MINNEAPOLIS — First-quarter earnings at Target exceeded a profit forecast the company increased last month after a strong start to the quarter.
Sales increased 6.1% to $16.5 billion and same-store sales advanced 5.3%. The sales momentum, combined with rigid expense control, enabled the company to report first-quarter earnings per share of $1.04, which exceeded a guidance range that had been increased to 96 cents to $1.02 from 88 cents to 98 cents in early April, following better-than-expected same-store sales during the first two months of the quarter.
"We're very pleased with our first quarter earnings, which benefited from better-than-expected sales," said Gregg Steinhafel, Target's chairman, president and CEO. "While our outlook for the remainder of 2012 reflects continued economic uncertainty, we are confident in our strategy, keenly focused on delivering an affordable and inspirational merchandise assortment to our guests and committed to making thoughtful investments in our U.S. and Canadian business segments that we expect will reward our shareholders over time."
The company also exceeded its adjusted earnings forecast, which takes into account expenses incurred in relation to next year’s entry into Canada. Adjusted earnings per share were $1.11 in first quarter, and increase of 11.5% from the 99 cents during the prior year years. The $1.11 figure exceeded guidance of $1.04 to $1.10 that had been increased in early April from a range of 97 cents to $1.07.
Gross margins declined slightly to 30.2% from 30.4% as lower margin food and consumables accounted for a larger percentage of overall sales. The decline was more than offset by a reduction in expense as which declined to 19.9% compared with 20.4% the prior year.
The solid first quarter showing prompted the company to raise its full year earnings forecast by 5 cents to a range of $4.10 to $4.30 or, excluding cost related to Canada, $4.60 to $4.80.
Target ended the first quarter with 1,764 stores.