MINNEAPOLIS (dpa-AFX) - Target Corp. (TGT) reported a profit for second quarter 2016 that declined 9.7 percent from the prior year, while revenue dropped 7.2 percent. Quarterly comparable sales decreased 1.1 percent. The company cut its profit outlook for fiscal year 2016. The company said it is on pace to exceed its goal to save $2 billion in costs over the 2-year period ending in 2016.
Adjusted earnings per share from continuing operations for the quarter topped analysts' expectations, while quarterly revenues missed their estimates.
In the pre-market, TGT is currently trading at $72.61, down $2.87 or 3.80 percent.
'Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in Signature Categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time' said Brian Cornell, chairman and CEO of Target.
Net earnings for the second-quarter decreased 9.7 percent to $680 million from last year's $753 million, with earnings per share declining to $1.16 from $1.18 in the previous year.
The company's second quarter 2016 net interest expense was $307 million, compared with $148 million last year, driven by a $161 million charge related to the early retirement of debt. Second quarter 2016 effective income tax rate from continuing operations was 33.6 percent, compared with 34.6 percent last year. The decrease was primarily due to losses related to the early retirement of debt.
Second quarter adjusted earnings per share from continuing operations, which excluded $161 million of pre-tax early debt retirement losses, were $1.23, an increase of 0.5 percent from second quarter 2015. Analysts polled by Thomson Reuters expected the company to report earnings of $1.12 per share. Analysts' estimates typically exclude special items.
Quarterly sales dropped 7.2 percent to $16.17 billion from $17.43 billion in the previous year, reflecting a 1.1 percent decrease in comparable sales combined with the removal of pharmacy and clinic revenues from this year's results. Wall Street expected revenues of $16.18 billion for the quarter. Comparable digital channel sales grew 16 percent and contributed 0.5 percentage points to comparable sales growth.
While Target has plans in place to strengthen results over time, based on the current retail environment the Company believes it is prudent to lower its expectations for comparable sales in the second half of the year. In both the third and fourth quarters of 2016, Target now expects comparable sales growth in the range of (2.0) percent to flat.
In third quarter 2016, Target expects both GAAP earnings per share from continuing operations and Adjusted earnings per share of $0.75 to $0.95. Analysts project third-quarter earnings of $0.96 per share.
For full-year 2016, Target now expects GAAP earnings per share from continuing operations of $4.36 to $4.76, compared with prior guidance of $4.76 to $4.96. The Company expects full-year 2016 Adjusted earnings per share of $4.80 to $5.20, compared with prior guidance of $5.20 to $5.40. Analysts expect annual earnings of $5.13 per share. The 44-cent difference between the guidance ranges for GAAP earnings per share from continuing operations and Adjusted earnings per share primarily reflects early debt retirement losses already reported in 2016.
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