By Agency reporter

Thursday, 18 Nov 2010

Target Corporation, the second-largest United States discount retailer, posted a 23 per cent increase in third- quarter profit after earnings, as its credit-card unit more than doubled.

Bloomberg reported from New York on Wednesday, that net income rose to $535m, or 74 cents a share, in the three months ended October 30, from $436m, or 58 cents, a year earlier, the Minneapolis-based company said in a statement.

Excluding a tax gain, profit was 68 cents a share, matching the average of 20 estimates in a Bloomberg survey.

Profit at the credit-card division grew to $130m from $60m, as bad-debt expenses fell.

New fresh grocery sections and a discount programme started last month to spur sales from Target‘s highest-spending existing customers, helped the retailer boost sales during the economic recovery, outperforming larger rival Wal-Mart Stores in the US.

Target‘s ”business is evolving and to keep earnings growing they are going to have to get more and more people in there to drive more volumes,” a New York-based analyst for Wall Street Strategies Incorporated, Mr. Brian Sozzi, said. ”The groceries helped boost transactions last quarter, while reducing the average amount of each purchase, Sozzi, who recommends holding the shares, said.

Target gained $1.94, or 3.6 per cent, to $55.48 in New York Stock Exchange trading composite trading. The shares had gained 11 per cent this year.

Wal-Mart said on Tuesday, that the US same-store sales, which exclude new stores, fell for a sixth straight quarter as traffic sank from last year.

Target has increased same-store sales in the past year, including 1.6 per cent growth in the third quarter. The fourth-quarter performance of such sales will be the best of any three- month period in the past three years, Chief Executive Officer, Mr. Gregg Steinhafel, said in the statement.

The biggest gain in that timeframe was 2.6 per cent in the first quarter.

”It‘s fairly clear that Target‘s customers are doing better than Wal-Mart‘s because Wal-Mart has more of those lower-income customers,” an analyst for UBS Securities LLC in Stamford, Connecticut, Mr. Neil Currie, said before the results.

 

Source: Punch