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TARGET CORP Annual Report, Year Ended Feb 2, 2002

Filing Date
Filed April 15, 2002
Period End
February 2, 2002
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 15, 2002. Cited figures are marked; the original filing is the authoritative source.

Target Corporation (TGT) reported strong fiscal 2001 results (year ended February 2, 2002), with net earnings of $1,368 milliona, or $1.50 diluted EPS, up from $1.38 in 2000 (about 9% growth).

Total revenues rose 9.7% to $39.9 billionb and comparable-store sales grew 2.7%. Growth was driven almost entirely by Target, which contributed 86% of consolidated pre-tax segment profit, while Marshall Field's profit fell sharply (pre-tax segment profit down to $133 million from $190 million) and Mervyn's was roughly flat to up. Earnings were reduced by a $42 million after-tax ($.05 per share) unusual charge tied to adopting SFAS No. 140 for securitized receivables, which moved the credit card securitizations onto the balance sheet.

The balance sheet grew substantially. Total assets rose to $24.2 billionc from $19.5 billion, and long-term debt increased to $8.1 billion from $5.6 billion, driven by roughly $3.25 billion of new issuance and the consolidation of the credit card receivables. Capital expenditures reached $3.2 billion, and operating cash flow declined to $1.99 billion from $2.12 billion, so the company relied on debt to fund expansion.

The retail debt ratio was 43%, and interest coverage was 4.7x. The company ended the year with 1,381 stores, and management guides to 2002 capital spending of $3.3 to $3.5 billiond, roughly 95 net new stores, and at least 30 SuperTargets, with continued strong growth expected. For investors, the key points are the consistent earnings growth and the Target division's dominance, balanced against rising leverage, a shift toward more debt-funded growth, and weakening Marshall Field's performance.

The Target Visa credit card national rollout and the expanding receivables book were also significant contributors to 2001 results. Management's 2002 outlook calls for continued growth, with interest expense expected to rise considerably as funded balances increase.

02—Key points

Key Highlights

  1. Net earnings rose to $1,368 million ($1.50 diluted EPS) in 2001, up from $1,264 million ($1.38) in 2000, despite a $42 million after-tax accounting charge.
  2. Total revenues grew 9.7% to $39.9 billion, with comparable-store sales up 2.7%; Target revenues grew 13.1% and comparable-store sales rose 4.1%.
  3. Target generated 86% of consolidated pre-tax segment profit ($2,546 million, 7.8% margin), while Marshall Field's pre-tax segment profit fell 30% to $133 million.
  4. Total assets increased to $24.2 billion and long-term debt rose to $8.1 billion, as the adoption of SFAS No. 140 brought securitized credit card receivables onto the balance sheet.
  5. Capital expenditures reached $3.2 billion (up 25%), with 92% directed to Target; the 2002 plan is $3.3 to $3.5 billion, including about 95 net new stores.
  6. Operating cash flow declined to $1.99 billion from $2.12 billion, and the company funded its growth through a $3.25 billion debt issuance during the year.
  7. Credit card operations expanded sharply, with year-end receivables serviced up 41% to $4.1 billion following the national rollout of the Target Visa card.

03—Questions

Frequently Asked Questions

  1. How did Target Corporation perform financially in fiscal 2001?

    Target delivered net earnings of $1,368 million, or $1.50 per diluted share, up from $1.38 in 2000. Revenues grew 9.7% to $39.9 billion, and comparable-store sales increased 2.7%. Results included a $42 million after-tax unusual charge from the required adoption of SFAS No. 140.

  2. Which division drove Target's results, and how were the others performing?

    The Target division drove results, contributing 86% of pre-tax segment profit with revenue growth of 13.1%. Mervyn's pre-tax profit rose modestly to $286 million. Marshall Field's was the weak spot, with revenues down 4.8% and pre-tax profit falling to $133 million from $190 million.

  3. Why did the balance sheet and debt levels change so much?

    Target adopted SFAS No. 140 in August 2001, which required securitized credit card receivables to be consolidated as secured financing rather than sold. As a result, total assets rose to $24.2 billion from $19.5 billion and long-term debt rose to $8.1 billion from $5.6 billion. Management states that the retail debt ratio was 43% and interest coverage was 4.7x.

  4. What is the outlook for 2002?

    Management expects another year of strong revenue and earnings growth driven by comparable-store sales and new Target stores, along with growth in credit card operations. Gross margin and operating expense rates are expected to be roughly flat. Capital spending is planned at $3.3 to $3.5 billion, interest expense is expected to rise considerably, and the effective tax rate is expected to be about 38%.

  5. Are there any material risks or legal issues disclosed?

    Management states that currently identified claims and litigation are not expected to have a material adverse effect on results or financial condition. The filing also lists forward-looking risks, including competitive pressures, consumer trends, credit regulation and card usage, economic conditions, labor availability, and product sourcing from international vendors. Item 7A states the company had no material market risk exposure for interest rates, currencies, or commodities, although it does hold interest rate swaps with notional amounts of $1.45 billion.

04—Continue

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