MINNEAPOLIS, May 21, 2002 /PRNewswire-FirstCall via COMTEX/ -- Target
Corporation (NYSE: TGT) today reported earnings per share for the first quarter
ended May 4, 2002 of 38 cents, compared with 28 cents in the first quarter ended
May 5, 2001. All earnings per share figures refer to diluted earnings per share.
First quarter net earnings increased 35.9 percent to $345 million, compared with
$254 million in 2001.
"We are extremely pleased with our first quarter results," said Bob Ulrich,
chairman and chief executive officer of Target Corporation. "Our performance
reflects year-over-year growth in profits at all three operating divisions, with
particular strength at Target Stores."
Total revenues in the first quarter increased 15.1 percent to $9.594 billion
from $8.334 billion in 2001, driven by an 18.6 percent revenue increase at
Target Stores. Comparable-store sales for the first quarter 2002 increased 5.2
percent. (Total revenues include retail sales and net credit revenues.
Comparable-store sales are sales from stores open longer than one year.)
In the first quarter, gross margin rate increased from the prior year,
reflecting gross margin rate improvement at all three divisions. (Gross margin
rate represents gross margin as a percentage of sales.) Expense rate, excluding
credit card operations, was also favorable to prior year, benefiting from
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 32.8 percent to $762 million,
compared with $573 million in the first quarter 2001. Pre-tax profit at Target
Stores increased 35 percent. Pre-tax profit at Mervyn's rose 8 percent and
pre-tax profit at Marshall Field's improved 36 percent. (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 $115 million
in the first quarter from $110 million a year ago. At quarter-end, gross
receivables serviced were $4.246 billion, compared with $2.708 billion at the
end of first quarter 2001, due to the continued growth in usage of the Target
Visa. The provision for bad debt expense exceeded write-offs by $36 million in
the quarter, while delinquency trends improved from the same period a year ago.
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 $16
million compared with first quarter 2001 reflecting 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 was 38.0 percent, compared with
38.0 percent last year.
Miscellaneous
Target Corporation will webcast its first quarter earnings conference call at
9:30 a.m. CDT today. Investors and the media are invited to listen to the call
through the company's website at http://www.target.com (click on "company/Target
Corporation/investor information/webcasts"). A telephone replay of the call will
be available beginning at approximately 11:30 a.m. CDT today through the end of
business on May 22, 2002. The replay number is (888) 568-0398.
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 1,409 stores in 47 states. This included 1,081 Target stores,
264 Mervyn's stores and 64 Marshall Field's stores.
Target Corporation news releases are available at http://www.target.com or
http://www.prnewswire.com .
TARGET CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended
(Millions, except per share data) May 4, May 5, %
(Unaudited) 2002 2001 Change
Sales $9,336 $8,186 14.1%
Net credit revenues 258 148 74.2
Total revenues 9,594 8,334 15.1
Cost of sales 6,322 5,603 12.8
Selling, general and administrative
expense 2,127 1,887 12.7
Credit expense 165 72 130.3
Depreciation and amortization 289 256 13.1
Interest expense 135 107 25.9
Earnings before income taxes 556 409 35.9
Provision for income taxes 211 155 35.9
Net earnings $345 $254 35.9%
Basic earnings per share $0.38 $0.28 34.8%
Diluted earnings per share $0.38 $0.28 35.0%
Weighted average common shares
outstanding:
Basic 906.4 899.0
Diluted 914.7 908.5
TARGET CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Millions) May 4, May 5,
(Unaudited) 2002 2001
ASSETS
Cash and cash equivalents $445 $367
Accounts receivable (net of $297 allowance) 3,949 --
Receivable-backed securities -- 1,748
Inventory 4,565 4,294
Other 1,236 1,029
Total current assets 10,195 7,438
Property and equipment, net 13,931 12,037
Other 1,063 901
Total assets $25,189 $20,376
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Accounts payable $3,685 $3,285
Current portion of long-term debt and
notes payable 1,370 1,442
Other 1,796 1,690
Total current liabilities 6,851 6,417
Long-term debt 8,943 6,174
Other 1,201 1,041
Shareholders' investment 8,194 6,744
Total liabilities and shareholders'
investment $25,189 $20,376
Common shares outstanding 907.2 900.1
TARGET CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
(Millions) May 4, May 5,
(Unaudited) 2002 2001
OPERATING ACTIVITIES
Net earnings $345 $254
Reconciliation to cash flow:
Depreciation and amortization 289 256
Bad debt provision 89 --
Other non-cash items affecting earnings 66 18
Changes in operating accounts
requiring cash:
Accounts receivable (207) --
Inventory (116) (46)
Other current assets (316) (279)
Other assets (107) (82)
Accounts payable (475) (291)
Accrued liabilities (117) (140)
Income taxes payable (77) (40)
Cash flow required by operations (626) (350)
INVESTING ACTIVITIES
Expenditures for property and equipment (697) (857)
Decrease in receivable-backed securities -- 193
Proceeds from disposals of
property and equipment 4 4
Other (1) --
Cash flow required by investing activities (694) (660)
Net financing requirements (1,320) (1,010)
FINANCING ACTIVITIES
Increase in notes payable, net 311 774
Additions to long-term debt 1,000 500
Reductions of long-term debt (8) (201)
Dividends paid (54) (49)
Repurchase of stock -- (14)
Other 17 11
Cash flow provided by financing activities 1,266 1,021
Net (decrease) / increase in
cash and cash equivalents (54) 11
Cash and cash equivalents at
beginning of year 499 356
Cash and cash equivalents at end of period $445 $367
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
May 4, May 5, % Change
2002 2001 Revenues Comp. Sales
Target $8,029 $6,771 18.6% 6.8%
Mervyn's 863 871 (0.9) (1.4)
Marshall Field's 625 630 (0.7) (2.1)
Other 77 62 24.4 na
TOTAL $9,594 $8,334 15.1% 5.2%
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
May 4, May 5, May 4, May 5,
2002 2001 2002 2001 % Change
Target 1,081* 991* 129,795 115,240 12.6%
Mervyn's 264 266 21,425 21,555 (0.6)
Marshall Field's 64 64 14,638 14,584 0.4
Other -- -- -- --
TOTAL 1,409 1,321 165,858 151,379 9.6%
Inventory
May 4, May 5, % Change
2002 2001
Target $3,483 $3,112 11.9%
Mervyn's 545 601 (9.3)
Marshall Field's 381 432 (11.9)
Other 156 149 5.1
TOTAL $4,565 $4,294 6.3%
* Includes 75 SuperTargets in 2002 and 37 SuperTargets in 2001.
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
May 4, 2002 May 5, 2001 % Change
Target $678 $502 35.1%
Mervyn's 52 48 8.3
Marshall Field's 32 23 36.0
Total pre-tax segment profit 762 573 32.8
Securitization adjustment
(interest equivalent) -- (12)
Interest expense (135) (107)
Other (71) (45)
Earnings before income taxes $556 $409 35.9%
EBITDA
EBITDA is pre-tax segment profit before depreciation and amortization.
Three Months Ended
May 4, 2002 May 5, 2001 % Change
Target $899 $686 30.9%
Mervyn's 81 80 2.0
Marshall Field's 64 57 11.1
Total segment EBITDA $1,044 $823 26.7%
Segment depreciation and amortization (282) (250)
Pre-tax segment profit $762 $573 32.8%
Three Months Twelve Months
Ended Ended
May 4, May 5, May 4, May 5,
2002 2001 2002 2001
Pre-tax Segment Profit as a % of Revenues:
Target 8.4% 7.4% 8.0% 7.5%
Mervyn's 6.1% 5.5% 7.2% 6.6%
Marshall Field's 5.0% 3.7% 5.1% 6.3%
EBITDA as a % of Revenues:
Target 11.2% 10.1% 10.5% 9.9%
Mervyn's 9.4% 9.2% 10.2% 9.7%
Marshall Field's 10.2% 9.1% 9.9% 10.8%
Target Corporation
(Millions)
(Unaudited)
CREDIT CARD CONTRIBUTION
Three Months Ended
May 4, May 5,
2002 2001
Revenues
Finance charges, late fees and other revenues $244 $175
Merchant fees
Intracompany 22 22
Third-party 14 1
Total revenues 280 198
Expenses
Bad debt 89 36
Operations and marketing 76 52
Total expenses 165 88
Pre-tax credit contribution $115 $110
QUARTER-END RECEIVABLES SERVICED
May 4, May 5,
2002 2001
Target
Guest Card $899 $1,233
Target Visa 2,053 111
Mervyn's 607 655
Marshall Field's 687 709
Quarter-end receivables serviced $4,246 $2,708
Past due* 5.0% 6.0%
Average receivables serviced $4,143 $2,764
* Accounts with two or more payments past due as a percent of total
outstanding receivables.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Three Months Ended
May 4, May 5,
2002 2001
Allowance at beginning of quarter $261 $211
Bad debt provision 89 36
Net write-offs (53) (40)
Allowance at end of quarter $297 $207
As a percent of quarter-end receivables serviced 7.0% 7.6%
As a multiple of trailing 12 months net write-offs 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 of Target Corporation
http://www.target.com
Copyright (C) 2002 PR Newswire. All rights reserved.
