MINNEAPOLIS-In its first quarterly earnings report after the sale of Mervyn’s and Marshall Field, Target Corp. reported net income of $537 million, or $0.60 per share, for the third quarter 2004 (ended October 30, 2004), compared with $302 million, or $0.33 per share, in the third quarter 2003. Revenue for the quarter was $10.9 billion, up 11% from $9.8 billion during Q303, and same-store sales grew by 4.5% over the same period.

The income total reflected $203 million, or $0.23 per share, realized from the early September sale of Mervyn’s 257 stores and four distribution centers to an investment group comprised of Sun Capital Inc., Cerberus Capital Management, and Lubert-Adler/Klaff and Partners, and all of Mervyn’s credit card receivables to GE Consumer Finance. Without the Mervyn’s sale, earnings would have been $0.37 per share, a penny short of some analysts’ expectations.

Still, Target executives characterized the third quarter as a good one. “Sales of our back-to-school and back-to-college offerings were in line with our expectations, and growth in both traffic and transaction amounts contributed equally to our sales in the third quarter,” noted Gregg Steinhafel, president of Target, during Thursday’s 3Q earnings conference call.

Target opened 46 new stores in the quarter, including 10 new superstores, to bring the retail giant’s total number of stores to 1,313 in 47 states, of which 136 are SuperTargets. An emphasis at SuperTargets is food sales, the better to compete with other megastores. “We want to offer a complete assortment of consumables and commodities priced at parity with Wal-Mart,” said Steinhafel.

In June, the company initiated a $3 billion share repurchase program, and in Q304 Target repurchased $503 million of its common stock, acquiring 11.4 million shares at an average price of $44.16 per share. Thus far the retailer has acquired 22.4 million shares of its common stock, reflecting a total investment of $975 million, and expects to finish buying back the entire $3 billion in two or three years.

Looking ahead to the fourth quarter, Douglas Scovanner, EVP and CFO, noted that the company is expecting relatively modest growth. “Our outlook for the fourth quarter envisions a low double-digit percentage growth in total sales, driven in part by an increase in same-store sales in the range of 3% to 5%,” he said during the conference call. “The categories that delivered stronger than average same-store sales performance included pharmacy, consumables, apparel and accessories, and footware.”

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