Financial News Release

Target Corporation Fourth Quarter Earnings Per Share $1.23
02/26/08

Fiscal 2007 EPS $3.33

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 26, 2008--Target Corporation (NYSE:TGT) today reported net earnings of $1,028 million for the fourth quarter ended February 2, 2008, a thirteen-week period, compared with $1,119 million in the fourth quarter ended February 3, 2007, a fourteen-week period. Earnings per share in the fourth quarter decreased 4.7 percent to $1.23 from $1.29 in the same period a year ago. All earnings per share figures refer to diluted earnings per share.

For the full fiscal year 2007, a 52-week period, net earnings were $2.849 billion, compared with $2.787 billion in fiscal 2006, a 53-week period. Earnings per share increased 3.9 percent to $3.33 from $3.21 a year ago.

"Our financial performance in 2007 fell short of our expectations as the pace of sales and earnings slowed considerably in the second half of the year," said Bob Ulrich, chairman and chief executive officer. "As we enter 2008, we remain keenly focused on the disciplined execution of our core strategy, positioning Target to deliver improved financial results, even in the face of continued challenges in the current economic environment."

Full-Year Results

For fiscal 2007, total revenues increased 6.5 percent to $63.367 billion from $59.490 billion in 2006, fueled by the contribution from new store expansion, a 3.0 percent increase in comparable store sales, and contribution from credit card operations, offset by the impact of an extra fiscal week in 2006. On a 52-week over 52-week basis, total revenues in 2007 increased 8.4 percent. Total revenues include retail sales and net credit card revenues. Comparable-store sales are sales from stores open longer than one year.

Earnings before interest expense and income taxes (EBIT) for the full year increased 4.0 percent to $5.272 billion, compared with $5.069 billion a year ago. EBIT in core retail operations grew 1.3 percent, while the contribution from credit card operations to total EBIT rose 18.9 percent. Within core retail operations, both gross margin rate and expense rate were slightly unfavorable to the prior year. Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales.

Earnings before taxes (EBT) for the full year totaled $4.625 billion, an increase of $128 million, or 2.8 percent over 2006. The contribution from the company's credit card operations to full year earnings before taxes, net of the allocated interest expense, was $600 million, an increase of $103 million, or 20.8 percent, over fiscal 2006. Credit card EBT performance was driven by strong growth in average receivables, combined with a moderate increase in the yield on those receivables.

Net interest expense for the year increased $75 million compared with 2006, due to higher average debt balances, including the debt to fund growth in accounts receivable.

The company's annual effective income tax rate was 38.4 percent in 2007 compared with 38.0 percent in 2006.

Fourth-Quarter Results

Total revenues in the fourth quarter increased 0.8 percent to $19.872 billion from $19.710 billion in 2006, due to the contribution from new store expansion, a 0.2 percent increase in comparable store sales, and contribution from credit card operations, offset by the impact of an extra fiscal week in 2006. On a 13-week over 13-week basis, total revenues in fourth-quarter 2007 increased 6.3 percent.

Fourth quarter 2007 EBIT decreased 5.8 percent to $1.846 billion from $1.960 billion in the fourth quarter a year ago. EBIT in core retail operations fell 7.6 percent, while the contribution from credit card operations to total EBIT rose 9.0 percent over last year's 14-week quarter. Within core retail operations, gross margin rate was unfavorable to the prior year while expense rate was essentially unchanged from a year ago.

Net interest expense for the quarter increased $30 million over fourth quarter 2006, due to higher average debt balances offset by the cost of funding an extra week in fourth quarter 2006.

EBT in the fourth quarter totaled $1.665 billion, representing a decrease of $144 million, or 7.9 percent, from the same period in 2006. The contribution from the company's credit card operations to these results was $137 million, an increase of $15 million, or 12.0 percent, from a year ago.

Other Factors

In the fourth quarter, under the share repurchase program announced in November 2007, the company repurchased approximately 26.5 million shares of its common stock at an average price of $54.64, for a total investment of $1.45 billion. For the full year, the company repurchased approximately 46.2 million shares of its common stock at an average price of $57.24, for a total investment of $2.64 billion.

In addition to its open market share repurchase activity, the company also invested $331 million in a related series of derivative transactions during the quarter involving the purchase and sale of call options on its common stock. These options expire in April, May and June, 2008, and give the company the right to purchase up to 30 million shares of its common stock at various prices. "These call options allowed Target to enjoy the economic benefits of controlling the additional repurchase of nearly 4 percent of our outstanding shares at a time when, prior to our January issuance of $4 billion in long-term debt, our share price presented a compelling opportunity," said Doug Scovanner, chief financial officer.

Miscellaneous

Target Corporation will webcast its fourth quarter earnings conference call at 9:00am CST today. Investors and the media are invited to listen to the call through the company's website at www.target.com/investors (click on "webcasts"). A telephone replay of the call will be available beginning at approximately 11:30am CST today through the end of business on February 28, 2008. The replay number is (800) 642-1687 (passcode: 7391399).

Forward-looking statements in this release, including the outlook for earnings, market share growth, credit card performance, full year tax rate, and the timing to complete the new share repurchase program, should be read in conjunction with the cautionary statements in Exhibit (99)A to the company's 2006 Form 10-K.

Target Corporation's continuing operations include large, general merchandise and food discount stores, as well as an on-line business called Target.com. At quarter-end, the company operated 1,591 Target stores in 47 states.

Target Corporation news releases are available at www.target.com.

                Consolidated Statements of Operations


---------------------------------------------------------------------
                  Three Months Ended        Twelve Months Ended
                  ------------------        -------------------
                   Feb. 2,   Feb. 3,          Feb. 2,   Feb. 3,
(millions, except
 per share data)
 (unaudited)          2008      2007 Change      2008      2007 Change
----------------------------------------------------------------------
Sales             $ 19,340 $  19,269  0.4 % $  61,471 $  57,878   6.2%
Credit card
 revenues              532       441 20.7       1,896     1,612  17.6
---------------------------------------------------------------------
Total revenues      19,872    19,710  0.8      63,367    59,490   6.5
Cost of sales       13,499    13,349  1.1      41,895    39,399   6.3
Selling, general
 and
 administrative
 expenses            3,829     3,804  0.7      13,704    12,819   6.9
Credit card
 expenses              263       195 34.9         837       707  18.3
Depreciation and
 amortization          435       402  8.2       1,659     1,496  10.9
---------------------------------------------------------------------
Earnings before
 interest expense
 and income taxes    1,846     1,960 (5.8)      5,272     5,069   4.0
Net interest
 expense               181       151 19.6         647       572  13.2
---------------------------------------------------------------------
Earnings before
 income taxes        1,665     1,809 (7.9)      4,625     4,497   2.8
Provision for
 income taxes          637       690 (7.6)      1,776     1,710   3.9
---------------------------------------------------------------------
Net earnings      $  1,028 $   1,119 (8.2)% $   2,849 $   2,787   2.2%
---------------------------------------------------------------------
Basic earnings
 per share        $   1.24 $    1.30 (4.9)% $    3.37 $    3.23   4.2%
---------------------------------------------------------------------
Diluted earnings
 per share        $   1.23 $    1.29 (4.7)% $    3.33 $    3.21   3.9%
---------------------------------------------------------------------
Weighted average
 common shares
 outstanding
     Basic           829.4     858.5            845.4     861.9
     Diluted         834.3     865.4            850.8     868.6


Subject to reclassification
            Consolidated Statements of Financial Position


----------------------------------------------------------------------
                                                      Feb. 2,  Feb. 3,
(millions) (unaudited)                                  2008     2007
----------------------------------------------------------------------
Assets
Cash and cash equivalents                            $ 2,450  $   813
Accounts receivable, net                               8,054    6,194
Inventory                                              6,780    6,254
Other current assets                                   1,622    1,445
----------------------------------------------------------------------
  Total current assets                                18,906   14,706
Property and equipment
  Land                                                 5,522    4,934
  Buildings and improvements                          18,329   16,110
  Fixtures and equipment                               3,858    3,553
  Computer hardware and software                       2,421    2,188
  Construction-in-progress                             1,852    1,596
  Accumulated depreciation                            (7,887)  (6,950)
----------------------------------------------------------------------
  Property and equipment, net                         24,095   21,431
Other noncurrent assets                                1,559    1,212
----------------------------------------------------------------------
Total assets                                         $44,560  $37,349
----------------------------------------------------------------------

Liabilities and Shareholders' Investment
Accounts payable                                     $ 6,721  $ 6,575
Accrued and other current liabilities                  3,097    3,180
Current portion of long-term debt and notes payable    1,964    1,362
----------------------------------------------------------------------
  Total current liabilities                           11,782   11,117
Long-term debt                                        15,126    8,675
Deferred income taxes                                    470      577
Other noncurrent liabilities                           1,875    1,347
----------------------------------------------------------------------
Shareholders' investment
  Common stock                                            68       72
  Additional paid-in-capital                           2,656    2,387
  Retained earnings                                   12,761   13,417
  Accumulated other comprehensive loss                  (178)    (243)
----------------------------------------------------------------------
  Total shareholders' investment                      15,307   15,633
----------------------------------------------------------------------
Total liabilities and shareholders' investment       $44,560  $37,349
----------------------------------------------------------------------
Common shares outstanding                              818.7    859.8
----------------------------------------------------------------------


Subject to reclassification
                Consolidated Statements of Cash Flows


----------------------------------------------------------------------
                                                   Twelve Months Ended
                                                   -------------------
                                                     Feb. 2,   Feb. 3,
(millions) (unaudited)                                 2008      2007
----------------------------------------------------------------------
Operating Activities
Net earnings                                       $  2,849  $  2,787
Reconciliation to cash flow
  Depreciation and amortization                       1,659     1,496
  Share-based compensation expense                       73        99
  Deferred income taxes                                 (70)     (201)
  Bad debt provision                                    481       380
  Loss on disposal of property and equipment, net        28        53
  Other non-cash items affecting earnings                52       (35)
  Changes in operating accounts providing /
   (requiring) cash:
    Accounts receivable originated at Target           (602)     (226)
    Inventory                                          (525)     (431)
    Other current assets                               (139)      (30)
    Other noncurrent assets                             101         5
    Accounts payable                                    111       435
    Accrued and other current liabilities                62       430
    Other noncurrent liabilities                        124       100
  Other                                                 (79)     -
----------------------------------------------------------------------
Cash flow provided by operations                      4,125     4,862
----------------------------------------------------------------------
Investing Activities
  Expenditures for property and equipment            (4,369)   (3,928)
  Proceeds from disposal of property and
   equipment                                             95        62
  Change in accounts receivable originated at
   third parties                                     (1,739)     (683)
  Other investments                                    (182)     (144)
----------------------------------------------------------------------
Cash flow required for investing activities          (6,195)   (4,693)
----------------------------------------------------------------------
Financing Activities
  Additions to short-term notes payable               1,000      -
  Reductions of short-term notes payable               (500)     -
  Additions to long-term debt                         7,617     1,256
  Reductions of long-term debt                       (1,326)   (1,155)
  Dividends paid                                       (442)     (380)
  Repurchase of stock                                (2,477)     (901)
  Premium paid on call options                         (331)     -
  Stock option exercises and related tax benefit        210       181
  Other                                                 (44)       (5)
----------------------------------------------------------------------
Cash flow provided by / (required for) financing
 activities                                           3,707    (1,004)
----------------------------------------------------------------------
Net increase / (decrease) in cash and cash
 equivalents                                          1,637      (835)
Cash and cash equivalents at beginning of period        813     1,648
----------------------------------------------------------------------
Cash and cash equivalents at end of period         $  2,450  $    813
----------------------------------------------------------------------

Subject to reclassification
   Number of Stores, Retail Square Feet and Comparable-store Sales

----------------------------------------------------------------------
                        Number of Stores     Retail Square Feet (a)
                       ------------------- ---------------------------
                        Feb. 2,   Feb. 3,   Feb. 2,    Feb. 3,
(unaudited)                2008      2007      2008       2007  Change
----------------------------------------------------------------------
Target general
 merchandise stores       1,381     1,311   170,858    160,806    6.3%
SuperTarget stores          210       177    37,087     31,258   18.6%
----------------------------------------------------------------------
Total                     1,591     1,488   207,945    192,064    8.3%
----------------------------------------------------------------------

(a) In thousands; reflects total square feet, less office,
 distribution center and vacant space.

---------------------------------------------------------------
                       Three Months Ended  Twelve Months Ended
                       ------------------- --------------------
                        Feb. 2,   Feb. 3,   Feb. 2,    Feb. 3,
(unaudited)                2008      2007      2008       2007
---------------------------------------------------------------
Comparable-store sales
 (b)                        0.2%      4.8%      3.0%       4.8%
---------------------------------------------------------------

(b) Comparable-store sales growth is calculated by comparing sales in
 current year periods to comparable, prior year periods of equivalent
 length.

        Credit Card Contribution to Earnings Before Tax

Effective February 2007, the Company redefined Credit Card
 Contribution to Earnings Before Taxes (EBT). We have reclassified
 prior period amounts to conform to the current year disclosure. These
 reclassifications had no effect on our Consolidated Statements of
 Operations.


---------------------------------------------------------------
                       Three Months Ended  Twelve Months Ended
                       ------------------- --------------------
                        Feb. 2,   Feb. 3,   Feb. 2,    Feb. 3,
(millions) (unaudited)     2008      2007      2008       2007
---------------------------------------------------------------
Revenues
Finance charges        $    373  $    305  $  1,308  $   1,117
Interest expense (a)        (87)      (83)     (330)      (286)
---------------------------------------------------------------
Net interest income         286       222       978        831
---------------------------------------------------------------
Late fees and other
 revenues                   112        95       422        356
Third-party merchant
 fees                        47        41       166        139
New account and
 loyalty rewards
 discounts (b)              (41)      (37)     (113)      (107)
---------------------------------------------------------------
Non-interest income         118        99       475        388
---------------------------------------------------------------
Net credit card
 revenues                   404       321     1,453      1,219
---------------------------------------------------------------
Expenses
Bad debt provision          170       102       481        380
Operations and
 marketing                   93        93       356        327
Allocated depreciation
 charge (c)                   4         4        16         15
---------------------------------------------------------------
Total expenses              267       199       853        722
---------------------------------------------------------------
Credit card
 contribution to EBT   $    137  $    122  $    600  $     497
---------------------------------------------------------------
As a percentage of
 average receivables
 (annualized)               6.6%      6.9%      8.3%       7.9%
Net interest margin
 (annualized) (d)          13.8%     12.6%     13.4%      13.2%
---------------------------------------------------------------

---------------------------------------------------------------
Receivables
(millions)
---------------------------------------------------------------
Period-end receivables $  8,624  $  6,711  $  8,624  $   6,711
Average receivables    $  8,285  $  6,544  $  7,275  $   6,161
Accounts with three or
 more payments (60+
 days) past due as a
 percentage of period-
 end receivables            4.0%      3.5%
Accounts with four or
 more payments (90+
 days) past due as a
 percentage of period-
 end receivables            2.7%      2.4%
---------------------------------------------------------------

---------------------------------------------------------------
Allowance for Doubtful
 Accounts
(millions)
---------------------------------------------------------------
Allowance at beginning
 of period             $    532  $    514  $    517  $     451
Bad debt provision          170       102       481        380
Net write-offs             (132)      (99)     (428)      (314)
---------------------------------------------------------------
Allowance at end of
 period                $    570  $    517  $    570  $     517
---------------------------------------------------------------
As a percentage of
 period-end
 receivables                6.6%      7.7%      6.6%       7.7%
---------------------------------------------------------------
Net write-offs as a
 percentage of average
 receivables
 (annualized)               6.4%      6.1%      5.9%       5.1%
---------------------------------------------------------------

(a) Represents an allocation of consolidated interest expense based on
 estimated funding costs for average net accounts receivable and other
 financial services assets and is included in net interest expense in
 our Consolidated Statements of Operations.

(b) Primarily consists of new account and loyalty rewards program
 discounts on our REDcard products, which are included as reductions
 of sales in our Consolidated Statements of Operations.

(c) Included in depreciation and amortization in our Consolidated
 Statements of Operations.

(d) Net interest income divided by average accounts receivable.

CONTACT: Target Corporation
John Hulbert, 612-761-6627
or
Susan Kahn, 612-761-6735

SOURCE: Target Corporation