01—Abstract
Summary
Summary of the 10-K/A filed March 18, 2010. Cited figures are marked; the original filing is the authoritative source.
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%a 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.
02—Key points
Key Highlights
- Retail Segment achieved record EBIT despite a 2.5% decline in comparable-store sales for FY2009.
- Credit Card Segment saw a significant increase in profit and a near doubling of return on invested capital.
- Strong cash flow from operations supported capital expenditures, debt repayment, and the resumption of share repurchases.
- Company is actively managing inventory and supply chain through various techniques.
- Target is investing in store remodels and technology to enhance guest experience.
- Seasonality impacts revenue and earnings, with the fourth quarter being the peak sales period.
- Significant risks include competition, changing consumer preferences, macroeconomic conditions, and supply chain disruptions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Target Corp kept $0.04.
- Revenue$65.36B100.0%
- Cost of revenue−$44.06B67.4%
- Gross profit$21.30B32.6%
- Operating costs−$16.72B25.6%
- Operating income$4.58B7.0%
- Interest, other & tax−$2.09B3.2%
- Net income$2.49B3.8%
Where FY2010 revenue went
$65.36B- Cost of revenue: $44.06B, 67% of revenue
- SG&A: $13.08B, 20% of revenue
- Net income: $2.49B, 3.8% of revenue
- Other operating costs: $3.64B, 5.6% of revenue
- Interest, other & tax: $2.09B, 3.2% of revenue
Kept 3.8% as net incomeNet income $2.49B · 3.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2010filed March 18, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $65.36B$64.95B | +0.6% |
| Cost of Revenue | $44.06B$44.16B | −0.2% |
| Gross Profit | $21.30B$20.79B | +2.4% |
| SG&A Expenses | $13.08B$12.95B | +1.0% |
| Operating Income | $4.58B— | — |
| Interest Expense | $801.00M$866.00M | −7.5% |
| Net Income | $2.49B$2.21B | +12.4% |
| EPS (Basic) | $3.31$2.87 | +15.3% |
| EPS (Diluted) | $3.30$2.86 | +15.4% |
| Shares Outstanding (Basic) | 752.00M770.40M | −2.4% |
| Shares Outstanding (Diluted) | 754.80M773.60M | −2.4% |
05—Questions
Frequently Asked Questions
What were the key financial performance drivers for Target in fiscal year 2009?
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.
What are the primary risks facing Target as outlined in the filing?
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.
How is Target managing its Credit Card Segment, and what are the key performance indicators?
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.
What is Target's strategy regarding store expansion and capital expenditures?
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.
06—Continue