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Expectations elevated after April results


The modest increase in April same-store sales Target reported last week and updated guidance that earnings per share will be well above analysts’ estimates may help Target’s existing board members retain their seats in the company’s ongoing proxy battle. April same-store sales increased a scant 0.3% and benefitted from the timing of Easter, but gross margin trends were strong and inventories were well managed, according to the company. More importantly, the company noted that trends in its credit business stabilized after substantial deterioration during the past year. Credit card results were in line with the company’s prior guidance, including write-offs of approximately $300 million. However, conditions stopped getting worse, so the company didn’t have to set aside more funds for its allowance for doubtful accounts.

“April sales results were in line with our guidance for the month,” said Gregg Steinhafel, chairman, president and CEO. “For the first quarter overall, retail segment financial performance was significantly better than expected, and the credit card segment performed in line with our prior guidance. As a result, we expect first-quarter earnings per share results to be well above the current median First Call estimate of 52 cents.”

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