| Target Corporation Third Quarter Earnings Per Share $0.49 | | 11/17/08 |  | | Click here for PDF Version
MINNEAPOLIS--(BUSINESS WIRE)--Target Corporation (NYSE: TGT) today reported net earnings of $369
million for the third quarter ended November 1, 2008, compared with $483
million in the third quarter ended November 3, 2007. Earnings per share
in the third quarter decreased 13.8 percent to 49 cents from 56 cents in
the same period a year ago. All earnings per share figures refer to
diluted earnings per share. “Our third quarter financial results reflect
the significant macroeconomic challenges facing our retail and credit
card segments,” said Gregg Steinhafel,
president and chief executive officer. “As
we look to this holiday season and 2009, our entire Target organization
is focused on providing compelling reasons for our guests to shop at
Target in these difficult times -- by delivering exceptional value, a
broad assortment of outstanding merchandise and a superior store
experience. In addition, we continue to drive profitable performance
through our thoughtful approach to managing inventory, credit card
receivables, expenses and capital investment.” Retail Segment Results Sales grew 1.7 percent in the third quarter 2008 to $14.6 billion from
$14.3 billion in 2007, due to the contribution from new store expansion
offset by a 3.3 percent decline in comparable store sales. Retail
segment earnings before interest expense and income taxes (EBIT) were
$772 million in the third quarter of 2008, up 7.9 percent from $715
million in 2007. Third quarter gross margin rate increased moderately from last year,
driven by increases in gross margin rates within categories, partially
offset by the mix impact of faster sales growth in lower margin rate
categories. Third quarter selling, general and administrative (SG&A)
expense rate was flat to 2007, benefiting from continued productivity
gains in stores and disciplined control of expenses across the company. Credit Card Segment Results Average receivables in the third quarter increased 19.4 percent to $8.7
billion from $7.3 billion in 2007. Average receivables directly funded
by Target declined 27 percent in the third quarter to $3.3 billion from
$4.5 billion in 2007, reflecting JPMorgan Chase’s
investment in the receivables portfolio. Segment profitability in the quarter declined 83 percent to $35 million
from $202 million last year, as a result of a decline in overall
portfolio performance, Target’s reduced
investment in the portfolio, and a decrease in interest rates. Overall
portfolio performance declined due to higher bad debt expense resulting
from current period write-offs and additions to the reserve for future
periods. Third quarter segment pre-tax return on invested capital declined to 4.3
percent in 2008 from 18.0 percent in 2007. Interest Expense and Taxes Net interest expense for the quarter increased $58 million from third
quarter 2007, due to higher average debt balances supporting capital
investment, share repurchase and the receivables portfolio, partially
offset by lower average net interest rates. Over the past four quarters,
the company has invested $3.8 billion in capital expenditures, $4.8
billion in share repurchase and grown its accounts receivable by $1.1
billion. The company’s effective income tax rate for
the third quarter was 41.7 percent in 2008, up from 38.1 percent in
2007. For the full year, the company now expects an effective income tax
rate in the range of 38.0 to 38.5 percent. Capital Spending and Share Repurchase In the third quarter, under the share repurchase program announced in
November 2007, the company repurchased approximately 2.5 million shares
of its common stock at an average price of $54.93, for a total
investment of $140 million. Program-to-date through the end of the third quarter, the company has
acquired approximately 93.3 million shares of its common stock at an
average price per share of $51.70, reflecting a total investment of
approximately $4.8 billion. “On an ongoing basis we evaluate our
deployment of capital resources, both for investment in our business and
execution of our share repurchase program,”
said Doug Scovanner, executive vice president and chief financial
officer. “The current environment and our
financial outlook have naturally reduced our appetite for investment in
our business, and we have also temporarily suspended substantially all
of our share repurchase activity. At this time, we have reduced our
expected 2009 capital expenditures by about $1 billion. Overall, we
believe these related decisions will help to protect our liquidity and
strong debt ratings as we continue to operate in a very challenging
retail and credit environment.” Miscellaneous Target Corporation will webcast its third quarter earnings conference
call at 9:30am 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 “events + presentations”
and then “archives + webcasts”).
A telephone replay of the call will be available beginning at
approximately 11:30am CST today through the end of business on November
19, 2008. The replay number is (800) 642-1687 (passcode: 4010327). Forward-looking statements in this release, including expectations for
Target’s full-year 2008 effective tax rate
and 2009 capital expenditures, should be read in conjunction with the
cautionary statements in Exhibit (99)A to the company’s
first quarter 2008 Form 10-Q. Target Corporation's retail segment includes large general merchandise
and food discount stores and Target.com, a fully integrated on-line
business. In addition, the company operates a credit card segment that
offers branded proprietary and Visa credit card products. The company
currently operates 1,684 Target stores in 48 states. Target Corporation news releases are available at www.target.com.
|
TARGET CORPORATION
|
|
|
|
Consolidated Statements of Operations
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions, except per share data)(unaudited)
|
|
|
Nov. 1,
2008
|
|
|
|
Nov. 3,
2007
|
|
|
Change
|
|
|
|
Nov. 1,
2008
|
|
|
|
Nov. 3,
2007
|
|
|
Change
|
|
|
Sales
|
|
$
|
14,588
|
|
|
$
|
14,342
|
|
|
1.7
|
|
%
|
|
$
|
43,861
|
|
|
$
|
42,132
|
|
|
4.1
|
|
%
|
|
Credit card revenues
|
|
|
526
|
|
|
|
493
|
|
|
6.8
|
|
|
|
|
1,527
|
|
|
|
1,364
|
|
|
12.0
|
|
|
|
Total revenues
|
|
|
15,114
|
|
|
|
14,835
|
|
|
1.9
|
|
|
|
|
45,388
|
|
|
|
43,496
|
|
|
4.4
|
|
|
|
Cost of sales
|
|
|
10,130
|
|
|
|
10,035
|
|
|
1.0
|
|
|
|
|
30,332
|
|
|
|
29,147
|
|
|
4.1
|
|
|
|
Selling, general and administrative expenses
|
|
|
3,245
|
|
|
|
3,191
|
|
|
1.7
|
|
|
|
|
9,436
|
|
|
|
9,124
|
|
|
3.4
|
|
|
|
Credit card expenses
|
|
|
403
|
|
|
|
222
|
|
|
81.5
|
|
|
|
|
1,023
|
|
|
|
574
|
|
|
78.5
|
|
|
|
Depreciation and amortization
|
|
|
469
|
|
|
|
429
|
|
|
9.3
|
|
|
|
|
1,352
|
|
|
|
1,225
|
|
|
10.4
|
|
|
|
Earnings before interest expense and income taxes
|
|
|
867
|
|
|
|
958
|
|
|
(9.5
|
)
|
|
|
|
3,245
|
|
|
|
3,426
|
|
|
(5.3
|
)
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecourse debt collateralized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by credit card receivables
|
|
|
60
|
|
|
|
41
|
|
|
45.3
|
|
|
|
|
126
|
|
|
|
98
|
|
|
29.5
|
|
|
|
Other interest expense
|
|
|
180
|
|
|
|
143
|
|
|
26.5
|
|
|
|
|
550
|
|
|
|
380
|
|
|
44.9
|
|
|
|
Interest income
|
|
|
(6
|
)
|
|
|
(7
|
)
|
|
(21.1
|
)
|
|
|
|
(24
|
)
|
|
|
(11
|
)
|
|
128.7
|
|
|
|
Net interest expense
|
|
|
234
|
|
|
|
177
|
|
|
32.8
|
|
|
|
|
652
|
|
|
|
467
|
|
|
39.7
|
|
|
|
Earnings before income taxes
|
|
|
633
|
|
|
|
781
|
|
|
(19.1
|
)
|
|
|
|
2,593
|
|
|
|
2,959
|
|
|
(12.4
|
)
|
|
|
Provision for income taxes
|
|
|
264
|
|
|
|
298
|
|
|
(11.5
|
)
|
|
|
|
988
|
|
|
|
1,138
|
|
|
(13.2
|
)
|
|
|
Net earnings
|
|
$
|
369
|
|
|
$
|
483
|
|
|
(23.8
|
)
|
%
|
|
$
|
1,605
|
|
|
$
|
1,821
|
|
|
(11.9
|
)
|
%
|
|
Basic earnings per share
|
|
$
|
0.49
|
|
|
$
|
0.57
|
|
|
(14.5
|
)
|
%
|
|
$
|
2.07
|
|
|
$
|
2.14
|
|
|
(3.4
|
)
|
%
|
|
Diluted earnings per share
|
|
$
|
0.49
|
|
|
$
|
0.56
|
|
|
(13.8
|
)
|
%
|
|
$
|
2.06
|
|
|
$
|
2.11
|
|
|
(2.6
|
)
|
%
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
753.5
|
|
|
|
845.6
|
|
|
|
|
|
|
776.4
|
|
|
|
850.8
|
|
|
|
|
|
Diluted
|
|
|
756.6
|
|
|
|
851.0
|
|
|
|
|
|
|
780.1
|
|
|
|
856.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Financial Position
|
|
|
|
|
|
Nov. 1,
|
|
|
Feb. 2,
|
|
|
Nov. 3,
|
|
(millions)
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Assets
|
|
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
|
Cash and cash equivalents
|
|
$
|
918
|
|
|
$
|
2,450
|
|
|
$
|
627
|
|
|
Credit card receivables, net of allowance of $765, $570 and
$532
|
|
|
7,999
|
|
|
|
8,054
|
|
|
|
7,120
|
|
|
Inventory
|
|
|
9,050
|
|
|
|
6,780
|
|
|
|
8,746
|
|
|
Other current assets
|
|
|
2,272
|
|
|
|
1,622
|
|
|
|
1,841
|
|
|
Total current assets
|
|
|
20,239
|
|
|
|
18,906
|
|
|
|
18,334
|
|
|
Property and equipment
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
5,727
|
|
|
|
5,522
|
|
|
|
5,387
|
|
|
Buildings and improvements
|
|
|
20,454
|
|
|
|
18,329
|
|
|
|
17,211
|
|
|
Fixtures and equipment
|
|
|
4,212
|
|
|
|
3,858
|
|
|
|
3,659
|
|
|
Computer hardware and software
|
|
|
2,610
|
|
|
|
2,421
|
|
|
|
2,361
|
|
|
Construction-in-progress
|
|
|
1,320
|
|
|
|
1,852
|
|
|
|
2,524
|
|
|
Accumulated depreciation
|
|
|
(8,798
|
)
|
|
|
(7,887
|
)
|
|
|
(7,536
|
)
|
|
Property and equipment, net
|
|
|
25,525
|
|
|
|
24,095
|
|
|
|
23,606
|
|
|
Other noncurrent assets
|
|
|
1,277
|
|
|
|
1,559
|
|
|
|
1,349
|
|
|
Total assets
|
|
$
|
47,041
|
|
|
$
|
44,560
|
|
|
$
|
43,289
|
|
|
Liabilities and shareholders' investment
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,590
|
|
|
$
|
6,721
|
|
|
$
|
7,852
|
|
|
Accrued and other current liabilities
|
|
|
3,057
|
|
|
|
3,097
|
|
|
|
2,812
|
|
|
Unsecured debt and other borrowings
|
|
|
2,849
|
|
|
|
1,464
|
|
|
|
1,899
|
|
|
Nonrecourse debt collateralized by credit card receivables
|
|
|
-
|
|
|
|
500
|
|
|
|
1,000
|
|
|
Total current liabilities
|
|
|
13,496
|
|
|
|
11,782
|
|
|
|
13,563
|
|
|
Unsecured debt and other borrowings
|
|
|
11,966
|
|
|
|
13,226
|
|
|
|
9,339
|
|
|
Nonrecourse debt collateralized by credit card receivables
|
|
|
5,478
|
|
|
|
1,900
|
|
|
|
1,900
|
|
|
Deferred income taxes
|
|
|
589
|
|
|
|
470
|
|
|
|
421
|
|
|
Other noncurrent liabilities
|
|
|
1,932
|
|
|
|
1,875
|
|
|
|
1,906
|
|
|
Total noncurrent liabilities
|
|
|
19,965
|
|
|
|
17,471
|
|
|
|
13,566
|
|
|
Shareholders' investment
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
63
|
|
|
|
68
|
|
|
|
70
|
|
|
Additional paid-in capital
|
|
|
2,725
|
|
|
|
2,656
|
|
|
|
2,636
|
|
|
Retained earnings
|
|
|
10,967
|
|
|
|
12,761
|
|
|
|
13,630
|
|
|
Accumulated other comprehensive loss
|
|
|
(175
|
)
|
|
|
(178
|
)
|
|
|
(176
|
)
|
|
Total shareholders' investment
|
|
|
13,580
|
|
|
|
15,307
|
|
|
|
16,160
|
|
|
Total liabilities and shareholders' investment
|
|
$
|
47,041
|
|
|
$
|
44,560
|
|
|
$
|
43,289
|
|
|
Common shares outstanding
|
|
|
752.8
|
|
|
|
818.7
|
|
|
|
845.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
|
Nov. 3,
|
|
(millions) (unaudited)
|
|
|
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
$
|
1,605
|
|
|
$
|
1,821
|
|
|
Reconciliation to cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
1,352
|
|
|
|
1,225
|
|
|
|
Share-based compensation expense
|
|
|
|
|
|
|
43
|
|
|
|
59
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
(32
|
)
|
|
|
(72
|
)
|
|
|
Bad debt provision
|
|
|
|
|
|
|
751
|
|
|
|
311
|
|
|
|
Loss on disposal of property and equipment, net
|
|
|
|
33
|
|
|
|
34
|
|
|
|
Other non-cash items affecting earnings
|
|
|
|
|
|
|
165
|
|
|
|
82
|
|
|
|
Changes in operating accounts providing / (requiring) cash:
|
|
|
|
|
|
|
|
|
|
Accounts receivable originated at Target
|
|
|
|
|
|
(389
|
)
|
|
|
(260
|
)
|
|
|
|
Inventory
|
|
|
|
|
|
|
(2,270
|
)
|
|
|
(2,492
|
)
|
|
|
|
Other current assets
|
|
|
|
|
|
|
(322
|
)
|
|
|
(164
|
)
|
|
|
|
Other noncurrent assets
|
|
|
|
|
|
|
5
|
|
|
|
4
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
869
|
|
|
|
1,277
|
|
|
|
|
Accrued and other current liabilities
|
|
|
|
|
|
|
(270
|
)
|
|
|
(297
|
)
|
|
|
|
Other noncurrent liabilities
|
|
|
|
|
|
|
4
|
|
|
|
58
|
|
|
|
Other
|
|
|
|
|
|
|
160
|
|
|
|
-
|
|
|
Cash flow provided by operations
|
|
|
|
|
|
|
1,704
|
|
|
|
1,586
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for property and equipment
|
|
|
|
|
|
|
(2,827
|
)
|
|
|
(3,418
|
)
|
|
|
Proceeds from disposal of property and equipment
|
|
|
|
26
|
|
|
|
53
|
|
|
|
Change in accounts receivable originated at third parties
|
|
|
|
(307
|
)
|
|
|
(978
|
)
|
|
|
Other
|
|
|
|
|
|
|
(179
|
)
|
|
|
(189
|
)
|
|
Cash flow required for investing activities
|
|
|
|
|
|
|
(3,287
|
)
|
|
|
(4,532
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in commercial paper, net
|
|
|
|
|
|
|
1,382
|
|
|
|
578
|
|
|
|
Additions to short-term notes payable
|
|
|
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
Reductions of short-term notes payable
|
|
|
|
|
|
|
(500
|
)
|
|
|
-
|
|
|
|
Additions to long-term debt
|
|
|
|
|
|
|
3,557
|
|
|
|
3,650
|
|
|
|
Reductions of long-term debt
|
|
|
|
|
|
|
(1,254
|
)
|
|
|
(1,254
|
)
|
|
|
Dividends paid
|
|
|
|
|
|
|
(345
|
)
|
|
|
(324
|
)
|
|
|
Repurchase of stock
|
|
|
|
|
|
|
(2,815
|
)
|
|
|
(1,071
|
)
|
|
|
Stock option exercises and related tax benefit
|
|
|
|
|
34
|
|
|
|
204
|
|
|
|
Other
|
|
|
|
|
|
|
(8
|
)
|
|
|
(23
|
)
|
|
Cash flow provided by financing activities
|
|
|
|
|
|
|
51
|
|
|
|
2,760
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
|
(1,532
|
)
|
|
|
(186
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
2,450
|
|
|
|
813
|
|
|
Cash and cash equivalents at end of period
|
|
|
|
|
|
$
|
918
|
|
|
$
|
627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment Results
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
|
|
|
(millions) (unaudited)
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
Sales
|
|
$
|
14,588
|
|
|
$
|
14,342
|
|
|
1.7
|
|
%
|
|
$
|
43,861
|
|
|
$
|
42,132
|
|
|
4.1
|
%
|
|
Cost of sales
|
|
|
10,130
|
|
|
|
10,035
|
|
|
1.0
|
|
|
|
|
30,332
|
|
|
|
29,147
|
|
|
4.1
|
|
|
Gross margin
|
|
|
4,458
|
|
|
|
4,307
|
|
|
3.5
|
|
|
|
|
13,529
|
|
|
|
12,985
|
|
|
4.2
|
|
|
SG&A expenses (a)
|
|
|
3,221
|
|
|
|
3,167
|
|
|
1.7
|
|
|
|
|
9,361
|
|
|
|
9,052
|
|
|
3.4
|
|
|
EBITDA
|
|
|
1,237
|
|
|
|
1,140
|
|
|
8.5
|
|
|
|
|
4,168
|
|
|
|
3,933
|
|
|
6.0
|
|
|
Depreciation and amortization
|
|
|
465
|
|
|
|
425
|
|
|
9.4
|
|
|
|
|
1,339
|
|
|
|
1,213
|
|
|
10.5
|
|
|
EBIT
|
|
$
|
772
|
|
|
$
|
715
|
|
|
7.9
|
|
%
|
|
$
|
2,829
|
|
|
$
|
2,720
|
|
|
4.0
|
%
|
|
EBITDA is earnings before interest expense, income taxes,
depreciation and amortization.
|
|
|
|
|
EBIT is earnings before interest expense and income taxes.
|
|
|
|
|
(a) New account and loyalty
rewards redeemed by our guests reduce reported sales. Our Retail
Segment charges the cost of these discounts to our Credit Card
Segment, and the reimbursements of $24 million and $75 million for
the three and nine months ended November 1, 2008, respectively, and
$24 million and $73 million for the three and nine months ended
November 3, 2007, respectively, are recorded as a reduction to SG&A
expenses within the Retail Segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment Rate Analysis
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
Nov. 1,
|
|
|
Nov. 3,
|
|
|
|
|
|
|
(unaudited)
|
|
|
2008
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
Gross margin rate
|
|
|
30.6
|
%
|
|
|
30.0
|
%
|
|
30.8
|
%
|
|
|
|
30.8
|
%
|
|
|
|
|
|
|
SG&A expense rate
|
|
|
22.1
|
%
|
|
|
22.1
|
%
|
|
21.3
|
%
|
|
|
|
21.5
|
%
|
|
|
|
|
|
|
EBITDA margin rate
|
|
|
8.5
|
%
|
|
|
7.9
|
%
|
|
9.5
|
%
|
|
|
|
9.3
|
%
|
|
|
|
|
|
|
Depreciation and amortization expense rate
|
|
3.2
|
%
|
|
|
3.0
|
%
|
|
3.1
|
%
|
|
|
|
2.9
|
%
|
|
|
|
|
|
|
EBIT margin rate
|
|
|
5.3
|
%
|
|
|
5.0
|
%
|
|
6.4
|
%
|
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable-Store Sales
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
Nov. 1,
|
|
|
Nov. 3,
|
|
|
|
|
|
|
(unaudited)
|
|
|
2008
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
Comparable-store sales
|
|
|
(3.3
|
)%
|
|
|
3.7
|
%
|
|
(1.5
|
)%
|
|
|
|
4.3
|
%
|
|
|
|
|
|
|
Comparable-store sales increases or decreases are calculated by
comparing sales in current year periods with comparable, prior
fiscal-year periods of equivalent length. The method of calculating
comparable-store sales varies across the retail industry.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Stores and Retail Square Feet
|
Number of Stores
|
|
Retail Square Feet (b)
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
Nov. 1,
|
|
|
Nov. 3,
|
|
|
|
|
|
|
(unaudited)
|
|
|
2008
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
2007
|
|
|
Change
|
|
|
|
|
Target general merchandise stores
|
|
|
1,445
|
|
|
|
1,381
|
|
|
180,200
|
|
|
|
|
170,518
|
|
|
|
5.7
|
%
|
|
|
|
|
SuperTarget stores
|
|
|
239
|
|
|
|
210
|
|
|
42,220
|
|
|
|
|
37,022
|
|
|
|
14.0
|
%
|
|
|
|
|
Total
|
|
|
1,684
|
|
|
|
1,591
|
|
|
222,420
|
|
|
|
|
207,540
|
|
|
|
7.2
|
%
|
|
|
|
|
(b) In thousands; reflects total square feet, less office,
distribution center and vacant space.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
|
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card Segment Results
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
|
Nov. 3,
|
|
|
|
|
|
Nov. 1,
|
|
|
Nov. 3,
|
|
|
|
|
(millions) (unaudited)
|
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
Finance charge revenue
|
|
|
|
$
|
366
|
|
|
$
|
334
|
|
|
9.6
|
|
%
|
|
$
|
1,060
|
|
|
$
|
935
|
|
|
13.4
|
|
%
|
|
Late fees and other revenue
|
|
|
|
|
123
|
|
|
|
113
|
|
|
9.0
|
|
|
|
|
352
|
|
|
|
311
|
|
|
13.3
|
|
|
|
Third party merchant fees
|
|
|
|
|
37
|
|
|
|
46
|
|
|
(19.2
|
)
|
|
|
|
115
|
|
|
|
118
|
|
|
(2.5
|
)
|
|
|
Total revenues
|
|
|
|
|
|
|
526
|
|
|
|
493
|
|
|
6.8
|
|
|
|
|
1,527
|
|
|
|
1,364
|
|
|
12.0
|
|
|
|
Bad debt expense
|
|
|
|
|
|
|
314
|
|
|
|
130
|
|
|
142.6
|
|
|
|
|
751
|
|
|
|
311
|
|
|
141.2
|
|
|
|
Operations and marketing expenses (a)
|
|
|
113
|
|
|
|
116
|
|
|
(2.8
|
)
|
|
|
|
347
|
|
|
|
335
|
|
|
3.8
|
|
|
|
Depreciation and amortization
|
|
|
|
|
4
|
|
|
|
4
|
|
|
0.5
|
|
|
|
|
13
|
|
|
|
12
|
|
|
6.0
|
|
|
|
Total expenses
|
|
|
|
|
|
|
431
|
|
|
|
250
|
|
|
72.7
|
|
|
|
|
1,111
|
|
|
|
658
|
|
|
68.9
|
|
|
|
EBIT
|
|
|
|
|
|
|
95
|
|
|
|
243
|
|
|
(61.0
|
)
|
|
|
|
416
|
|
|
|
706
|
|
|
(41.0
|
)
|
|
|
Interest expense on nonrecourse debt collateralized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by credit card receivables
|
|
60
|
|
|
|
41
|
|
|
45.2
|
|
|
|
|
126
|
|
|
|
98
|
|
|
29.4
|
|
|
|
Segment profitability
|
|
|
|
$
|
35
|
|
|
$
|
202
|
|
|
(82.6
|
)
|
%
|
|
$
|
290
|
|
|
$
|
608
|
|
|
(52.3
|
)
|
%
|
|
Average receivables funded by Target (b)
|
|
$
|
3,272
|
|
|
$
|
4,479
|
|
|
(27.0
|
)
|
%
|
|
$
|
4,392
|
|
|
$
|
4,612
|
|
|
(4.8
|
)
|
%
|
|
Segment pretax ROIC (c)
|
|
|
|
|
4.3
|
%
|
|
|
18.0
|
%
|
|
|
|
|
|
8.8
|
%
|
|
|
17.6
|
%
|
|
|
|
|
(a) New account and loyalty
rewards redeemed by our guests reduce reported sales. Our Retail
Segment charges the cost of these discounts to our Credit Card
Segment, and the reimbursements of $24 million and $75 million for
the three and nine months ended November 1, 2008, respectively, and
$24 million and $73 million for the three and nine months ended
November 3, 2007, respectively, are recorded as an increase to
Operations and Marketing expenses within the Credit Card Segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Amounts represent the portion of average credit card
receivables funded by Target. These amounts exclude $5,473 million
and $4,176 million for the three and nine months ended November 1,
2008, respectively, and $2,845 million and $2,296 million for the
three and nine months ended November 3, 2007, respectively, of
receivables funded by nonrecourse debt collateralized by credit card
receivables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) ROIC is return on invested capital, and this rate represents
segment profitability divided by average receivables funded by
Target, expressed as an annualized rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread Analysis - Total Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
Nine Months Ended
|
|
|
|
|
Nov. 1, 2008
|
|
Nov. 3, 2007
|
|
|
Nov. 1, 2008
|
|
Nov. 3, 2007
|
|
|
|
|
Yield
|
|
Yield
|
|
|
Yield
|
|
Yield
|
|
|
|
Amount
|
|
Annualized
|
|
Amount
|
|
Annualized
|
|
|
Amount
|
|
Annualized
|
|
Amount
|
|
Annualized
|
|
|
(unaudited)
|
|
(in millions)
|
|
Rate
|
|
(in millions)
|
|
Rate
|
|
|
(in millions)
|
|
Rate
|
|
(in millions)
|
|
Rate
|
|
|
EBIT
|
|
$
|
95
|
|
4.3
|
%
|
(b)
|
$
|
243
|
|
13.3
|
%
|
(b)
|
|
$
|
416
|
|
6.5
|
%
|
(b)
|
$
|
706
|
|
13.6
|
%
|
(b)
|
|
LIBOR (a)
|
|
|
|
3.1
|
%
|
|
|
|
5.3
|
%
|
|
|
|
|
2.8
|
%
|
|
|
|
5.3
|
%
|
|
|
Spread to LIBOR (c)
|
|
$
|
27
|
|
1.2
|
%
|
(b)
|
$
|
146
|
|
8.0
|
%
|
(b)
|
|
$
|
235
|
|
3.7
|
%
|
(b)
|
$
|
431
|
|
8.3
|
%
|
(b)
|
|
(a) Balance-weighted average
one-month LIBOR rate
|
|
(b) As a percentage of average
receivables
|
|
(c) Spread to LIBOR is a metric
used to analyze the performance of our total credit card portfolio
because the vast majority of our portfolio earns finance charge
revenue at rates tied to the Prime Rate, and the interest rate on
all nonrecourse debt securitized by credit card receivables is tied
to LIBOR.
|
|
|
|
|
|
|
|
|
|
|
|
Receivables Rollforward Analysis
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
|
|
|
(millions) (unaudited)
|
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
Beginning receivables
|
|
|
|
$
|
8,641
|
|
|
$
|
6,906
|
|
|
25.1
|
|
%
|
|
$
|
8,624
|
|
|
$
|
6,711
|
|
|
28.5
|
|
%
|
|
Charges at Target
|
|
|
|
|
|
|
955
|
|
|
|
1,062
|
|
|
(10.0
|
)
|
|
|
|
2,923
|
|
|
|
3,053
|
|
|
(4.3
|
)
|
|
|
Charges at third parties
|
|
|
|
|
2,082
|
|
|
|
2,615
|
|
|
(20.4
|
)
|
|
|
|
6,488
|
|
|
|
6,706
|
|
|
(3.3
|
)
|
|
|
Payments
|
|
|
|
|
|
|
(3,221
|
)
|
|
|
(3,299
|
)
|
|
(2.4
|
)
|
|
|
|
(10,209
|
)
|
|
|
(9,848
|
)
|
|
3.7
|
|
|
|
Other
|
|
|
|
|
|
|
307
|
|
|
|
368
|
|
|
(16.7
|
)
|
|
|
|
938
|
|
|
|
1,030
|
|
|
(8.9
|
)
|
|
|
Period-end receivables
|
|
|
|
$
|
8,764
|
|
|
$
|
7,652
|
|
|
14.5
|
|
%
|
|
$
|
8,764
|
|
|
$
|
7,652
|
|
|
14.5
|
|
%
|
|
Average receivables
|
|
|
|
|
$
|
8,745
|
|
|
$
|
7,324
|
|
|
19.4
|
|
%
|
|
$
|
8,568
|
|
|
$
|
6,908
|
|
|
24.0
|
|
%
|
|
Accounts with three or more payments (60+ days)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
past due as a percentage of period-end receivables
|
|
|
5.6
|
%
|
|
|
3.8
|
%
|
|
|
|
|
|
5.6
|
%
|
|
|
3.8
|
%
|
|
|
|
|
Accounts with four or more payments (90+ days)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
past due as a percentage of period-end receivables
|
|
|
3.8
|
%
|
|
|
2.6
|
%
|
|
|
|
|
|
3.8
|
%
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Doubtful Accounts
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
|
|
|
Nov. 1,
|
|
Nov. 3,
|
|
|
|
|
(millions) (unaudited)
|
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
|
2008
|
|
|
|
2007
|
|
|
Change
|
|
|
Allowance at beginning of period
|
|
|
$
|
661
|
|
|
$
|
509
|
|
|
29.8
|
|
%
|
|
$
|
570
|
|
|
$
|
517
|
|
|
10.4
|
|
%
|
|
Bad debt provision
|
|
|
|
|
|
314
|
|
|
|
130
|
|
|
142.6
|
|
|
|
|
751
|
|
|
|
311
|
|
|
141.2
|
|
|
|
Net write-offs
|
|
|
|
|
|
|
(210
|
)
|
|
|
(107
|
)
|
|
97.6
|
|
|
|
|
(556
|
)
|
|
|
(296
|
)
|
|
88.1
|
|
|
|
Allowance at end of period
|
|
|
|
$
|
765
|
|
|
$
|
532
|
|
|
43.7
|
|
%
|
|
$
|
765
|
|
|
$
|
532
|
|
|
43.7
|
|
%
|
|
As a percentage of period-end receivables
|
|
|
8.7
|
%
|
|
|
7.0
|
%
|
|
|
|
|
|
8.7
|
%
|
|
|
7.0
|
%
|
|
|
|
|
Net write-offs as a percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of average receivables (annualized)
|
|
|
9.6
|
%
|
|
|
5.8
|
%
|
|
|
|
|
|
8.7
|
%
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: Target Corporation
John Hulbert, 612-761-6627
(Investors)
or
Lena Michaud, 612-761-6796
(Financial Media)
|
|
