Inc. Magazine Names Loot Crate Fastest Growing Company in the U.S.; Additional Toy/Baby Companies Listed
Inc. magazine ranked Loot Crate No. 1 on its 35th annual Inc. 5000, a ranking of the nation’s fastest-growing private companies. The list represents the most comprehensive look at the most important segment of the U.S. economy—independent entrepreneurs. The average company on the list achieved three-year growth of 490 percent. The Inc. 5000’s aggregate revenue is $200 billion, generating 640,000 jobs over the past three years.
“The Inc. 5000 list is different where it really counts,” says Inc. president and editor-in-chief Eric Schurenberg. “It honors real achievement by a founder or a team of them. No one makes the Inc. 5000 without building something great—usually from scratch. That’s one of the hardest things to do in business, as every company founder knows. But without it, free enterprise fails.”
In addition to Loot Crate, a number of companies across the toy and baby products industries made the list including Skyrocket (306), Maximum Games (759), Babiators (937), Kidz Gear (2782), iBaby (3912), Puzzled (4079), and Diono (4430). Some companies are new to this year’s list, while others have placed in prior years.
The full 2016 Inc. 5000 list can be viewed here. The issue is also now available on newsstands featuring the top-500 companies.
Target Reports Q2 2016
Target Corporation reported a second quarter 2016 comparable sales decrease of 1.1 percent and GAAP earnings per share (EPS) from continuing operations of $1.07, a decrease of 11.6 percent from second quarter 2015. Second quarter adjusted earnings per share from continuing operations (Adjusted EPS), which excludes $161 million of pre-tax early debt retirement losses, were $1.23, an increase of 0.5 percent from second quarter 2015.
“While we recognize there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations,” said Brian Cornell, chairman and CEO of Target. “Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in Signature Categories, store experience, new flex-format stores, and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”
Third Quarter and Fiscal 2016 Guidance
While Target has plans in place to strengthen results over time, based on the current retail environment the company believes it is prudent to lower its expectations for comparable sales in the second half of the year. In both the third and fourth quarters of 2016, Target now expects comparable sales growth in the range of (2.0) percent to flat.
In third quarter 2016, Target expects both GAAP EPS from continuing operations and adjusted EPS of $0.75 to $0.95.
For full-year 2016, Target now expects GAAP EPS from continuing operations of $4.36 to $4.76, compared with prior guidance of $4.76 to $4.96. The company expects full-year 2016 Adjusted EPS of $4.80 to $5.20, compared with prior guidance of $5.20 to $5.40. The 44-cent difference between the guidance ranges for GAAP EPS from continuing operations and adjusted EPS primarily reflects early debt retirement losses already reported in 2016.
Third quarter and full-year 2016 GAAP EPS from continuing operations may include the impact of certain discrete items, which will be excluded in calculating Adjusted EPS. The company is not currently aware of any such discrete items beyond those already reported in the first and second quarters of 2016.
Second quarter 2016 sales decreased 7.2 percent to $16.2 billion from $17.4 billion last year, reflecting a 1.1 percent decrease in comparable sales combined with the removal of pharmacy and clinic revenues from this year’s results. Comparable digital channel sales grew 16 percent and contributed 0.5 percentage points to comparable sales growth. Segment earnings before interest expense and income taxes (EBIT), which is Target’s measure of segment profit, were $1,241 million in second quarter 2016, a decrease of 8.1 percent from $1,350 million in 2015.
Second quarter EBITDA and EBIT margin rates were 11.2 percent and 7.7 percent, respectively, compared with 10.9 percent and 7.7 percent, respectively, in 2015. Second quarter gross margin rate was 31.3 percent, compared with 30.9 percent in 2015, reflecting the benefit of the sale of the company’s pharmacy and clinic businesses and ongoing cost savings initiatives, partially offset by investments in promotions and increased digital shipping costs. Second quarter SG&A expense rate was 20.1 percent in 2016, compared with 19.9 percent in 2015, as the deleveraging impact of lower sales and investments in team offset benefits from the sale of the company’s pharmacy and clinic businesses and continued expense discipline across the organization.
Interest Expense and Taxes from Continuing Operations
Target’s second quarter 2016 net interest expense was $307 million, compared with $148 million last year, driven by a $161 million charge related to the early retirement of debt. Second quarter 2016 effective income tax rate from continuing operations was 33.6 percent, compared with 34.6 percent last year. The decrease was primarily due to losses related to the early retirement of debt.
Capital Returned to Shareholders
In second quarter 2016, Target returned $1,680 million to shareholders, which consisted of:
- Repurchasing 19 million shares of common stock at an average price of $70.91, for a total investment of $1,350 million.
- Paying dividends of $330 million.
- Since the beginning of the current $10 billion share repurchase program, Target repurchased 125 million common shares at an average price of $70.57, for a total investment of approximately $8.8 billion.
For the trailing 12 months through second quarter 2016, after-tax return on invested capital (ROIC) was 15.8 percent, compared with 13.3 percent for the 12 months through second quarter 2015. Excluding the net gain on the sale of the pharmacy and clinic businesses, ROIC for the trailing 12 months through second quarter 2016 was 13.7 percent, reflecting higher profits on a modestly lower base of invested capital.
Second quarter net earnings from discontinued operations were $55 million, compared with after-tax losses of ($20) million last year. Second quarter 2016 net earnings from discontinued operations primarily reflect tax benefits from investment losses in Canada recognized upon court approval of Target Canada’s liquidation plan.