MINNEAPOLIS-Increased costs and reduced margins slammed Target’s bottom line in its third quarter. Net income was down 46.5 percent, to $341 million, in the quarter which ended on Nov. 2.
Selling, general and administrative expenses were up 4 percent in dollars, although as a percentage of sales they were essentially flat with last year’s third quarter at 22.3 percent. Gross margin was down 61 basis points, finishing at 29.7 percent. Last year’s quarter also included a one-time gain on a receivables transaction of $156 million.
These factors offset a net sales gain of 4 percent, to $17.3 billion. Same-store sales edged up 0.9 percent in the quarter. The top line included $333 million in net sales from Target’s Canadian stores, of which the company expects to open 124 by the end of this year. Total sales in the U.S. stores were up 2 percent.
Gregg Steinhafel, Target’s chairman, president and CEO, said sales are on an upward swing in spite of “an environment where consumer spending remains constrained. As our focus shifts to the fourth quarter, we are intently focused on delivering outstanding merchandise; an easy, fun shipping experience; and an unbeatable combination of everyday low prices, weekly ad discounts; five percent REDcard Rewards; and price-match policies throughout the U.S. and Canada.