| Target Corporation Announces Second Quarter Earnings | | 08/18/09 |  | | MINNEAPOLIS--(BUSINESS WIRE)--Aug. 18, 2009--
Target Corporation (NYSE:TGT) today reported net earnings of $594
million for the second quarter ended August 1, 2009, compared with $634
million in the second quarter ended August 2, 2008. Earnings per share
in the second quarter decreased 3.9 percent to $0.79 from $0.82 in the
same period a year ago. All earnings per share figures refer to diluted
earnings per share.
“Second quarter earnings were stronger than expected due to very strong
operating margin in our retail segment, and credit card segment
performance in line with expectations,” said Gregg Steinhafel, chairman,
president and chief executive officer. “Looking forward to the second
half of the year, we are focused on initiatives to drive incremental
traffic and sales in our stores while maintaining disciplined execution
in both of our business segments.”
Retail Segment Results
Sales decreased 2.7 percent in the second quarter to $14.6 billion in
2009 from $15.0 billion in 2008, due to a 6.2 percent decline in
comparable-store sales partially offset by the contribution from new
store expansion. Retail segment earnings before interest expense and
income taxes (EBIT) were $1,064 million in the second quarter of 2009, a
3.1 percent decrease from $1,098 million in 2008.
Second quarter gross margin rate increased to 31.9 percent from 31.2
percent in 2008, due to gross margin rate improvements within
categories, partially offset by the unfavorable mix impact of faster
sales growth in non-discretionary lower margin rate categories. Second
quarter selling, general and administrative (SG&A) expense dollars were
0.4 percent lower than 2008, benefiting from productivity improvements
that more-than-offset the expense of operating additional stores in
2009. At quarter-end, the company was operating 71 more stores than a
year ago.
Credit Card Segment Results
Average credit card receivables in the quarter decreased $150 million,
or 1.8 percent, from the second quarter of 2008, and quarter-end
receivables decreased $349 million, or 4.0 percent, from the same period
a year ago.
Credit card segment profit in the quarter declined to $63 million from
$74 million last year as a result of Target’s reduced investment in the
segment and lower floating interest rates, partially offset by improved
portfolio performance. Target’s pretax return on invested capital (ROIC)
from its investment in the credit card segment increased to 8.8 percent
in the second quarter from 8.2 percent in 2008.
Net write-offs in the quarter were $304 million, in line with
expectations. The allowance for doubtful accounts was $1,004 million at
quarter-end, compared with $1,005 million at the end of the first
quarter.
Other Expenses
Net interest expense for the quarter decreased $22 million from second
quarter 2008 to $194 million, reflecting a lower average portfolio
interest rate combined with modestly lower average debt balances.
The company’s effective income tax rate for the second quarter was 37.9
percent in 2009, up from 36.8 percent in 2008, primarily due to the
favorable resolution of specific tax uncertainties in 2008 that did not
recur in 2009. For the full year, the company now expects an effective
income tax rate in the range of 37.0 to 38.0 percent.
Miscellaneous
Target Corporation will webcast its second quarter earnings conference
call at 9:30am CDT 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 CDT today through the end of business
on August 20, 2009. The replay number is (800) 642-1687 (passcode:
73958812).
The statement on the expected tax rate is a forward-looking statement
within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements speak only as of the date they are made and are
subject to risks and uncertainties which could cause the
company's actual results to differ materially. The most important risks
and uncertainties are described in Item 1A of the company's Form 10-K
for the fiscal year ended January 31, 2009.
Target Corporation’s retail segment includes large, general merchandise
and food discount stores, and a fully integrated on-line business called
Target.com. In addition, the company operates a credit card segment that
offers branded proprietary and Visa credit card products. At
quarter-end, the company operated 1,719 Target stores in 49 states.
Target Corporation news releases are available at www.target.com.
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
|
|
(millions, except per share data)
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
Sales
|
|
$
|
14,567
|
|
|
$
|
14,971
|
|
|
(2.7
|
)
|
%
|
|
$
|
28,928
|
|
|
$
|
29,273
|
|
|
(1.2
|
)
|
%
|
|
Credit card revenues
|
|
|
500
|
|
|
|
501
|
|
|
(0.1
|
)
|
|
|
|
972
|
|
|
|
1,001
|
|
|
(2.9
|
)
|
|
|
Total revenues
|
|
|
15,067
|
|
|
|
15,472
|
|
|
(2.6
|
)
|
|
|
|
29,900
|
|
|
|
30,274
|
|
|
(1.2
|
)
|
|
|
Cost of sales
|
|
|
9,914
|
|
|
|
10,304
|
|
|
(3.8
|
)
|
|
|
|
19,851
|
|
|
|
20,202
|
|
|
(1.7
|
)
|
|
|
Selling, general and administrative expenses
|
|
|
3,136
|
|
|
|
3,153
|
|
|
(0.6
|
)
|
|
|
|
6,150
|
|
|
|
6,190
|
|
|
(0.7
|
)
|
|
|
Credit card expenses
|
|
|
388
|
|
|
|
347
|
|
|
12.0
|
|
|
|
|
772
|
|
|
|
620
|
|
|
24.5
|
|
|
|
Depreciation and amortization
|
|
|
478
|
|
|
|
448
|
|
|
6.7
|
|
|
|
|
950
|
|
|
|
884
|
|
|
7.5
|
|
|
|
Earnings before interest expense and income taxes
|
|
|
1,151
|
|
|
|
1,220
|
|
|
(5.7
|
)
|
|
|
|
2,177
|
|
|
|
2,378
|
|
|
(8.5
|
)
|
|
|
Net interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecourse debt collateralized
by credit card receivables
|
|
|
24
|
|
|
|
48
|
|
|
(49.5
|
)
|
|
|
|
51
|
|
|
|
67
|
|
|
(24.2
|
)
|
|
|
|
Other interest expense
|
|
|
171
|
|
|
|
179
|
|
|
(4.3
|
)
|
|
|
|
348
|
|
|
|
369
|
|
|
(5.8
|
)
|
|
|
|
Interest income
|
|
|
(1
|
)
|
|
|
(10
|
)
|
|
(89.8
|
)
|
|
|
|
(2
|
)
|
|
|
(19
|
)
|
|
(87.1
|
)
|
|
|
Net interest expense
|
|
|
194
|
|
|
|
217
|
|
|
(10.3
|
)
|
|
|
|
397
|
|
|
|
417
|
|
|
(5.1
|
)
|
|
|
Earnings before income taxes
|
|
|
957
|
|
|
|
1,003
|
|
|
(4.7
|
)
|
|
|
|
1,780
|
|
|
|
1,961
|
|
|
(9.2
|
)
|
|
|
Provision for income taxes
|
|
|
363
|
|
|
|
369
|
|
|
(1.8
|
)
|
|
|
|
664
|
|
|
|
724
|
|
|
(8.2
|
)
|
|
|
Net earnings
|
|
$
|
594
|
|
|
$
|
634
|
|
|
(6.4
|
)
|
%
|
|
$
|
1,116
|
|
|
$
|
1,237
|
|
|
(9.8
|
)
|
%
|
|
Basic earnings per share
|
|
$
|
0.79
|
|
|
$
|
0.82
|
|
|
(4.1
|
)
|
%
|
|
$
|
1.48
|
|
|
$
|
1.57
|
|
|
(5.5
|
)
|
%
|
|
Diluted earnings per share
|
|
$
|
0.79
|
|
|
$
|
0.82
|
|
|
(3.9
|
)
|
%
|
|
$
|
1.48
|
|
|
$
|
1.56
|
|
|
(5.3
|
)
|
%
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
752.0
|
|
|
|
770.3
|
|
|
|
|
|
|
752.1
|
|
|
|
787.9
|
|
|
|
|
|
|
Diluted
|
|
|
754.4
|
|
|
|
773.9
|
|
|
|
|
|
|
754.2
|
|
|
|
791.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Financial Position
|
|
|
|
|
August 1,
|
|
|
January 31,
|
|
|
August 2,
|
|
|
(millions)
|
|
|
2009
|
|
|
|
2009
|
|
|
|
2008
|
|
|
Assets
|
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
|
|
Cash and cash equivalents, including marketable securities
of $385,
$302 and $904
|
|
$
|
957
|
|
|
$
|
864
|
|
|
$
|
1,527
|
|
|
Credit card receivables, net of allowance of $1,004,
$1,010
and $661
|
|
|
7,288
|
|
|
|
8,084
|
|
|
|
7,980
|
|
|
Inventory
|
|
|
7,528
|
|
|
|
6,705
|
|
|
|
7,313
|
|
|
Other current assets
|
|
|
1,910
|
|
|
|
1,835
|
|
|
|
1,800
|
|
|
|
Total current assets
|
|
|
17,683
|
|
|
|
17,488
|
|
|
|
18,620
|
|
|
Property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
5,726
|
|
|
|
5,767
|
|
|
|
5,687
|
|
|
|
Buildings and improvements
|
|
|
21,530
|
|
|
|
20,430
|
|
|
|
19,511
|
|
|
|
Fixtures and equipment
|
|
|
4,481
|
|
|
|
4,270
|
|
|
|
4,031
|
|
|
|
Computer hardware and software
|
|
|
2,540
|
|
|
|
2,586
|
|
|
|
2,498
|
|
|
|
Construction-in-progress
|
|
|
978
|
|
|
|
1,763
|
|
|
|
1,851
|
|
|
|
Accumulated depreciation
|
|
|
(9,543
|
)
|
|
|
(9,060
|
)
|
|
|
(8,426
|
)
|
|
|
Property and equipment, net
|
|
|
25,712
|
|
|
|
25,756
|
|
|
|
25,152
|
|
|
Other noncurrent assets
|
|
|
838
|
|
|
|
862
|
|
|
|
1,368
|
|
|
Total assets
|
|
$
|
44,233
|
|
|
$
|
44,106
|
|
|
$
|
45,140
|
|
|
Liabilities and shareholders' investment
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
6,233
|
|
|
$
|
6,337
|
|
|
$
|
6,606
|
|
|
Accrued and other current liabilities
|
|
|
3,004
|
|
|
|
2,913
|
|
|
|
3,030
|
|
|
Unsecured debt and other borrowings
|
|
|
517
|
|
|
|
1,262
|
|
|
|
1,723
|
|
|
Nonrecourse debt collateralized by credit card receivables
|
|
|
56
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total current liabilities
|
|
|
9,810
|
|
|
|
10,512
|
|
|
|
11,359
|
|
|
Unsecured debt and other borrowings
|
|
|
11,983
|
|
|
|
12,000
|
|
|
|
12,465
|
|
|
Nonrecourse debt collateralized by credit card receivables
|
|
|
5,458
|
|
|
|
5,490
|
|
|
|
5,467
|
|
|
Deferred income taxes
|
|
|
494
|
|
|
|
455
|
|
|
|
534
|
|
|
Other noncurrent liabilities
|
|
|
1,886
|
|
|
|
1,937
|
|
|
|
1,858
|
|
|
|
Total noncurrent liabilities
|
|
|
19,821
|
|
|
|
19,882
|
|
|
|
20,324
|
|
|
Shareholders' investment
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
63
|
|
|
|
63
|
|
|
|
63
|
|
|
|
Additional paid-in capital
|
|
|
2,822
|
|
|
|
2,762
|
|
|
|
2,707
|
|
|
|
Retained earnings
|
|
|
12,266
|
|
|
|
11,443
|
|
|
|
10,861
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(549
|
)
|
|
|
(556
|
)
|
|
|
(174
|
)
|
|
|
Total shareholders' investment
|
|
|
14,602
|
|
|
|
13,712
|
|
|
|
13,457
|
|
|
Total liabilities and shareholders' investment
|
|
$
|
44,233
|
|
|
$
|
44,106
|
|
|
$
|
45,140
|
|
|
Common shares outstanding
|
|
|
751.9
|
|
|
|
752.7
|
|
|
|
755.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
(millions)
|
|
|
2009
|
|
|
|
2008
|
|
|
Operating activities
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Net earnings
|
|
$
|
1,116
|
|
|
$
|
1,237
|
|
|
Reconciliation to cash flow
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
950
|
|
|
|
884
|
|
|
|
Share-based compensation expense
|
|
|
48
|
|
|
|
37
|
|
|
|
Deferred income taxes
|
|
|
64
|
|
|
|
14
|
|
|
|
Bad debt provision
|
|
|
600
|
|
|
|
437
|
|
|
|
Loss on disposal of property and equipment, net
|
|
|
74
|
|
|
|
24
|
|
|
|
Other non-cash items affecting earnings
|
|
|
28
|
|
|
|
106
|
|
|
|
Changes in operating accounts providing / (requiring) cash
|
|
|
|
|
|
|
|
|
|
Accounts receivable originated at Target
|
|
|
154
|
|
|
|
(150
|
)
|
|
|
|
Inventory
|
|
|
(823
|
)
|
|
|
(533
|
)
|
|
|
|
Other current assets
|
|
|
(59
|
)
|
|
|
(104
|
)
|
|
|
|
Other noncurrent assets
|
|
|
19
|
|
|
|
(17
|
)
|
|
|
|
Accounts payable
|
|
|
(103
|
)
|
|
|
(115
|
)
|
|
|
|
Accrued and other current liabilities
|
|
|
30
|
|
|
|
(179
|
)
|
|
|
|
Other noncurrent liabilities
|
|
|
(47
|
)
|
|
|
(47
|
)
|
|
|
Other
|
|
|
—
|
|
|
|
160
|
|
|
Cash flow provided by operations
|
|
|
2,051
|
|
|
|
1,754
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Expenditures for property and equipment
|
|
|
(1,042
|
)
|
|
|
(1,956
|
)
|
|
|
Proceeds from disposal of property and equipment
|
|
|
24
|
|
|
|
17
|
|
|
|
Change in accounts receivable originated at third parties
|
|
|
42
|
|
|
|
(213
|
)
|
|
|
Other investments
|
|
|
4
|
|
|
|
(53
|
)
|
|
Cash flow required for investing activities
|
|
|
(972
|
)
|
|
|
(2,205
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Reductions of short-term notes payable
|
|
|
—
|
|
|
|
(500
|
)
|
|
|
Additions to long-term debt
|
|
|
—
|
|
|
|
3,557
|
|
|
|
Reductions of long-term debt
|
|
|
(754
|
)
|
|
|
(503
|
)
|
|
|
Dividends paid
|
|
|
(241
|
)
|
|
|
(224
|
)
|
|
|
Repurchase of stock
|
|
|
—
|
|
|
|
(2,815
|
)
|
|
|
Stock option exercises and related tax benefit
|
|
|
9
|
|
|
|
21
|
|
|
|
Other
|
|
|
—
|
|
|
|
(8
|
)
|
|
Cash flow provided by/(required for) financing activities
|
|
|
(986
|
)
|
|
|
(472
|
)
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
93
|
|
|
|
(923
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
864
|
|
|
|
2,450
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
957
|
|
|
$
|
1,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TARGET CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment Results
|
|
Three Months Ended
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
|
(millions) (unaudited)
|
|
|
2009
|
|
|
|
2008
|
|
|
Change
|
|
|
|
2009
|
|
|
|
2008
|
|
Change
|
|
|
Sales
|
|
$
|
14,567
|
|
|
$
|
14,971
|
|
|
(2.7
|
)%
|
|
$
|
28,928
|
|
|
$
|
29,273
|
|
(1.2
|
)%
|
|
Cost of sales
|
|
|
9,914
|
|
|
|
10,304
|
|
|
(3.8
|
)
|
|
|
19,851
|
|
|
|
20,202
|
|
(1.7
|
)
|
|
Gross margin
|
|
|
4,653
|
|
|
|
4,667
|
|
|
(0.3
|
)
|
|
|
9,077
|
|
|
|
9,071
|
|
0.1
|
|
|
SG&A expenses(a)
|
|
|
3,115
|
|
|
|
3,126
|
|
|
(0.4
|
)
|
|
|
6,109
|
|
|
|
6,139
|
|
(0.5
|
)
|
|
EBITDA
|
|
|
1,538
|
|
|
|
1,541
|
|
|
(0.2
|
)
|
|
|
2,968
|
|
|
|
2,932
|
|
1.2
|
|
|
Depreciation and amortization
|
|
|
474
|
|
|
|
443
|
|
|
6.9
|
|
|
|
942
|
|
|
|
876
|
|
7.7
|
|
|
EBIT
|
|
$
|
1,064
|
|
|
$
|
1,098
|
|
|
(3.1
|
)%
|
|
$
|
2,026
|
|
|
$
|
2,056
|
|
(1.5
|
)%
|
|
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 $21 million and $41 million for the three and six
months ended August 1, 2009, respectively, and $27 million and $51
million for the three and six months ended August 2, 2008,
respectively, are recorded as a reduction to SG&A expenses within
the Retail Segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment Rate Analysis
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
2009
|
|
|
|
2008
|
|
|
2009
|
|
|
|
2008
|
|
|
|
|
|
|
|
Gross margin rate
|
|
|
31.9
|
%
|
|
|
31.2
|
%
|
|
31.4
|
%
|
|
|
31.0
|
%
|
|
|
|
|
|
|
SG&A expense rate
|
|
|
21.4
|
%
|
|
|
20.9
|
%
|
|
21.1
|
%
|
|
|
21.0
|
%
|
|
|
|
|
|
|
EBITDA margin rate
|
|
|
10.6
|
%
|
|
|
10.3
|
%
|
|
10.3
|
%
|
|
|
10.0
|
%
|
|
|
|
|
|
|
Depreciation and amortization expense rate
|
|
|
3.3
|
%
|
|
|
3.0
|
%
|
|
3.3
|
%
|
|
|
3.0
|
%
|
|
|
|
|
|
|
EBIT margin rate
|
|
|
7.3
|
%
|
|
|
7.3
|
%
|
|
7.0
|
%
|
|
|
7.0
|
%
|
|
|
|
|
|
|
Retail Segment rate analysis metrics are computed by dividing the
applicable amount by sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable-Store Sales
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
2009
|
|
|
|
2008
|
|
|
2009
|
|
|
|
2008
|
|
|
|
|
|
|
|
Comparable-store sales
|
|
|
(6.2
|
)%
|
|
|
(0.4
|
)%
|
|
(5.0
|
)%
|
|
|
(0.6
|
)%
|
|
|
|
|
|
|
Drivers of changes in comparable-store sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of transactions
|
|
|
(2.6
|
)%
|
|
|
(2.0
|
)%
|
|
(1.9
|
)%
|
|
|
(1.9
|
)%
|
|
|
|
|
|
|
Average transaction amount
|
|
|
(3.7
|
)%
|
|
|
1.6
|
%
|
|
(3.1
|
)%
|
|
|
1.4
|
%
|
|
|
|
|
|
|
Units per transaction
|
|
|
(2.6
|
)%
|
|
|
(1.5
|
)%
|
|
(2.9
|
)%
|
|
|
(1.2
|
)%
|
|
|
|
|
|
|
Selling price per unit
|
|
|
(1.2
|
)%
|
|
|
3.2
|
%
|
|
(0.2
|
)%
|
|
|
2.6
|
%
|
|
|
|
|
|
|
The comparable-store sales increases or decreases above are
calculated by comparing sales in fiscal year periods with comparable
prior year periods of equivalent length.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Stores and Retail Square Feet
|
|
Number of Stores
|
|
Retail Square Feet(a)
|
|
|
|
|
August 1,
|
|
|
January 31,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
January 31,
|
|
August 2,
|
|
|
(unaudited)
|
|
|
2009
|
|
|
|
2009
|
|
|
2008
|
|
|
|
2009
|
|
|
|
2009
|
|
2008
|
|
|
Target general merchandise stores
|
|
|
1,472
|
|
|
|
1,443
|
|
|
1,417
|
|
|
|
184,663
|
|
|
|
180,321
|
|
176,171
|
|
|
SuperTarget stores
|
|
|
247
|
|
|
|
239
|
|
|
231
|
|
|
|
43,739
|
|
|
|
42,267
|
|
40,828
|
|
|
Total
|
|
|
1,719
|
|
|
|
1,682
|
|
|
1,648
|
|
|
|
228,402
|
|
|
|
222,588
|
|
216,999
|
|
|
(a) 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
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
|
|
|
|
August 1, 2009
|
|
August 2, 2008
|
|
August 1, 2009
|
|
August 2, 2008
|
|
|
|
|
Amount
|
|
Annualized
|
|
Amount
|
|
Annualized
|
|
Amount
|
|
Annualized
|
|
Amount
|
|
Annualized
|
|
|
(millions) (unaudited)
|
|
(in millions)
|
|
Rate(d)
|
|
(in millions)
|
|
Rate(d)
|
|
(in millions)
|
|
Rate(d)
|
|
(in millions)
|
|
Rate(d)
|
|
|
Finance charge revenue
|
|
$
|
377
|
|
|
18.1
|
|
%
|
$
|
340
|
|
|
|
16.0
|
|
%
|
$
|
732
|
|
|
17.2
|
|
%
|
$
|
694
|
|
|
16.4
|
|
%
|
|
Late fees and other revenue
|
|
|
91
|
|
|
4.3
|
|
|
|
121
|
|
|
|
5.7
|
|
|
|
178
|
|
|
4.2
|
|
|
|
229
|
|
|
5.4
|
|
|
|
Third party merchant fees
|
|
|
32
|
|
|
1.5
|
|
|
|
40
|
|
|
|
1.9
|
|
|
|
62
|
|
|
1.5
|
|
|
|
78
|
|
|
1.9
|
|
|
|
Total revenues
|
|
|
500
|
|
|
23.9
|
|
|
|
501
|
|
|
|
23.5
|
|
|
|
972
|
|
|
22.8
|
|
|
|
1,001
|
|
|
23.6
|
|
|
|
Bad debt expense
|
|
|
303
|
|
|
14.5
|
|
|
|
256
|
|
|
|
12.0
|
|
|
|
600
|
|
|
14.1
|
|
|
|
437
|
|
|
10.3
|
|
|
|
Operations and marketing expenses(a)
|
|
|
106
|
|
|
5.0
|
|
|
|
118
|
|
|
|
5.5
|
|
|
|
213
|
|
|
5.0
|
|
|
|
234
|
|
|
5.5
|
|
|
|
Depreciation and amortization
|
|
|
4
|
|
|
0.2
|
|
|
|
5
|
|
|
|
0.2
|
|
|
|
7
|
|
|
0.2
|
|
|
|
8
|
|
|
0.2
|
|
|
|
Total expenses
|
|
|
413
|
|
|
19.7
|
|
|
|
379
|
|
|
|
17.8
|
|
|
|
820
|
|
|
19.2
|
|
|
|
679
|
|
|
16.0
|
|
|
|
EBIT
|
|
|
87
|
|
|
4.2
|
|
|
|
122
|
|
|
|
5.8
|
|
|
|
152
|
|
|
3.6
|
|
|
|
322
|
|
|
7.6
|
|
|
|
Interest expense on nonrecourse debt collateralized by credit card
receivables
|
|
|
24
|
|
|
|
|
48
|
|
|
|
|
|
51
|
|
|
|
|
|
67
|
|
|
|
|
|
Segment profit
|
|
$
|
63
|
|
|
|
$
|
74
|
|
|
|
|
$
|
101
|
|
|
|
|
$
|
255
|
|
|
|
|
|
Average gross credit card receivables funded by Target(b)
|
|
$
|
2,853
|
|
|
|
$
|
3,636
|
|
|
|
|
$
|
3,027
|
|
|
|
|
$
|
4,952
|
|
|
|
|
|
Segment pretax ROIC(c)
|
|
|
8.8
|
%
|
|
|
|
8.2
|
%
|
|
|
|
|
6.7
|
%
|
|
|
|
|
10.3
|
%
|
|
|
|
|
(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 $21 million and $41 million for the three and six
months ended August 1, 2009, respectively, and $27 million and $51
million for the three and six months ended August 2, 2008,
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
$5,508 million and $5,502 million for the three and six months ended
August 1, 2009, respectively, and $4,875 million and $3,528 million
for the three and six months ended August 2, 2008, respectively, of
receivables funded by nonrecourse debt collateralized by credit card
receivables.
|
|
(c) ROIC is return on invested capital, and
this rate represents segment profit divided by average receivables
funded by Target, expressed as an annualized rate.
|
|
(d) As an annualized percentage of average
gross credit card receivables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread Analysis - Total Portfolio
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
|
|
|
|
August 1, 2009
|
|
August 2, 2008
|
|
August 1, 2009
|
|
August 2, 2008
|
|
|
|
|
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
|
|
$
|
87
|
|
|
4.2
|
%
|
(b)
|
$
|
122
|
|
|
|
5.8
|
%
|
(b)
|
$
|
152
|
|
|
3.6
|
%
|
(b)
|
$
|
322
|
|
|
7.6
|
%
|
(b)
|
|
LIBOR(a)
|
|
|
|
|
0.3
|
%
|
|
|
|
|
2.5
|
%
|
|
|
|
0.4
|
%
|
|
|
|
2.7
|
%
|
|
|
Spread to LIBOR(c)
|
|
$
|
81
|
|
|
3.9
|
%
|
(b)
|
$
|
70
|
|
|
|
3.3
|
%
|
(b)
|
$
|
135
|
|
|
3.2
|
%
|
(b)
|
$
|
208
|
|
|
4.9
|
%
|
(b)
|
|
(a) Balance-weighted average one-month LIBOR
|
|
(b) As a percentage of average gross credit
card 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
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 1,
|
August 2,
|
|
|
|
August 1,
|
|
August 2,
|
|
|
|
|
|
|
|
|
(millions) (unaudited)
|
|
2009
|
2008
|
|
Change
|
|
2009
|
|
2008
|
|
Change
|
|
|
|
|
|
|
Beginning gross credit card receivables
|
|
$
|
8,457
|
|
$
|
8,420
|
|
|
|
0.4
|
|
%
|
$
|
9,094
|
|
|
$
|
8,624
|
|
|
5.4
|
|
%
|
|
|
|
|
|
Charges at Target
|
|
|
843
|
|
|
1,021
|
|
|
|
(17.5
|
)
|
|
|
1,646
|
|
|
|
1,968
|
|
|
(16.3
|
)
|
|
|
|
|
|
|
Charges at third parties
|
|
|
1,768
|
|
|
2,258
|
|
|
|
(21.7
|
)
|
|
|
3,432
|
|
|
|
4,406
|
|
|
(22.1
|
)
|
|
|
|
|
|
|
Payments
|
|
|
(2,940
|
)
|
|
(3,358
|
)
|
|
|
(12.4
|
)
|
|
|
(6,201
|
)
|
|
|
(6,988
|
)
|
|
(11.3
|
)
|
|
|
|
|
|
|
Other
|
|
|
165
|
|
|
300
|
|
|
|
(44.9
|
)
|
|
|
322
|
|
|
|
631
|
|
|
(49.0
|
)
|
|
|
|
|
|
|
Period-end gross credit card receivables
|
|
$
|
8,293
|
|
$
|
8,641
|
|
|
|
(4.0
|
)
|
%
|
$
|
8,293
|
|
|
$
|
8,641
|
|
|
(4.0
|
)
|
%
|
|
|
|
|
|
Average gross credit card receivables
|
|
$
|
8,361
|
|
$
|
8,511
|
|
|
|
(1.8
|
)
|
%
|
$
|
8,529
|
|
|
$
|
8,479
|
|
|
0.6
|
|
%
|
|
|
|
|
|
Accounts with three or more payments (60+ days) past due as a
percentage of period-end gross credit card receivables
|
|
|
5.8
|
%
|
|
4.5
|
%
|
|
|
|
|
5.8
|
%
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
Accounts with four or more payments (90+ days) past due as a
percentage of period-end gross credit card receivables
|
|
|
4.1
|
%
|
|
3.1
|
%
|
|
|
|
|
4.1
|
%
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Doubtful Accounts
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 1,
|
August 2,
|
|
|
|
August 1,
|
|
August 2,
|
|
|
|
|
|
|
|
|
(millions) (unaudited)
|
|
2009
|
2008
|
|
Change
|
|
2009
|
|
2008
|
|
Change
|
|
|
|
|
|
|
Allowance at beginning of period
|
|
$
|
1,005
|
|
$
|
590
|
|
|
|
70.2
|
|
%
|
$
|
1,010
|
|
|
$
|
570
|
|
|
77.1
|
|
%
|
|
|
|
|
|
Bad debt provision
|
|
|
303
|
|
|
256
|
|
|
|
18.5
|
|
|
|
600
|
|
|
|
437
|
|
|
37.3
|
|
|
|
|
|
|
|
Net write-offs(a)
|
|
|
(304
|
)
|
|
(185
|
)
|
|
|
63.6
|
|
|
|
(606
|
)
|
|
|
(346
|
)
|
|
74.9
|
|
|
|
|
|
|
|
Allowance at end of period
|
|
$
|
1,004
|
|
$
|
661
|
|
|
|
52.0
|
|
%
|
$
|
1,004
|
|
|
$
|
661
|
|
|
52.0
|
|
%
|
|
|
|
|
|
As a percentage of period-end gross credit card receivables
|
|
|
12.1
|
%
|
|
7.6
|
%
|
|
|
|
|
12.1
|
%
|
|
|
7.6
|
%
|
|
|
|
|
|
|
|
|
Net write-offs as a percentage of average gross credit card
receivables (annualized)
|
|
|
14.5
|
%
|
|
8.7
|
%
|
|
|
|
|
14.2
|
%
|
|
|
8.2
|
%
|
|
|
|
|
|
|
|
|
(a) Net write-offs include the principal amount
of losses (excluding accrued and unpaid finance charges) less
current period principal recoveries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to reclassification
|
|
Source: Target Corporation
Target Corporation
Investors:
John Hulbert, 612-761-6627
or
Financial
Media:
Eric Hausman, 612-761-2054
|
|
