Target And Talbots Show Gains In Earnings

The Target Corporation said yesterday that its quarterly profit rose almost 18 percent, and the womens apparel retailer Talbots posted a better-than-expected profit after warning last month that weak April sales would cause earnings to decline sharply.

But Limited Brands, which announced plans this month to shed its underperforming apparel brands, posted sharply lower quarterly profit and said sales in May might be lower than in the period a year earlier.

Target, the No. 2 discount chain behind Wal-Mart Stores, said profit rose to $651 million, or 75 cents a share, from $554 million, or 63 cents a share, a year earlier.

The profit, helped by its credit card business and strong sales at established stores, was better than the 71 cents expected by analysts. Shares of Target rose 56 cents, to $58.60.

Talbots said that net income for the first quarter, which ended May 5, dropped to $5.2 million, or 10 cents a share, from $27.4 million, or 51 cents a share, in the period last year. Analysts on average had been expecting 9 cents a share. Shares of Talbots rose 46 cents, to $21.62.

Excluding costs associated with its acquisition last year of the retailer J. Jill, the company earned 23 cents a share. Total first-quarter sales rose nearly 27 percent, to $573.6 million, helped by the J. Jill purchase. But total sales at stores open at least a year, known as same-store sales and a critical yardstick for retailers, fell 3.5 percent in the quarter, 3.9 percent at Talbots and 1.2 percent at J. Jill.

Limited Brands, owner of the Victorias Secret and Bath & Body Works stores, said that first-quarter net profit was $52.9 million, or 13 cents a share, for the quarter ended May 5, a 47 percent drop from $99.4 million, or 25 cents a share, a year earlier. Quarterly sales rose 11 percent, to $2.3 billion.

The company agreed last week to sell 67 percent of its Express chain to the private equity group Golden Gate Capital for $538 million and said it might sell its namesake womens clothing chain as well.

At Target, sales gains at stores open at least a year have outpaced those of Wal-Mart in recent quarters, helped by its inexpensive designer merchandise, like its Isaac Mizrahi home décor and clothing.

It is also increasing its selection of food to bring shoppers to its stores more often.

Target is reaping the benefits of its own infrastructure, supply chain, sourcing, and the part thats more art than science, the merchandising, said Sarah Henry, a consumer analyst with MFC Global Investment Management, of the retailers stronger-than-expected results.

Revenue in the period, which ended May 5 and was the first quarter of Targets fiscal year, rose 9.2 percent, to $14.04 billion. Same-store sales increased 4.3 percent.

Credit card revenue rose to $418 million from $370 million. Target offers a Target Visa and another card that can be used only at its stores.

This month, Target forecast May same-stores sales to rise 5 percent to 7 percent, and on Monday it backed that view.

Talbots said that it would wait until further into the current quarter to give a second-quarter profit and sales forecast, but it lowered its full-year earnings outlook to a range of 70 cents to 80 cents a share, down from its previous forecast of $1.05 to $1.15 a share.

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