Target's 3Q Profit Jumps on Revenue, Mervyn's Sale

MINNEAPOLIS - Target Corp. reported yesterday a 78 percent jump in its third-quarter profit, thanks in part to the sale of its Mervyn's department store chain and an 11 percent increase in revenues.

The Minneapolis-based retailer, which currently operates 1,117 general merchandise stores and 136 grocery/general merchandise SuperTarget stores, opened a record 46 stores during the quarter, including 10 new SuperTarget stores. During a conference call yesterday, chairman and c.e.o. Bob Ulrich said there was an opportunity to "at least double in size in the U.S." Senior management has stated in the past that SuperTarget will continue to constitute approximately one third of the chain’s net new square footage.

Ulrich reiterated that Target is not currently looking for overseas acquisitions, as some reports have speculated in recent months. "There is no question that Target will be an international presence at some point in time, but in the near-term future we have no plans," he said.

Even U.S. expansion may become more difficult for Target, however, with Wal-Mart's ramped-up supercenter expansion, analysts have noted.

For the third quarter ended Oct. 30, Target reported net income of $537 million, or 60 cents per share. The results included $203 million, or 23 cents per share, from the sale of the Mervyn's chain, which closed during the quarter. Without the Mervyn's sale, earnings would have been 37 cents per share.

Revenue was $10.9 billion, up 11 percent from $9.8 billion during the same period last year. Same-store sales grew by 4.5 percent. Target also credited new store expansion and
its credit card operations for the sales increase.

In an innovative merchandising move, Target stores will roll out a "Global Bazaar" in January that will include decorative accessories and furniture from Asia, Latin America, Africa, and India, said president Gregg W. Steinhafel.
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