Target to Buy Back More Shares

Target (NYSE: TGT) announced that it has authorized a share repurchase program worth $5 billion. The company expects to begin the program in early 2012.

Currently, the company is in the process of another repurchase program worth $10 billion. The company has repurchased over 185 million shares since its current program began in November 2007. Since that repurchase program began, the stock has stayed roughly flat with the exception of a steep downturn along with the market as a whole at the end of 2008, from which it began to recover in March 2009. In August of that year, Target's share price returned to a range of $49 to $56 a share, and the stock was able to maintain that price point throughout 2010 and 2011.

The new repurchase program comes after Target posted disappointing results for Q4 2011, with lower-than-expected sales driven by lower demand for electronics and media. While groceries and cosmetics showed stronger results, it was not enough to raise store sales figures, which increased by only 1.6% in December 2011. Target lowered its earnings expectations to a range of $1.35 to $1.43 per share while its net profit margin has continued to decline to 3.38%, down from 4.33% in the previous quarter. Target opened slightly higher on the news at the beginning of trading on Thursday.

Like Target, Walmart (NYSE: WMT) has faced challenges in the past year. While Walmart does not release monthly store sales figures, its Q3 2011 profits fell below estimates as they dropped 2.9%, and analysts expect little improvement in the last quarter for the big box retailer. Walmart has also faced a contracting profit margin, which reached a low of 3.18%.

Disappointing figures from Target and Walmart contrast with impressive figures from Costco (NYSE: COST). Costco's stores saw a 7% increase in sales for December after a year of steady growth. The company's share price grew by about 12% in 2011 as it saw revenues steadily increase despite thin profit margins half of its competitors. That growth may be short lived, as analysts are expecting lower demand in electronics to hit Costco's next earnings results after disappointing electronics sales figures were released from Target and Best Buy (NYSE: BBY), which reported same-store sales drops of 1.2% in December.

In its last repurchase program, Target bought 185 million shares at an average price of $51.53, which represents around 22% of outstanding shares in the company as of November 2007. Its newest program is slated to last for two to three years.