10-K/APeriod: FY2010

TARGET CORP Annual Report (Amendment), Year Ended Jan 30, 2010

Filed March 18, 2010For Securities:TGT

Summary

Target Corporation's 2010 10-K filing reveals a company navigating a challenging economic environment while demonstrating resilience in its core retail operations. Despite a 2.5% decline in comparable-store sales for fiscal year 2009, the Retail Segment achieved its highest-ever EBIT, showcasing effective cost management and operational efficiency. The company's strategic focus on differentiating its shopping experience through a blend of price, merchandise assortment, convenience, and guest service remains a key pillar for sustained success. The Credit Card Segment also showed strength, with disciplined management leading to a significant increase in segment profit and a near doubling of segment pretax return on invested capital, despite a reduction in the portfolio's average investment. The company is actively managing its financial condition, evidenced by strong cash flow generation which funded capital expenditures and debt repayment, and the resumption of its share repurchase program. Target continues to invest in its infrastructure and store base, with plans for further remodels and potential new store development, while closely monitoring risks related to macroeconomic conditions, consumer preferences, and supply chain disruptions.

Financial Highlights

29 data points
Beta

Revenue

$65.36B

32.6% Gross Margin

Net Income

$2.49B

3.8% Net Margin

EPS (Diluted)

$3.30

Free Cash Flow

$4.15B

Financial Statements
Beta
Revenue$65.36B
Cost of Revenue$44.06B
Gross Profit$21.30B
SG&A Expenses$13.08B
Operating Income$4.58B
Interest Expense$801.00M
Net Income$2.49B
EPS (Basic)$3.31
EPS (Diluted)$3.30
Shares Outstanding (Basic)752.00M
Shares Outstanding (Diluted)754.80M

Key Highlights

  • 1Retail Segment achieved record EBIT despite a 2.5% decline in comparable-store sales for FY2009.
  • 2Credit Card Segment saw a significant increase in profit and a near doubling of return on invested capital.
  • 3Strong cash flow from operations supported capital expenditures, debt repayment, and the resumption of share repurchases.
  • 4Company is actively managing inventory and supply chain through various techniques.
  • 5Target is investing in store remodels and technology to enhance guest experience.
  • 6Seasonality impacts revenue and earnings, with the fourth quarter being the peak sales period.
  • 7Significant risks include competition, changing consumer preferences, macroeconomic conditions, and supply chain disruptions.

Frequently Asked Questions

In fiscal year 2009, Target's Retail Segment delivered its highest-ever EBIT despite a 2.5% decrease in comparable-store sales, indicating strong operational efficiency and cost management. The Credit Card Segment also performed well, increasing its profit and significantly boosting its return on invested capital. The company benefited from strong cash flow from operations, which allowed it to fund capital expenditures, reduce debt, and restart its share repurchase program.

Key risks identified include intense competition in the retail sector, the challenge of anticipating and responding to rapidly changing consumer preferences, and the significant impact of macroeconomic conditions and U.S. consumer confidence on sales and credit card performance. Other risks involve managing a large workforce, potential supply chain disruptions (especially from international sourcing), ensuring product safety, protecting customer data, and navigating evolving legal and regulatory landscapes.

Target's Credit Card Segment focuses on driving sales and deepening guest relationships. Key performance indicators include segment profit, return on invested capital (ROIC), and Spread to LIBOR, which approximates the portfolio's overall financial performance. In 2009, the segment saw improved portfolio performance and lower funding costs, leading to a strong ROIC. The company also implemented terms changes to its credit card products in response to regulatory actions and economic conditions.

Target's capital expenditures in 2009 were significantly lower than in 2008, reflecting a decrease in spending on new stores, remodels, and technology. However, the company continues to invest in its physical footprint, with capital expenditures including funds for stores set to open in future years and a substantial remodel program planned. The company also competes for suitable store locations and manages risks associated with new store development.