Target Corporation Q1 2009 Earnings Call Transcript

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2009-05-20 13:48:19.0

Tags: J.P. Morgan Chase & Co., Call Transcript, Earnings, Morgan Stanley, Same-store Sales, Basis Point, Seeking Alpha, Target Corp.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Gregory Melich – Morgan Stanley.

Gregory Melich – Morgan Stanley

Could you get in to a little bit more Doug in terms of SG&A? I know that there were a few things that helped that you said were timing related, should we still be thinking that SG&A dollars this year could grow maybe 2% or 3% or is it possible to keep it actually flat or even slightly down?

Douglas A. Scovanner

That’s a great question and it depends heavily on the pace of sales. I think it’s still good advice to think we will favorably leverage SG&A for the year at say 1% or so same store sales performance and deleverage to the extent that same store sales are below that. So, it really has a great deal to do with our pace of same store sales.

Gregory Melich – Morgan Stanley

Then on the gross margin side, the mix hit about 80 bips, if I remember correctly that’s a little bit more than its actually been running, is that just straight because of comps or did some of the mix actually change within the categories that hurt that?

Douglas A. Scovanner

It’s comps across the categories and it’s a little worse but we’re talking about a handful of basis points compared to some of our most recent experience. For the year last year it was 60 but, there were periods that were obviously more than 60 during the year.

Operator

Your next question comes from Charles Grom – JP Morgan.

Charles Grom – JP Morgan

Just to follow up on that last question, just on the timing of certain expenses Doug, can you just share with us in either dollar amount, percentage or basis points how much it is going to shift back in to 2Q?

Douglas A. Scovanner

The single biggest timing issue for us I mentioned in my remarks which is marketing and advertising expense give or take benefited Q1 by about 30 basis points. Some of that meaningful part of that will turn around in Q2.

Charles Grom – JP Morgan

That’s basically the only timing expense during the quarter?

Douglas A. Scovanner

There are always a big list of timing issues but, generally speaking they obviously cancel out across the year. In the quarter we had other issues of a timing nature that ran both ways but, that one rises far above the rest.

 

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