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TARGET CORP Annual Report, Year Ended Jan 28, 1995

Filing Date
Filed April 18, 1995
Period End
January 28, 1995
Security
TGT
In the record · 2016–202610-K1110-Q328-K125

TGT filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 125 current reports (8-K) between 2016 and 2026.

  1. FY2017 annual report10-K · Mar ’17Mar ’17
  2. Leadership change8-K · Oct ’19Oct ’19
  3. Material agreement8-K · Oct ’21Oct ’21
  4. Material agreement8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed April 18, 1995. Cited figures are marked; the original filing is the authoritative source.

Dayton Hudson Corporation (filed as TARGET CORP, TGT) reported record fiscal 1994 results: revenues rose 11% to $21.3 billiona, operating profit grew 9% to $1,208 million, and net earnings increased 16% to $434 million, or $5.52 per fully diluted share (versus $4.77 in 1993).

Growth was led by Target, the upscale discounter, whose revenues rose 16% and operating profit 11% to $732 millionb, with 611 stores and a 7% comparable-store revenue gain. Mervyn's operating profit increased 15%, while the Department Store Division posted a modest 1% gain. Margin pressure was notable: the pre-tax LIFO credit fell sharply to $19 million from $91 million, and the effective tax rate rose to 39.2%.

Management is also shifting internal performance measurement to Economic Value Added (EVA), with a stated long-term objective of 15% annual EPS growth. Balance sheet and capital spending point to a company funding aggressive expansion. Capital expenditures reached $1,095 millionc, with 77% directed to Target, and management expects 1995 capital spending to be several hundred million dollars higher, with 60-70 new Target stores planned.

Long-term debt rose to $4.49 billiond, and the year-end debt ratio (including operating leases) was 57%, inside management's 45%-65% target range. Management expects debt to increase by more than in 1994 to fund store growth and the expanding proprietary credit card receivables, which grew to $1.81 billion.

Cash flow from operations fell to $892 million from $1,219 million, largely due to working capital build, which investors should monitor. Overall, the filing portrays a strong earnings year with a growing reliance on borrowing and a gradual shift in mix toward Target.

02—Key points

Key Highlights

  1. Record fiscal 1994 results: revenues of $21.3 billion (+11%), operating profit of $1,208 million (+9%), and net earnings of $434 million (+16%).
  2. Fully diluted EPS of $5.52 versus $4.77 in 1993; dividends declared rose to $1.68 per share from $1.62.
  3. Target drove growth with revenues of $13.6 billion (+16%), operating profit of $732 million (+11%), and comparable-store revenue growth of 7%; 60 new Target stores opened in 1994.
  4. Pre-tax LIFO credit dropped to $19 million from $91 million, pressuring gross margin; the effective tax rate increased to 39.2% from 38.2%.
  5. Capital expenditures of $1,095 million, with 1995 spending expected to rise by several hundred million dollars and plans for 60-70 new Target stores.
  6. Long-term debt rose to $4,488 million; year-end debt ratio of 57% remains within the 45%-65% target range, and debt is expected to grow more in 1995.
  7. Shareholder return of approximately 7% in 1994 versus roughly 1% for the S&P 500; investment-grade ratings maintained (A+/A3/A) with $1 billion in committed credit lines.

03—Questions

Frequently Asked Questions

  1. How did the company perform financially in fiscal 1994?

    Dayton Hudson posted record revenues of $21.3 billion, up 11%, and net earnings of $434 million, up 16%. Fully diluted EPS rose to $5.52 from $4.77. Operating profit grew 9% to $1.21 billion, though a sharply smaller LIFO credit tempered margin gains.

  2. Which business segment is driving growth?

    Target is the primary growth engine. Its revenues rose 16% to $13.6 billion and operating profit rose 11% to $732 million, and it accounts for most new store investment. Mervyn's operating profit rose 15% to $206 million on modest revenue growth, while the Department Store Division grew operating profit only 1% to $270 million.

  3. Is the company's debt load a concern?

    Debt is rising to fund expansion. Long-term debt reached $4.49 billion, and the year-end debt ratio including operating leases was 57%, within management's 45%-65% target range. Management expects borrowing to grow more in 1995 as it finances new stores and the growing credit card receivables portfolio, and credit ratings remain strong at A+, A3 and A.

  4. What are the main risks to margins going forward?

    Gross margin pressure is expected as Target, the lowest-margin division, takes a larger share of growth. The LIFO credit fell to $19 million from $91 million, and management expects the gross margin rate to decline over time. The effective tax rate also rose to 39.2%, and interest expense is expected to increase in 1995.

  5. What is management's strategy and outlook for 1995?

    Management plans 60-70 new Target stores, 11 new Mervyn's stores, and one new department store, with expansion into Cleveland/Akron and Minneapolis/St. Paul. It is adopting EVA as the key performance measure, targets 15% annual EPS growth over time, and expects continued accounts receivable growth in its proprietary credit operations.

04—Continue

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