TARGET CORP Quarterly Report for Q3 Ended Oct 29, 2011

Summary

Target Corporation reported solid results for the third quarter of fiscal year 2011, with consolidated revenues increasing by 5.1% to $16.4 billion. Net earnings rose to $555 million, or $0.82 per diluted share, from $535 million, or $0.74 per diluted share, in the same period last year. The company saw growth in its U.S. Retail Segment, driven by a 4.3% increase in comparable-store sales and favorable Selling, General, and Administrative (SG&A) expense rates. The U.S. Credit Card Segment also showed improvement, with declining bad debt expense contributing to increased segment profit. Looking ahead, Target is preparing for its expansion into Canada, having secured leasehold interests for up to 220 Zellers locations and planning to open 125 to 135 stores primarily in 2013. The company also announced its intention to sell its credit card receivables portfolio, contingent on favorable strategic and financial conditions. Management expressed confidence in the company's liquidity and ability to fund anticipated expansion and strategic initiatives.

Key Highlights

• 1Consolidated revenues increased by 5.1% to $16.4 billion in Q3 FY2011.
• 2Diluted earnings per share (EPS) grew to $0.82, a 10.2% increase year-over-year.
• 3U.S. Retail Segment comparable-store sales increased by 4.3%, with a 5.4% rise in segment sales.
• 4U.S. Credit Card Segment profit increased due to a significant reduction in bad debt expense.
• 5Target is actively pursuing the sale of its credit card receivables portfolio.
• 6The company is on track with its expansion into Canada, having acquired leasehold interests for future store locations.
• 7Inventory levels increased by 3.6% to support strategic initiatives and expanded retail square footage.

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