MINNEAPOLIS, Aug 15, 2002 /PRNewswire-FirstCall via COMTEX/ -- Target
Corporation (NYSE: TGT) today reported earnings per share for the second quarter
ended August 3, 2002 of 38 cents, compared with 30 cents in the second quarter
ended August 4, 2001. All earnings per share figures refer to diluted earnings
per share. Second quarter net earnings increased 26.8 percent to $344 million,
compared with $271 million in 2001.
"We are extremely pleased with our second quarter results, particularly our
continued momentum at Target Stores," said Bob Ulrich, chairman and chief
executive officer of Target Corporation. "This performance reinforces our
confidence in our ability to deliver strong profitable growth in 2002 and
generate considerable value for our shareholders over the long-term."
Total revenues in the second quarter increased 12.6 percent to $10.068 billion
from $8.941 billion in 2001, driven by a 16.2 percent revenue increase at Target
Stores. Comparable-store sales for the second quarter 2002 increased 3.0
percent. (Total revenues include retail sales and net credit revenues.
Comparable-store sales are sales from stores open longer than one year.)
In the second quarter, gross margin rate increased from the prior year,
primarily due to strong improvement at both Target Stores and Mervyn's. (Gross
margin rate represents gross margin as a percentage of sales.) Expense rate,
excluding credit card operations, was unfavorable to prior year, as growth in
expense was only partially offset by the benefit of overall growth at Target,
our lowest expense rate division. (Expense rate represents selling, general and
administrative expenses as a percentage of sales. It includes buying and
occupancy, advertising, start-up and other expense, and excludes depreciation
and expenses associated with credit card operations.)
For the quarter, pre-tax segment profit increased 31.4 percent to $785 million,
compared with $598 million in the second quarter 2001. Pre-tax profit at Target
Stores increased $186 million, or 35.5 percent. Pre-tax profit at Mervyn's
declined $1 million and pre-tax profit at Marshall Field's improved by $2
million. (Pre-tax segment profit is earnings before LIFO, securitization
effects, interest, other expense and unusual items.)
Contribution from the company's credit card operations increased to $129 million
in the second quarter from $103 million a year ago. At quarter-end, gross
receivables serviced were $4.636 billion, compared with $2.687 billion at the
end of second quarter 2001, due to the continued growth in usage of the Target
Visa. The provision for bad debt expense exceeded write-offs by $35 million in
the quarter, while delinquency trends improved from the same period a year ago,
primarily due to the growth of higher quality Target Visa receivables. Results
of credit card operations are included in the pre-tax segment profit for each of
the company's three business segments.
Other Factors
Net interest expense and interest equivalent for the quarter increased $32
million compared with second quarter 2001, of which $16 million is related to
the repurchase of debt. The increase in net interest expense is due to
substantially higher average funded balances, partially offset by the benefit of
a lower average portfolio interest rate.
The company's annual effective income tax rate is 38.2 percent, compared with
38.0 percent last year.
Miscellaneous
Separately, the corporation announced today that CEO Bob Ulrich and CFO Doug
Scovanner plan to sign and file the certifications required by the SEC,
following their review with the company's audit committee and Board of
Directors. This filing is due in conjunction with the corporation's second
quarter Form 10-Q filing, on or before September 17, 2002.
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 (click on "company/Target
Corporation/investor information/webcasts"). A telephone replay of the call will
be available beginning at approximately 11:30am CDT today through the end of
business on August 16, 2002. The replay number is (888) 445-8681.
Forward-looking statements in this release should be read in conjunction with
the cautionary statements in Exhibit (99)C to the company's 2001 Form 10-K.
Target Corporation operates large-store general merchandise formats, including
discount stores, moderate-priced promotional and traditional department stores,
as well as a direct mail and on-line business called target.direct. The company
currently operates 1,435 stores in 47 states. This includes 1,107 Target stores,
264 Mervyn's stores and 64 Marshall Field's stores.
Target Corporation news releases are available at www.target.com or
www.prnewswire.com .
Target Corporation
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended Six Months Ended
(Millions, except August 3, August 4, % August 3, August 4, %
per share data) 2002 2001 Change 2002 2001 Change
(Unaudited)
Sales $9,791 $8,795 11.3% $19,127 $16,981 12.6%
Net credit revenues 277 146 88.8 535 294 81.5
Total revenues 10,068 8,941 12.6 19,662 17,275 13.8
Cost of sales 6,640 6,082 9.2 12,962 11,685 10.9
Selling, general and
administrative
expense 2,249 1,974 13.9 4,376 3,861 13.3
Credit expense 171 78 118.9 336 150 124.3
Depreciation and
amortization 295 259 13.8 584 515 13.5
Interest expense 154 109 40.9 289 216 33.5
Earnings before income
taxes 559 439 27.4 1,115 848 31.5
Provision for income
taxes 215 168 28.4 426 323 32.0
Net earnings $344 $271 26.8% $689 $525 31.2%
Basic earnings per
share $0.38 $0.30 25.8% $0.76 $0.58 30.1%
Diluted earnings per
share $0.38 $0.30 26.2% $0.75 $0.58 30.4%
Weighted average
common shares
outstanding:
Basic 907.9 901.0 907.2 900.0
Diluted 913.0 908.9 913.9 908.7
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Millions) August 3, August 4,
(Unaudited) 2002 2001
ASSETS
Cash and cash equivalents $1,755 $798
Accounts receivable (net of $332
allowance) 4,304 ---
Receivable-backed securities --- 1,721
Inventory 4,549 4,408
Other 1,112 893
Total current assets 11,720 7,820
Property and equipment, net 14,370 12,508
Other 1,169 917
Total assets $27,259 $21,245
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Accounts payable $4,187 $3,735
Current portion of long-term debt and
notes payable 1,583 580
Other 2,031 1,886
Total current liabilities 7,801 6,201
Long-term debt 9,735 6,999
Other 1,206 1,047
Shareholders' investment 8,517 6,998
Total liabilities and shareholders'
investment $27,259 $21,245
Common shares outstanding 908.4 901.7
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
(Millions) August 3, August 4,
(Unaudited) 2002 2001
OPERATING ACTIVITIES
Net earnings $689 $525
Reconciliation to cash flow:
Depreciation and amortization 584 515
Bad debt provision 192 ---
Other non-cash items affecting earnings 106 56
Changes in operating accounts
providing / (requiring) cash:
Accounts receivable (665) ---
Inventory (100) (160)
Other current assets (197) (142)
Other assets (121) (67)
Accounts payable 27 159
Accrued liabilities 13 (97)
Income taxes payable 20 94
Other 19 ---
Cash flow provided by operations 567 883
INVESTING ACTIVITIES
Expenditures for property and
equipment (1,479) (1,586)
Decrease in receivable-backed
securities --- 220
Proceeds from disposals of
property and equipment 11 10
Cash flow required by investing
activities (1,468) (1,356)
Net financing requirements (901) (473)
FINANCING ACTIVITIES
Decrease in notes payable, net --- (247)
Additions to long-term debt 2,500 1,750
Reductions of long-term debt (245) (476)
Dividends paid (109) (99)
Repurchase of stock --- (14)
Other 11 1
Cash flow provided by financing
activities 2,157 915
Net increase in cash and cash
equivalents 1,256 442
Cash and cash equivalents at
beginning of year 499 356
Cash and cash equivalents at end
of period $1,755 $798
Target Corporation
(Millions, except as indicated)
(Unaudited)
REVENUES and COMPARABLE-STORE SALES
Comparable-store sales are sales from stores open longer than one year.
Three Months Ended Six Months Ended
% Change % Change
Aug. 3, Aug. 4, Comp. Aug. 3, Aug. 4, Comp.
2002 2001 Revenues Sales 2002 2001 Revenues Sales
Target $8,499 $7,311 16.2% 4.4% $16,528 $14,082 17.4% 5.6%
Mervyn's 886 931 (4.9) (5.1) 1,749 1,802 (3.0) (3.3)
Marshall
Field's 589 598 (1.4) (2.5) 1,214 1,227 (1.1) (2.3)
Other 94 101 (7.8) na 171 164 4.5 na
TOTAL $10,068 $8,941 12.6% 3.0% $19,662 $17,275 13.8% 4.1%
NUMBER OF STORES, RETAIL SQUARE FEET and INVENTORY
Retail square feet in thousands; reflects total square feet less office,
warehouse and vacant space.
Number of Stores Retail Square Feet
August 3, August 4, August 3, August 4, %
2002 2001 2002 2001 Change
Target 1,107* 1,019* 133,811 119,822 11.7%
Mervyn's 264 265 21,425 21,480 (0.3)
Marshall Field's 64 64 14,638 14,638 0.0
Other --- --- --- ---
TOTAL 1,435 1,348 169,874 155,940 8.9%
*Includes 82 SuperTargets in 2002 and 51 SuperTargets in 2001.
Inventory
August 3, August 4,
2002 2001 % Change
Target $3,509 $3,193 9.9%
Mervyn's 526 587 (10.3)
Marshall Field's 343 393 (12.7)
Other 171 235 (27.6)
TOTAL $4,549 $4,408 3.2%
PRE-TAX SEGMENT PROFIT AND EARNINGS RECONCILIATION
Pre-tax segment profit is earnings before LIFO, securitization effects,
interest, other expense and unusual items.
Three Months Ended Six Months Ended
August 3, August 4, % August 3, August 4, %
2002 2001 Change 2002 2001 Change
Target $708 $522 35.5% $1,386 $1,024 35.3%
Mervyn's 59 60 (1.2) 111 108 3.0
Marshall Field's 18 16 18.0 50 39 28.8
Total pre-tax
segment profit 785 598 31.4 1,547 1,171 32.1
Securitization
adjustment
(interest
equivalent) --- (13) --- (25)
Interest expense (154) (109) (289) (216)
Other (72) (37) (143) (82)
Earnings before
income taxes $559 $439 27.4% $1,115 $848 31.5%
EBITDA
EBITDA is pre-tax segment profit before depreciation and amortization.
Three Months Ended Six Months Ended
August 3, August 4, % August 3, August 4, %
2002 2001 Change 2002 2001 Change
Target $931 $709 31.2% $1,830 $1,395 31.1%
Mervyn's 86 91 (5.2) 167 171 (1.9)
Marshall Field's 49 50 (0.3) 113 107 5.8
Total segment
EBITDA $1,066 $850 25.5% $2,110 $1,673 26.1%
Segment
depreciation and
amortization (281) (252) (563) (502)
Pre-tax segment
profit $785 $598 31.4% $1,547 $1,171 32.1%
Three Months Six Months Twelve Months
Ended Ended Ended
August 3, August 4, August 3, August 4, August 3, August 4,
2002 2001 2002 2001 2002 2001
Pre-tax
Segment
Profit as
a % of
Revenues:
Target 8.3% 7.1% 8.4% 7.3% 8.3% 7.5%
Mervyn's 6.6% 6.4% 6.4% 6.0% 7.3% 6.7%
Marshall
Field's 3.1% 2.6% 4.1% 3.1% 5.2% 5.7%
EBITDA as a
% of Revenues:
Target 11.0% 9.7% 11.1% 9.9% 10.7% 9.8%
Mervyn's 9.7% 9.8% 9.6% 9.5% 10.2% 9.8%
Marshall
Field's 8.4% 8.3% 9.3% 8.7% 9.9% 10.4%
Target Corporation
(Millions)
(Unaudited)
CREDIT CARD CONTRIBUTION
Three Months Ended Six Months Ended
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
Revenues
Finance charges, late fees and
other revenues $262 $175 $506 $350
Merchant fees
Intracompany 23 22 45 44
Third-party 15 1 29 2
Total revenues 300 198 580 396
Expenses
Bad debt 103 45 192 81
Operations and marketing 68 50 144 102
Total expenses 171 95 336 183
Pre-tax credit contribution $129 $103 $244 $213
QUARTER-END RECEIVABLES SERVICED
August 3, August 4,
2002 2001
Target
Guest Card $865 $1,255
Target Visa 2,534 131
Mervyn's 586 639
Marshall Field's 651 662
Quarter-end receivables serviced $4,636 $2,687
Past due* 5.6% 6.8%
Average receivables serviced $4,301 $2,732
* Accounts with two or more payments past due as a percent of total
outstanding receivables.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Three Months Ended Six Months Ended
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
Allowance at beginning of period $297 $207 261 $211
Bad debt provision 103 45 192 81
Net write-offs (68) (39) (121) (79)
Allowance at end of period $332 $213 332 213
As a percent of period-end
receivables serviced 7.2% 7.9% 7.2% 7.9%
As a multiple of trailing
12 months net write-offs 1.5 1.4 1.5 1.4
SOURCE Target Corporation
CONTACT:
Investors, Susan Kahn, +1-612-761-6735, or financial media,
Cathy Wright, +1-612-761-6627, both for Target Corporation
URL: http://www.target.com
Copyright (C) 2002 PR Newswire. All rights reserved.
