Weather Prompts Target Complaints, Complicates Financial Outlook

Target Corp. is another retailing crying foul… weather. The company today announced that it expects first quarter 2013 comparable store sales growth to be approximately flat due to softer than anticipated sales trends particularly in seasonal and other weather-sensitive categories across the store.

In line with the softer sales, Target stated that its first quarter adjusted earnings will likely come in at the low end of prior guidance that ranged from $1.10 to $1.20.

In addition, a debt tender offer, the sale of credit card receivables and Canadian initiatives also impacted the retailer’s financial metrics. So, Target expects first quarter GAAP earnings per share to be approximately 28 cents lower than adjusted EPS due to losses, recognized in interest expense, of approximately $445 million, or 41 cents per share, involving early debt retirement, dilution related to the company’s Canadian segment of approximately 23 cents per share and net accounting gains of approximately 36 cents per share associated with the sale of Target’s entire consumer credit card receivables portfolio to TD Bank Group.

Target further noted that it expects fiscal 2013 adjusted EPS to be consistent with the previous guidance of $4.85 to $5.05. The retailer anticipates full-year 2013 GAAP EPS to be approximately 57 cents lower than adjusted EPS due to the early retirement of debt expense, a 45 cent per share expense related to Canadian operations, and a 29 cent per share accounting gain associated with the credit card receivables sale.

On April 11, Target announced the final results of previously announced tender offers to purchase up to $1.11 billion of debt securities. The company’s final purchase totaled $760.7 million at a cost of $1.11 billion including late tender offer consideration.