Earnings: Target | J.C. Penney

Target Profit Rises 13 Percent

CHICAGO (Reuters) - Target Corp. (TGT) Thursday said quarterly profit rose nearly 13 percent, helped by strong early-summer sales and big returns from its credit card business.

The second-largest U.S. discount retailer also said its directors had authorized a $5 billion share repurchase, which it expects to complete by the end of 2008. Shares of Target have fallen 17 percent year to date, pressured by increasingly fierce competition from larger rival Wal-Mart Stores Inc. (WMT) .

Earning rose to $609 million, or 70 cents per share, in the fiscal second quarter that ended on July 29, from $540 million, or 61 cents per share, in the same period a year earlier.

Analysts, on average, expected a profit of 69 cents, according to Reuters Estimates. The retailer said last week that second-quarter earnings per share would likely meet or exceed the 69 cent consensus.

Wal-Mart has been adding more upscale items to its stores in the hope of tempting wealthier shoppers to buy more than just low-margin food.

Total revenue rose 11 percent to $13.35 billion. That was slightly behind analysts' expectations for $13.38 billion, according to Reuters Estimates.

The retailer said second-quarter gross margin in its retail operations was "essentially unchanged" from a year earlier, an improvement from the first quarter, when a disappointing decline in margins drove the stock down.

Target had said in May that second-quarter margin would likely be flat or up slightly from a year earlier.

Minneapolis-based Target said its credit card business contributed $168 million to its earnings before taxes, up about 53 percent from a year earlier.

Target issues a branded Visa card, which has generated big profits for the company in recent years. The retailer has said repeatedly that it has no plans to sell the business, even though many other retailers have sold theirs for big profit.

Target's stock trades at about 12.8 times analysts' profit forecasts for the next fiscal year, below Wal-Mart's valuation of 13.3 times earnings, according to Reuters Estimates.

Target shares ended at $45.28 on the New York Stock Exchange Wednesday.

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J.C. Penney Reports 37 Percent Rise In Profit

NEW YORK (Reuters) - J.C. Penney Co. Inc. (JCP) Thursday posted a second-quarter profit that rose 37 percent and gave a full-year forecast that was higher than Wall Street had expected, after stronger sales of fine jewelry, children's and women's accessories, as well as demand for women's apparel.

"We have broad-based momentum entering the back half of the year," Mike Ullman III, company chairman and chief executive officer, said in a statement.

J.C. Penney reported net income of $179 million, or 76 cents per share for its fiscal second-quarter through July 29, compared with $131 million, or 50 cents per share, a year earlier.

Earnings per share from continuing operations rose to 75 cents, from 46 cents per share.

Wall Street, on average, expected earnings per share of 71 cents, according to Reuters Estimates. Earlier this month the department store operator had forecast earnings of 71 cents a share for the second quarter, up from its previous forecast of 65 cents.

Sales increased in all merchandise divisions and regions of the country, the company said, reporting total net sales up $4.24 billion from $3.98 billion.

The Plano, Texas-based company has wrapped up a five-year turnaround plan, and is now moving aggressively to transform its image from a stodgy retailer into a trendy one that offers up-to-date, fashionable merchandise.

It is expanding its private and exclusive brand offerings, like "nicole" by Nicole Miller and home furnishings by designer Chris Madden, and has outlined an aggressive growth plan for opening new stores.

Penney shares are up 15 percent for the year to date, compared with an 18 percent rise for rival Kohl's Corp. and an 8 percent decline in the Standard & Poor's Retailing Index .

OUTLOOK

Looking ahead, the company said it expected earnings of about $1.07 per share in the third quarter and about $1.84 in the fourth quarter. Full-year earnings are now expected to be in the area of $4.55 per share.

Analysts were looking for third-quarter earnings of $1.06, fourth-quarter earnings of $1.83 and full-year results of $4.49.

The company is moving ahead with its plans to increase store count, saying it will likely open 25 stores in the third quarter. Beginning in 2007, the company said it plans to open 50 stores per year.

Shares of J.C. Penney closed at $64 on Wednesday.

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