Financial News Release

Target Corporation Fourth Quarter Earnings Per Share $1.29
02/27/07

Fiscal 2006 EPS $3.21

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 27, 2007--Target Corporation (NYSE:TGT) today reported net earnings of $1.119 billion for the fourth quarter ended February 3, 2007, a 14-week period, compared with $939 million in the fourth quarter ended January 28, 2006, a 13-week period. Earnings per share in the fourth quarter 2007 increased 21.7 percent to $1.29 per share from $1.06 per share in the same period a year ago. All earnings per share figures refer to diluted earnings per share.

For the full fiscal year 2006, a 53-week period, net earnings were $2.787 billion, compared with $2.408 billion in fiscal 2005, a 52-week period. Earnings per share increased 18.5 percent to $3.21 per share from $2.71 per share a year ago.

"We are pleased with our performance in 2006, which reflects the strength of our strategic direction and disciplined execution," said Bob Ulrich, chairman and chief executive officer of Target Corporation. "In 2007, we remain focused on delighting our guests, creating a preferred workplace for our team members and supporting the communities in which we operate, positioning us to generate considerable profitable market share growth and superior value for our shareholders over time."

Full-Year Results

For fiscal 2006, total revenues increased 13.1 percent to $59.490 billion from $52.620 billion in 2005, fueled by the contribution from new store expansion, a 4.8 percent increase in comparable store sales (based on a 52-week period in both years), the impact of one additional week and the contribution from our credit card operations. 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 17.3 percent to $5.069 billion, compared with $4.323 billion a year ago. EBIT in our core retail operations grew 11.2 percent, while the contribution of our credit card operations to total EBIT rose 51.9 percent. Within our core retail operations, gross margin rate was essentially unchanged from the prior year, while the company's expense rate was 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.

Total year net interest expense increased $109 million compared with 2005, primarily due to growth in the cost of funding our credit card operations.

Earnings before taxes (EBT) for the full year totaled $4.497 billion, representing an increase of $637 million, or 16.5 percent, from the same period in 2005. The contribution from the company's credit card operations to these results was $693 million, an increase of $241 million, or 53.3 percent, from a year ago.

Fourth-Quarter Results

Total revenues in the fourth quarter increased 16.3 percent to $19.710 billion from $16.947 billion in 2005, driven by the extra week of sales, the contribution from new store expansion, a 4.8 percent increase in comparable store sales (based on a 13-week period in both years) and the contribution from our credit card operations.

Fourth quarter 2006 EBIT increased 22.1 percent to $1.960 billion, compared with $1.606 billion in the fourth quarter a year ago. EBIT in our core retail operations grew 19.5 percent, while the contribution of our credit card operations to total EBIT rose 40.7 percent. Within our core retail operations, gross margin rate in the quarter was slightly favorable and the company's expense rate was slightly unfavorable to the prior year.

Net interest expense for the quarter increased $27 million compared with fourth quarter 2005, due to growth in the cost of funding our credit card operations and the additional week.

EBT in the fourth quarter totaled $1.809 billion, representing an increase of $327 million, or 22.1 percent, from the same period in 2005. The contribution from the company's credit card operations to these results was $187 million, an increase of $54 million, or 40.7 percent, from a year ago.

Other Factors

For the full year, the effective income tax rate in 2006 was 38.0 percent, compared to 37.6 percent in 2005.

Under a $5 billion share repurchase program that began in 2004, the company repurchased 19.5 million shares of its common stock in 2006 at an average price of $50.16 per share, for a total investment of $977 million. Program to-date, the company has acquired 71.0 million shares of its common stock at an average price per share of $48.56, reflecting a total investment of approximately $3.45 billion. The company expects to continue to execute this program primarily in open market transactions, subject to market conditions, and expects to complete the total program by year-end 2008, or sooner.

Miscellaneous

Target Corporation will webcast its fourth quarter and year end 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 "Events + Calendar", then "webcasts"). A telephone replay of the call will be available beginning at approximately 11:00am CST today through the end of business on Thursday March 1, 2007. The replay number is (800) 642-1687 (passcode: 7387445).

Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company's 2005 Form 10-K.

Target Corporation's operations include large, general merchandise and food discount stores and a fully integrated on-line business through which we offer a fun and convenient shopping experience with thousands of highly differentiated and affordably priced items. The company gives back more than $3 million each week to its local communities through grants and special programs. The company currently operates 1,487 Target stores in 47 states.

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


                  CONSOLIDATED RESULTS OF OPERATIONS

                                              Fifty-   Fifty-
                   Fourteen Thirteen           Three     Two
                    Weeks    Weeks            Weeks    Weeks
                    Ended    Ended            Ended    Ended
                   ------------------------  ------------------------
(Millions, except
 per share data)   Feb. 3,  Jan. 28,   %     Feb. 3,  Jan. 28,   %
(Unaudited)          2007     2006   Change    2007     2006   Change
                   -------- -------- ------  -------- -------- ------

Sales              $19,269  $16,570   16.3 % $57,878  $51,271   12.9 %
Net credit card
 revenues              441      377   17.0     1,612    1,349   19.5
                   -------- -------- ------  -------- -------- ------

Total revenues      19,710   16,947   16.3    59,490   52,620   13.1

Cost of sales       13,349   11,509   16.0    39,399   34,927   12.8
Selling, general
 and
 administrative
 expenses            3,804    3,254   16.9    12,819   11,185   14.6
Credit card
 expenses              195      209   (6.6)      707      776   (8.9)
Depreciation and
 amortization          402      369    9.0     1,496    1,409    6.1
                   -------- -------- ------  -------- -------- ------

Earnings before
 interest expense
 and income taxes    1,960    1,606   22.1     5,069    4,323   17.3
                   -------- -------- ------  -------- -------- ------

Net interest
 expense               151      124   21.5       572      463   23.4
                   -------- -------- ------  -------- -------- ------

Earnings before
 income taxes        1,809    1,482   22.1     4,497    3,860   16.5

Provision for
 income taxes          690      543   27.2     1,710    1,452   17.8
                   -------- -------- ------  -------- -------- ------

Net earnings        $1,119     $939   19.2 %  $2,787   $2,408   15.8 %
                   ======== ======== ======  ======== ======== ======


Basic earnings per
 share:              $1.30    $1.07   21.7 %   $3.23    $2.73   18.5 %
                   ======== ======== ======  ======== ======== ======

Diluted earnings
 per share:          $1.29    $1.06   21.7 %   $3.21    $2.71   18.5 %
                   ======== ======== ======  ======== ======== ======

Weighted average common
 shares outstanding:
           Basic     858.5    876.6            861.9    882.0
           Diluted   865.4    883.5            868.6    889.2

            CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

SUBJECT TO RECLASSIFICATION
(Millions)                                           Feb. 3,  Jan. 28,
(Unaudited)                                            2007     2006
                                                     -------- --------

ASSETS
Cash and cash equivalents                               $813   $1,648
Accounts receivable, net                               6,194    5,666
Inventory                                              6,254    5,838
Other current assets                                   1,445    1,253
                                                     -------- --------
   Total current assets                               14,706   14,405
                                                     -------- --------

Property and equipment, net                           21,431   19,038
Other non-current assets                               1,212    1,552
                                                     -------- --------
   Total assets                                      $37,349  $34,995
                                                     ======== ========

LIABILITIES AND SHAREHOLDERS' INVESTMENT
Accounts payable                                      $6,575   $6,268
Current portion of long-term debt and notes
 payable                                               1,362      753
Other current liabilities                              3,180    2,567
                                                     -------- --------
   Total current liabilities                          11,117    9,588
                                                     -------- --------

Long-term debt                                         8,675    9,119
Deferred income taxes                                    577      851
Other non-current liabilities                          1,347    1,232
Shareholders' investment                              15,633   14,205
                                                     -------- --------
   Total liabilities and shareholders'
    investment                                       $37,349  $34,995
                                                     ======== ========

Common shares outstanding                              859.8    874.1

                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               Fifty-Three  Fifty-Two
SUBJECT TO RECLASSIFICATION                    Weeks Ended Weeks Ended
                                               -----------------------
(Millions)                                       Feb. 3,    Jan. 28,
(Unaudited)                                       2007        2006
                                               ----------- -----------

OPERATING ACTIVITIES
Net earnings                                       $2,787      $2,408

Reconciliation to cash flow:
     Depreciation and amortization                  1,496       1,409
     Share-based compensation expense                  99          93
     Deferred income taxes                           (201)       (122)
     Bad debt provision                               380         466
     Loss on disposal of property and
      equipment, net                                   53          70
     Other non-cash items affecting
      earnings                                        (35)        (50)
     Changes in operating accounts
      providing/(requiring) cash:
           Accounts receivable
            originated at Target                     (226)       (244)
           Inventory                                 (431)       (454)
           Other current assets                       (30)        (28)
           Other non-current assets                     5         (24)
           Accounts payable                           435         489
           Accrued liabilities                        389         351
           Income taxes payable                        41          70
           Other non-current liabilities              100           2
     Other                                              -          15
                                               ----------- -----------
Cash flow provided by operations                    4,862       4,451
                                               ----------- -----------

INVESTING ACTIVITIES
Expenditures for property and equipment            (3,928)     (3,388)
Proceeds from disposal of property and
 equipment                                             62          58
Change in accounts receivable originated
 at third parties                                    (683)       (819)
Other investment                                     (144)          -
                                               ----------- -----------
Cash flow required for investing
 activities                                        (4,693)     (4,149)
                                               ----------- -----------

FINANCING ACTIVITIES
Additions to long-term debt                         1,256         913
Reductions of long-term debt                       (1,155)       (527)
Dividends paid                                       (380)       (318)
Repurchase of stock                                  (901)     (1,197)
Stock option exercises and related tax
 benefit                                              181         231
Other                                                  (5)         (1)
                                               ----------- -----------
Cash flow required for financing
 activities                                        (1,004)       (899)
                                               ----------- -----------

Net decrease in cash and cash
 equivalents                                         (835)       (597)

Cash and cash equivalents at beginning
 of period                                          1,648       2,245

                                               ----------- -----------
Cash and cash equivalents at end of
 period                                              $813      $1,648
                                               =========== ===========

   NUMBER OF STORES, RETAIL SQUARE FEET and COMPARABLE-STORE SALES
  Retail square feet in thousands; reflects total square feet less
             office, distribution center and vacant space.

                       Number of Stores        Retail Square Feet
                     -------------------- ----------------------------
                       Feb. 3,   Jan. 28,   Feb. 3,    Jan. 28,
(Unaudited)             2007       2006       2007       2006   Change
                     ----------- -------- ------------ -------- ------
Target General
 Merchandise Stores       1,311    1,239      160,806  150,318    7.0%
SuperTarget Stores          177      158       31,258   27,942   11.9%
                     ----------- -------- ------------ -------- ------
Total                     1,488    1,397      192,064  178,260    7.7%
                     =========== ======== ============ ======== ======

                     Thirteen Weeks Ended Fifty-Two Weeks Ended
                     -------------------- ---------------------
                     Jan. 27,(a) Jan. 28, Jan. 27,(a)  Jan. 28,
(Unaudited)             2007       2006       2007       2006
                     ----------- -------- ------------ --------
Comparable-Store
 Sales                      4.8%     4.2%         4.8%     5.6%
                     =========== ======== ============ ========

(a) Comparable-store sales growth is calculated by comparing sales in
 current year periods against designated prior year periods of
 equivalent length.

                   CREDIT CARD CONTRIBUTION TO EBT

                        Fourteen    Thirteen   Fifty-Three  Fifty-Two
                       Weeks Ended Weeks Ended Weeks Ended Weeks Ended
                       ----------------------- -----------------------
                         Feb. 3,    Jan. 28,     Feb. 3,    Jan. 28,
(Millions) (Unaudited)    2007        2006        2007        2006
                       ----------- ----------- ----------- -----------
Revenues
Finance charges              $305        $259      $1,117        $915
Interest expense (a)          (83)        (59)       (286)       (193)
                       ----------- ----------- ----------- -----------
Net interest income           222         200         831         722
                       ----------- ----------- ----------- -----------

Late fees and other
 revenues                      95          83         356         310
Merchant fees
  Intracompany                 24          24          74          72
  Third-party                  41          35         139         124
                       ----------- ----------- ----------- -----------
Non-interest income           160         142         569         506
                       ----------- ----------- ----------- -----------

Expenses
Bad debt                      102         129         380         466
Operations and
 marketing                     93          80         327         310
                       ----------- ----------- ----------- -----------
Total expenses                195         209         707         776
                       ----------- ----------- ----------- -----------

Credit card
 contribution to EBT         $187        $133        $693        $452
                       =========== =========== =========== ===========

As a percentage of
 average receivables
 (annualized)                10.6%        9.0%       11.0%        8.2%
                       =========== =========== =========== ===========

Net interest margin
 (annualized) (b)            12.6%       13.5%       13.2%       13.0%
                       =========== =========== =========== ===========

RECEIVABLES
Period-end receivables     $6,711      $6,117
Average receivables        $6,544      $5,922      $6,161      $5,544
Accounts with three or
 more payments past
 due as a percentage
 of period-end
 receivables                  3.5%        2.8%

ALLOWANCE FOR DOUBTFUL
 ACCOUNTS
Allowance at beginning
 of period                   $514        $417        $451        $387
Bad debt provision            102         129         380         466
Net write-offs                (99)        (95)       (314)       (402)
                       ----------- ----------- ----------- -----------
Allowance at end of
 period                      $517        $451        $517        $451
                       =========== =========== =========== ===========

As a percentage of
 period-end
 receivables                  7.7%        7.4%        7.7%        7.4%
                       =========== =========== =========== ===========

Net write-offs as a
 percentage of average
 receivables
 (annualized)                 6.1%        6.5%        5.1%        7.2%
                       =========== =========== =========== ===========

(a) Represents an allocation of consolidated interest expense based on
 estimated funding costs for average net accounts receivable and other
 financial services assets. Interest expense allocated to our credit
 card operations for the first, second, third, and fourth quarters
 2005 totaled $40, $43, $50, and $59, respectively.

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

CONTACT: Target Corporation
Susan Kahn (investor)
612-761-6735
or
Cathy Wright (financial media)
612-761-6627 or 847-615-1538

SOURCE: Target Corporation