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Target Earnings Off, but Beat Expectations

MINNEAPOLIS -- Despite higher revenues, Target Corp. here said it recorded an 18 percent slip in earnings for the third quarter. Food played a role in sales gains for the period, however.

Income for the quarter ended Oct. 29 was $435 million, or 49 cents per share, vs. $531 million, or 59 cents per share. The company said the sale of its former Mervyn's subsidiary boosted last year's results.

Revenue grew 12 percent to $12.21 billion from $10.91 billion, driven by a 5.9 percent gain in same-store sales driven by food and commodities, adult clothing, and credit card profits that jumped $38 million, or 31 percent.

The company said it had $20 million in hurricane losses, mostly damage to stores and inventory.

Although expanding profit margins helped Target during the quarter, company officials said they're not banking on a command performance during the fourth quarter Christmas shopping season. "As always, we expect this holiday season to be very promotional and highly competitive," Target's president Gregg Steinhafel said during a conference call with analysts.

The company also announced a $2 billion increase in stock buyback plan that enables Target to repurchase up to $5 billion of its own stock from shareholders over the next two to three years. Since June 2004, Target has repurchased $2.17 billion of its own shares, and now has about 885 million shares outstanding.
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