MINNEAPOLIS-Increased sales and a one-time gain helped Target to a 14.8 percent increase in its net income for its fiscal third quarter, to $637 million.
The one-time gain of $156 million was for the pending sale of the retailer’s credit-card receivables portfolio. Net sales in the quarter, which ended on Oct. 27, rose 3.4 percent to $16.6 billion, and included a same-store sales increase of 2.9 percent.
Higher overall expenses cut into Target’s gross margin and operating margin during the quarter. Gross margin was reduced by 14 basis points to 30.3 percent, reflecting the impact of the company’s integrated growth strategies, Target said in a statement reviewing its third quarter. Selling, general and administrative expenses increased 5.1 percent in dollars and 35 basis points as a percentage of sales to 22.3 percent.
Gregg Steinhafel, Target’s chairman, president and CEO, said the company was pleased with its third quarter, which has positioned the retailer for a “strong fourth-quarter performance” as well. Initiatives such as the 5% REDcard Rewards and the recently announced Target/Neiman Marcus holiday collection and the Holiday Price Match program offer more promise for a healthy fourth quarter, Steinhafel added.