventories well, and gross margin has held up quite well year-to-date,” Robert Drbul, an analyst at Barclays Capital, wrote in an August 11 report.
Target rose 4.7 per cent to $43.33 at 8:37 a.m. in early New York trading. The shares fell 65 cents to $41.38 yesterday in New York Stock Exchange composite trading. The stock had gained 20 per cent this year before today.
During the quarter, Target parried an effort by hedge-fund manager William Ackman to place as many as five outside directors, including himself, on its board.
Ackman argued that Target needed more expertise in credit cards, real estate and groceries. Shareholders at the May 28 annual meeting voted to re-elect the slate nominated by the retailer and to cap the board size at 12.
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