Target Reports Q4, 2013; Data Breach Has Significant Impact
Target Corporation reported fourth quarter net earnings of $520 million, or $0.81 per share, and full-year net earnings of $1.971 billion, or $3.07 per share. Dilution related to the Canadian Segment affected fourth quarter and full-year GAAP EPS by 40 cents and $1.13, respectively. Adjusted earnings per share were $1.30 in fourth quarter 2013, down 21.2 percent from $1.65 in 2012. Full-year 2013 adjusted EPS of $4.38 was down 8 percent from $4.76 in 2012.
“For more than 50 years Target has succeeded by focusing on our guests,” said Gregg Steinhafel, chairman, president, and CEO of Target Corporation. “During the first half of the fourth quarter, our guest-focused holiday merchandising and marketing plans drove better-than-expected sales. However, results softened meaningfully following our December announcement of a data breach. As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers, and we are encouraged that sales trends have improved in recent weeks.”
Fiscal 2014 Earnings Guidance
Fiscal 2014 will be Target’s first full year of operating stores in Canada. As a result, beginning with first quarter 2014, the company will no longer exclude Canadian Segment results.
In first quarter 2014, the company expects adjusted EPS of 60 cents to 75 cents, reflecting operating results in its U.S. and Canadian Segments. This measure excludes approximately two cents related to the expected reduction of the beneficial interest asset, as well as any net expenses related to the data breach. For full-year 2014, Target expects adjusted EPS of $3.85 to $4.15, reflecting operating results in its U.S. and Canadian Segments. This measure excludes approximately seven cents related to the expected reduction of the beneficial interest asset, as well as any net expenses related to the data breach. At this time, Target is not able to estimate future expenses related to the data breach.
U.S. Segment Results
As a reminder, following the sale of the U.S. credit card portfolio in March 2013, Target’s historical U.S. Retail Segment and U.S. Credit Card Segment results were combined to form a new U.S. Segment. Selling, General, and Administrative (SG&A) expenses in the new U.S. Segment include income from the profit-sharing arrangement with TD Bank Group, net of servicing expenses. The company classified historical U.S. Credit Card Segment revenues and expenses within U.S. Segment SG&A expenses.
In fourth quarter 2013, sales decreased 6.6 percent to $20.9 billion from $22.4 billion last year, reflecting the impact of an additional accounting week in 2012 and a 2.5 percent decrease in comparable sales, partially offset by the contribution from new stores. Segment earnings before interest expense and income taxes (EBIT) were $1.413 billion in fourth quarter 2013, a decrease of 22.4 percent from $1.821 billion in 2012.
Full-year 2013 sales decreased 0.9 percent to $71.3 billion from $72 billion last year, reflecting the impact of an additional accounting week in 2012 and a 0.4 percent decrease in comparable sales, partially offset by the contribution from new stores. Full-year EBIT was $4.959 billion in 2013, a decrease of 11.3 percent from $5.589 billion in 2012.
Canadian Segment Results
In fourth quarter 2013, the Canadian Segment generated sales of $623 million and EBIT of $329 million. The fourth quarter gross margin rate of 4.4 percent reflects continued efforts to clear excess inventory. Canadian operations reduced fourth quarter GAAP EPS by 40 cents. During fiscal 2013, Target’s Canadian Segment generated sales of $1.3 billion at a gross margin rate of 14.9 percent and EBIT of $941 million. Canadian operations reduced Target’s full-year 2013 GAAP EPS by $1.13.
Non-Segment Impacts to Consolidated GAAP Earnings per Share
Target incurred charges in fourth quarter 2013 related to part-time team member health benefit changes, land impairments, and workforce reductions. The combined effect of these charges increased fourth quarter Consolidated SG&A expense by approximately $64 million.
During fourth quarter 2013, Target experienced a data breach in which an intruder gained unauthorized access to the company’s network and stole certain payment card and other shopper information. Target incurred $17 million of expenses in the fourth quarter, reflecting $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable.
Iconix Brand Group Reports Q4 and 2013
Iconix Brand Group reported fourth quarter and full-year 2013 results. Total revenue for the fourth quarter of 2013 was approximately $105.3 million, a 24 percent increase as compared to approximately $85.1 million in the fourth quarter of 2012. EBITDA attributable to Iconix for the fourth quarter was approximately $60.1 million, a 20 percent increase as compared to $50 million in the prior-year quarter. Free cash flow attributable to Iconix for the fourth quarter was approximately $62.9 million, a 66 percent increase as compared to the prior-year quarter of approximately $37.9 million. On a non-GAAP basis, net income attributable to Iconix was $30.2 million, a 5 percent increase as compared to the prior-year quarter of approximately $28.9 million. Non-GAAP diluted EPS for the fourth quarter of 2013 increased 32 percent to $0.54 compared to $0.41 in the prior year quarter. GAAP net income attributable to Iconix for the fourth quarter of 2013 was approximately $26.1 million compared to $26.1 million in the prior year quarter and GAAP diluted EPS for the fourth quarter of 2013 increased 19 percent to $0.44 compared to $0.37 in the prior year quarter.
Full Year 2013 Results for Iconix Brand Group
Total revenue for the full year 2013 was approximately $432.6 million, a 22 percent increase as compared to approximately $353.8 million for the prior year. EBITDA attributable to Iconix for 2013 was approximately $262.9 million, a 21 percent increase as compared to approximately $217 million in the prior year. Free cash flow attributable to Iconix for 2013 was approximately $229.9 million, a 27 percent increase over the prior year of approximately $180.5 million. On a non-GAAP basis, net income attributable to Iconix for 2013 was approximately $142.2 million, a 17 percent increase as compared to approximately $122 million in the prior year, and non-GAAP diluted earnings per share increased 41 percent to $2.39 versus $1.70 for the prior year. GAAP net income attributable to Iconix for 2013 was approximately $128 million, a 17 percent increase as compared to $109.4 million in the prior year and GAAP diluted EPS for 2013 increased 39 percent to $2.11 compared to $1.52 in the prior year.
Neil Cole, chairman and CEO of Iconix Brand Group, said in a statement, “Since converting to a licensing model in 2005, we have built a powerful global platform, delivering compounded annual growth of around 40 percent for both revenue and EPS. In 2013, we had another record year and continued to drive growth through the expansion of our worldwide footprint, our acquisition strategy of asset-light businesses and global brands, and our ongoing commitment to share repurchases. Looking ahead, as we continue to focus on international markets and additional acquisitions, I believe we can build on our success and continue to deliver increased value to our shareholders.”
2014 Guidance for Iconix Brand Group
• Revenue of $440–$455 million
• Non-GAAP diluted EPS of $2.50–$2.60
• GAAP diluted EPS of $2.19–$2.29
• Free cash flow of $210–$217 million
Six Degrees of Kevin Bacon Turns 20; Session with Actor at SXSW
South by Southwest (SXSW) is a set of film, interactive, and music festivals and conferences that take place every spring in Austin, Texas. During this year’s show, on Saturday, March 8 at 3:30 pm, Six Degrees of Kevin Bacon: A Social Phenomenon Turns 20 comes to Ballroom D of the Austin Convention Center.
Brian Turtle (of Endless Games), one of the co-creators of the Six Degrees of Kevin Bacon concept that originated in 1994, will moderate this special session. Actor Kevin Bacon will play the starring role. The panel will include multiple surprise guests with varying degrees of separation to the Golden Globe Award-winning actor.
Six Degrees of Kevin Bacon is part of the Convergence initiative at SXSW 2014 and the session is therefore open to all SXSW Interactive, Film, Gold, and Platinum badgeholders.
Created by three college students (one of which was Endless Games’ Brian Turtle) at Albright College in Penn., Six Degrees of Kevin Bacon has thrived over two decades to include a best-selling book, board game, app (The Oracle of Kevin Bacon), a charity (SixDegrees.org), and was most recently added to the Google search tool (The Bacon Number).
Zerby Derby Premieres on Sprout
Zerby Derby, Sprout’s newest live action series, will make its U.S. premiere on Saturday, March 1 at 11am during The Sunny Side Up Show, Sprout’s live daily hosted morning show.
Produced and distributed by Breakthrough Entertainment, in association with TVO Kids, Zerby Derby introduces viewers to a world where pint-sized cars live and play in a life-size forest. Remote-controlled friends Zack, Lily, Rex, and Axle embark on exciting adventures approaching every potential problem with cheerful enthusiasm. To see the property, click here.
Trending on TTPM.com: Party Games
TTPM.com is showcasing what’s trending in each specific product category. Today it’s PARTY GAMES. This trending list is determined by consumers. It’s the number of page views for that item in the previous 30 days and is updated every 24 hours.