Target Reports Fourth Quarter and Full-Year 2017 Earnings

Target Corporation (NYSE: TGT) today announced its fourth quarter and full-year 2017 results.  The Company reported GAAP earnings per share (EPS) from continuing operations of $2.02 in fourth quarter and $5.32 for full-year 2017, compared with $1.46 and $4.58 in 2016, respectively.  Fourth quarter Adjusted EPS were $1.37, compared with $1.45 in 2016. Full-year Adjusted EPS were $4.71, compared with $5.01 in 2016. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

“Our fourth quarter results demonstrate the power of the significant investments we’ve made in our team and our business throughout 2017.  Our team’s outstanding execution of Target’s strategic initiatives during the year delivered strong fourth quarter traffic growth in our stores and digital channels, which drove healthy comparable sales in every one of our five core merchandise categories,” said Brian Cornell, chairman and chief executive officer of Target Corporation. “At our Financial Community Meeting later this morning, we will outline our plans to continue investing in our team and make 2018 a year of acceleration in the areas that set Target apart- our stores, exclusive brands, and rapidly-growing suite of fulfillment options. While we have a lot left to accomplish, our progress in 2017 gives us confidence that we are making the right long-term investments to best position Target for profitable growth in a rapidly changing consumer and retail environment.”

Fiscal 2018 Guidance
In first quarter 2018, Target expects a low-single digit increase in comparable sales, and both GAAP EPS from continuing operations and Adjusted EPS of $1.25 to $1.45.

For full-year 2018, Target expects a low-single digit increase in comparable sales, and both GAAP EPS from continuing operations and Adjusted EPS of $5.15 to $5.45.

First quarter and full-year 2018 GAAP EPS from continuing operations may include the impact of certain discrete items, which will be excluded in calculating Adjusted EPS.  The Company is not currently aware of any such discrete items.

Segment Results
Fourth quarter 2017 sales increased 10.0 percent to $22.8 billion from $20.7 billion last year, reflecting the impact of an additional week in this year’s fourth quarter, a 3.6 percent increase in comparable sales, and sales in non-mature stores.  Comparable digital channel sales grew 29 percent and contributed 1.8 percentage points of comparable sales growth.  Segment earnings before interest expense and income taxes (EBIT), which is Target’s measure of segment profit, were $1,152 million in fourth quarter 2017, a decrease of 14.3 percent from $1,344 million in 2016.

Fourth quarter EBIT margin rate was 5.1 percent, compared with 6.5 percent, in 2016. Fourth quarter gross margin3 rate was 26.2 percent, compared with 26.6 percent in 2016, reflecting pressure from digital fulfillments costs.  The net impact of the Company’s pricing and promotion efforts was offset by cost savings.  Fourth quarter SG&A expense rate was 18.5 percent in 2017, compared with 17.5 percent in 2016, driven by higher compensation costs, including both an increase in team member incentives and the impact of investments in store team member hours and wage rates, partially offset by cost saving initiatives.
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