Exhibit 99
FOR IMMEDIATE RELEASE
Contacts: | John Hulbert, Investors, (612) 761-6627 |
| Jenna Reck, Financial Media, (612) 761-5829 |
| Target Media Hotline, (612) 696-3400 |
Target Corporation Announces
Second Quarter 2011 Financial Results
Company Also Provides Third Quarter and Full-Year Earnings Guidance
MINNEAPOLIS (August 17, 2011) — Target Corporation (NYSE: TGT) today reported net earnings of $704 million for the quarter ended July 30, 2011, compared with $679 million in the quarter ended July 31, 2010. Earnings per share in the second quarter increased 11.5 percent to $1.03 from $0.92 in the same period a year ago. All earnings per share figures refer to diluted earnings per share.
“We’re very pleased with our second quarter financial results, which benefited from an acceleration in the pace of our comparable-store sales growth,” said Gregg Steinhafel, chairman, president, and chief executive officer of Target Corporation. “We continue to focus on strong execution of our strategy, preparing Target to perform well in a variety of economic environments.”
Earnings Guidance
The company currently expects third quarter diluted EPS of 70 to 75 cents, and full-year 2011 diluted EPS of $4.15 to $4.30.
— more —
U.S. Retail Segment Results
As the company first reported in its sales release on August 4, 2011, Target’s sales increased 5.1 percent in the second quarter to $15.9 billion in 2011 from $15.1 billion in 2010, due to a 3.9 percent increase in comparable-store sales and the contribution from new stores. Segment earnings before interest expense and income taxes (EBIT) were $1,147 million in the second quarter of 2011, an increase of 4.6 percent from $1,096 million in 2010.
Second quarter 2011 EBITDA and EBIT margin rates were 10.3 percent and 7.2 percent, respectively, compared with 10.5 percent and 7.2 percent in 2010. Second quarter gross margin rate declined to 31.6 percent in 2011 from 32.0 percent in 2010, due to the impact of the company’s integrated growth strategies. The company’s second quarter selling, general and administrative (SG&A) expense rate improved to 21.3 percent in 2011, compared with 21.5 percent in 2010.
U.S. Credit Card Segment Results
Second quarter average receivables decreased 12.4 percent to $6.2 billion in 2011 from $7.1 billion in 2010. Average receivables directly funded by Target decreased 19 percent in the second quarter to $2.4 billion from $3.0 billion in 2010.
Second quarter bad debt expense was $15 million in 2011, down from $138 million in 2010, driven by improved trends in key measures of risk. Segment profit for the quarter was $171 million, compared with $149 million in second quarter 2010. Annualized segment pre-tax return on invested capital was 28.5 percent in second quarter 2011, compared with 20.2 percent in 2010.
Canadian Segment Results
Consistent with prior guidance, second quarter 2011 EBIT was $(36) million due to start-up expenses and depreciation related to the company’s expected market entry in 2013.
Interest Expense and Taxes
Net interest expense for the quarter was $191 million, including $10 million of interest on capitalized leases related to Target’s Canadian market entry. Net interest expense was $185 million in second quarter 2010.
The company’s effective income tax rate was 36.5 percent in second quarter 2011, down from 37.2 percent in 2010.
Share Repurchase
In the second quarter 2011, the company repurchased approximately 14.3 million shares of its common stock at an average price of $48.11, for a total investment of $688 million. Year-to-date, the company has repurchased approximately 29.7 million shares of its common stock at an average price of $50.81, for a total investment of $1.5 billion.
Miscellaneous
Target Corporation will webcast its second quarter earnings conference call at 9:30 a.m. CDT today. Investors and the media are invited to listen to the call through the company’s website at www.target.com/investors (click on “Events + Presentations” and then “Archives + Webcasts”). A telephone replay of the call will be available beginning at approximately 11:30 a.m. CDT today through the end of business on August 19, 2011. The replay number is (800) 642-1687 (passcode: 20426383).
Statements in this release regarding expected sales, performance and earnings per share are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause the company’s actual results to differ materially. The most important risks and uncertainties are described in Item 1A of the company’s Form 10-K for the fiscal year ended January 29, 2011.
About Target
Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,762 stores in 49 states nationwide and at Target.com. In addition, the company operates a credit card segment that offers branded proprietary credit card products. Since 1946, Target has given 5 percent of its income through community grants and programs; today, that giving equals more than $3 million a week. For more information about Target’s commitment to corporate responsibility, visit Target.com/hereforgood.
For more information, visit Target.com/Pressroom.
# # #
TARGET CORPORATION
Consolidated Statements of Operations
|
| Three Months Ended |
|
|
| Six Months Ended |
|
|
| ||||||||
|
| July 30, |
| July 31, |
|
|
| July 30, |
| July 31, |
|
|
| ||||
(millions, except per share data) (unaudited) |
| 2011 |
| 2010 |
| Change |
| 2011 |
| 2010 |
| Change |
| ||||
Sales |
| $ | 15,895 |
| $ | 15,126 |
| 5.1 | % | $ | 31,475 |
| $ | 30,283 |
| 3.9 | % |
Credit card revenues |
| 345 |
| 406 |
| (15.0 | ) | 700 |
| 841 |
| (16.7 | ) | ||||
Total revenues |
| 16,240 |
| 15,532 |
| 4.6 |
| 32,175 |
| 31,124 |
| 3.4 |
| ||||
Cost of sales |
| 10,872 |
| 10,293 |
| 5.6 |
| 21,710 |
| 20,705 |
| 4.8 |
| ||||
Selling, general and administrative expenses |
| 3,473 |
| 3,263 |
| 6.4 |
| 6,705 |
| 6,405 |
| 4.7 |
| ||||
Credit card expenses |
| 86 |
| 214 |
| (59.8 | ) | 174 |
| 494 |
| (64.7 | ) | ||||
Depreciation and amortization |
| 509 |
| 496 |
| 2.7 |
| 1,022 |
| 1,012 |
| 1.0 |
| ||||
Earnings before interest expense and income taxes |
| 1,300 |
| 1,266 |
| 2.7 |
| 2,564 |
| 2,508 |
| 2.2 |
| ||||
Net interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Nonrecourse debt collateralized by credit card receivables |
| 18 |
| 21 |
| (14.5 | ) | 37 |
| 44 |
| (15.2 | ) | ||||
Other interest expense |
| 174 |
| 165 |
| 5.4 |
| 338 |
| 330 |
| 2.4 |
| ||||
Interest income |
| (1 | ) | (1 | ) | 32.7 |
| (1 | ) | (1 | ) | (7.9 | ) | ||||
Net interest expense |
| 191 |
| 185 |
| 3.1 |
| 374 |
| 373 |
| 0.4 |
| ||||
Earnings before income taxes |
| 1,109 |
| 1,081 |
| 2.6 |
| 2,190 |
| 2,135 |
| 2.6 |
| ||||
Provision for income taxes |
| 405 |
| 402 |
| 0.7 |
| 797 |
| 785 |
| 1.4 |
| ||||
Net earnings |
| $ | 704 |
| $ | 679 |
| 3.7 | % | $ | 1,393 |
| $ | 1,350 |
| 3.2 | % |
Basic earnings per share |
| $ | 1.03 |
| $ | 0.93 |
| 11.4 | % | $ | 2.03 |
| $ | 1.84 |
| 10.5 | % |
Diluted earnings per share |
| $ | 1.03 |
| $ | 0.92 |
| 11.5 | % | $ | 2.02 |
| $ | 1.82 |
| 10.7 | % |
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| 680.8 |
| 731.1 |
|
|
| 686.7 |
| 735.5 |
|
|
| ||||
Diluted |
| 685.1 |
| 736.6 |
|
|
| 691.2 |
| 741.1 |
|
|
|
Subject to reclassification
TARGET CORPORATION
Consolidated Statements of Financial Position
|
| July 30, |
| January 29, |
| July 31, |
| |||
(millions) |
| 2011 |
| 2011 |
| 2010 |
| |||
|
| (unaudited) |
|
|
| (unaudited) |
| |||
Assets |
|
|
|
|
|
|
| |||
Cash and cash equivalents, including marketable securities of $116, $1,129 and $972 |
| $ | 890 |
| $ | 1,712 |
| $ | 1,540 |
|
Credit card receivables, net of allowance of $480, $690 and $851 |
| 5,722 |
| 6,153 |
| 6,137 |
| |||
Inventory |
| 7,926 |
| 7,596 |
| 7,728 |
| |||
Other current assets |
| 1,521 |
| 1,752 |
| 1,840 |
| |||
Total current assets |
| 16,059 |
| 17,213 |
| 17,245 |
| |||
Property and equipment |
|
|
|
|
|
|
| |||
Land |
| 5,999 |
| 5,928 |
| 5,845 |
| |||
Buildings and improvements |
| 26,092 |
| 23,081 |
| 22,568 |
| |||
Fixtures and equipment |
| 4,906 |
| 4,939 |
| 4,602 |
| |||
Computer hardware and software |
| 2,392 |
| 2,533 |
| 2,432 |
| |||
Construction-in-progress |
| 571 |
| 567 |
| 772 |
| |||
Accumulated depreciation |
| (11,587 | ) | (11,555 | ) | (10,818 | ) | |||
Property and equipment, net |
| 28,373 |
| 25,493 |
| 25,401 |
| |||
Other noncurrent assets |
| 1,067 |
| 999 |
| 1,009 |
| |||
Total assets |
| $ | 45,499 |
| $ | 43,705 |
| $ | 43,655 |
|
Liabilities and shareholders’ investment |
|
|
|
|
|
|
| |||
Accounts payable |
| $ | 6,519 |
| $ | 6,625 |
| $ | 6,228 |
|
Accrued and other current liabilities |
| 3,721 |
| 3,326 |
| 3,057 |
| |||
Unsecured debt and other borrowings |
| 1,130 |
| 119 |
| 782 |
| |||
Nonrecourse debt collateralized by credit card receivables |
| 250 |
| — |
| 33 |
| |||
Total current liabilities |
| 11,620 |
| 10,070 |
| 10,100 |
| |||
Unsecured debt and other borrowings |
| 12,661 |
| 11,653 |
| 11,693 |
| |||
Nonrecourse debt collateralized by credit card receivables |
| 3,499 |
| 3,954 |
| 4,044 |
| |||
Deferred income taxes |
| 969 |
| 934 |
| 740 |
| |||
Other noncurrent liabilities |
| 1,644 |
| 1,607 |
| 1,810 |
| |||
Total noncurrent liabilities |
| 18,773 |
| 18,148 |
| 18,287 |
| |||
Shareholders’ investment |
|
|
|
|
|
|
| |||
Common stock |
| 56 |
| 59 |
| 60 |
| |||
Additional paid-in capital |
| 3,385 |
| 3,311 |
| 3,085 |
| |||
Retained earnings |
| 12,213 |
| 12,698 |
| 12,690 |
| |||
Accumulated other comprehensive loss |
| (548 | ) | (581 | ) | (567 | ) | |||
Total shareholders’ investment |
| 15,106 |
| 15,487 |
| 15,268 |
| |||
Total liabilities and shareholders’ investment |
| $ | 45,499 |
| $ | 43,705 |
| $ | 43,655 |
|
Common shares outstanding |
| 675.2 |
| 704.0 |
| 722.6 |
|
Subject to reclassification
TARGET CORPORATION
Consolidated Statements of Cash Flows
|
| Six Months Ended |
| ||||
|
| July 30, |
| July 31, |
| ||
(millions) (unaudited) |
| 2011 |
| 2010 |
| ||
Operating activities |
|
|
|
|
| ||
Net earnings |
| $ | 1,393 |
| $ | 1,350 |
|
Reconciliation to cash flow |
|
|
|
|
| ||
Depreciation and amortization |
| 1,022 |
| 1,012 |
| ||
Share-based compensation expense |
| 44 |
| 52 |
| ||
Deferred income taxes |
| 122 |
| 148 |
| ||
Bad debt expense |
| 27 |
| 335 |
| ||
Non-cash (gains)/losses and other, net |
| 62 |
| (39 | ) | ||
Changes in operating accounts: |
|
|
|
|
| ||
Accounts receivable originated at Target |
| 143 |
| 241 |
| ||
Inventory |
| (330 | ) | (549 | ) | ||
Other current assets |
| 80 |
| 5 |
| ||
Other noncurrent assets |
| 16 |
| (118 | ) | ||
Accounts payable |
| (119 | ) | (283 | ) | ||
Accrued and other current liabilities |
| (129 | ) | (247 | ) | ||
Other noncurrent liabilities |
| 5 |
| (79 | ) | ||
Cash flow provided by operations |
| 2,336 |
| 1,828 |
| ||
Investing activities |
|
|
|
|
| ||
Expenditures for property and equipment |
| (2,379 | ) | (991 | ) | ||
Proceeds from disposal of property and equipment |
| 2 |
| 32 |
| ||
Change in accounts receivable originated at third parties |
| 261 |
| 254 |
| ||
Other investments |
| (19 | ) | (20 | ) | ||
Cash flow required for investing activities |
| (2,135 | ) | (725 | ) | ||
Financing activities |
|
|
|
|
| ||
Additions to long-term debt |
| 1,000 |
| 997 |
| ||
Reductions of long-term debt |
| (238 | ) | (1,339 | ) | ||
Dividends paid |
| (346 | ) | (252 | ) | ||
Repurchase of stock |
| (1,493 | ) | (1,285 | ) | ||
Stock option exercises and related tax benefit |
| 34 |
| 116 |
| ||
Other |
| 20 |
| — |
| ||
Cash flow required for financing activities |
| (1,023 | ) | (1,763 | ) | ||
Net decrease in cash and cash equivalents |
| (822 | ) | (660 | ) | ||
Cash and cash equivalents at beginning of period |
| 1,712 |
| 2,200 |
| ||
Cash and cash equivalents at end of period |
| $ | 890 |
| $ | 1,540 |
|
Subject to reclassification
TARGET CORPORATION
U.S. Retail Segment
|
| Three Months Ended |
|
| Six Months Ended |
|
|
| |||||||||
U.S. Retail Segment Results |
| July 30, |
| July 31, |
|
|
| July 30, |
| July 31, |
|
|
| ||||
(millions) (unaudited) |
| 2011 |
| 2010 |
| Change |
| 2011 |
| 2010 |
| Change |
| ||||
Sales |
| $ | 15,895 |
| $ | 15,126 |
| 5.1 | % | $ | 31,475 |
| $ | 30,283 |
| 3.9 | % |
Cost of sales |
| 10,872 |
| 10,293 |
| 5.6 |
| 21,710 |
| 20,705 |
| 4.8 |
| ||||
Gross margin |
| 5,023 |
| 4,833 |
| 3.9 |
| 9,765 |
| 9,578 |
| 1.9 |
| ||||
SG&A expenses(a) |
| 3,382 |
| 3,246 |
| 4.2 |
| 6,554 |
| 6,370 |
| 2.9 |
| ||||
EBITDA |
| 1,641 |
| 1,587 |
| 3.4 |
| 3,211 |
| 3,208 |
| 0.1 |
| ||||
Depreciation and amortization |
| 494 |
| 491 |
| 0.7 |
| 1,002 |
| 1,003 |
| (0.1 | ) | ||||
EBIT |
| $ | 1,147 |
| $ | 1,096 |
| 4.6 | % | $ | 2,209 |
| $ | 2,205 |
| 0.2 | % |
EBITDA is earnings before interest expense, income taxes, depreciation and amortization.
EBIT is earnings before interest expense and income taxes.
(a) Loyalty Program discounts are recorded as reductions to sales in our U.S. Retail Segment. Effective with the October 2010 nationwide launch of our new 5% REDcard Rewards loyalty program, we changed the formula under which our U.S. Credit Card segment reimburses our U.S. Retail Segment to better align with the attributes of the new program. In the three and six months ended July 30, 2011, these reimbursed amounts were $66 million and $115 million, respectively, compared with $17 million and $34 million in the corresponding periods in 2010. In all periods these amounts were recorded as reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing expenses within the U.S. Credit Card Segment.
|
| Three Months Ended |
| Six Months Ended |
| ||||
U.S. Retail Segment Rate Analysis |
| July 30, |
| July 31, |
| July 30, |
| July 31, |
|
(unaudited) |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
|
Gross margin rate |
| 31.6 | % | 32.0 | % | 31.0 | % | 31.6 | % |
SG&A expense rate |
| 21.3 | % | 21.5 | % | 20.8 | % | 21.0 | % |
EBITDA margin rate |
| 10.3 | % | 10.5 | % | 10.2 | % | 10.6 | % |
Depreciation and amortization expense rate |
| 3.1 | % | 3.2 | % | 3.2 | % | 3.3 | % |
EBIT margin rate |
| 7.2 | % | 7.2 | % | 7.0 | % | 7.3 | % |
U.S. Retail Segment rate analysis metrics are computed by dividing the applicable amount by sales.
|
| Three Months Ended |
| Six Months Ended |
| ||||
Comparable-Store Sales |
| July 30, |
| July 31, |
| July 30, |
| July 31, |
|
(unaudited) |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
|
Comparable-store sales change |
| 3.9 | % | 1.7 | % | 2.9 | % | 2.2 | % |
Drivers of changes in comparable-store sales: |
|
|
|
|
|
|
|
|
|
Number of transactions |
| 0.5 | % | 2.4 | % | 0.4 | % | 2.3 | % |
Average transaction amount |
| 3.5 | % | (0.8 | )% | 2.6 | % | (0.1 | )% |
Units per transaction |
| 1.8 | % | 2.0 | % | 3.1 | % | 1.6 | % |
Selling price per unit |
| 1.7 | % | (2.7 | )% | (0.5 | )% | (1.7 | )% |
The comparable-store sales increases or decreases above are calculated by comparing sales in fiscal year periods with comparable prior year periods of equivalent length.
|
| Three Months Ended |
| Six Months Ended |
| ||||
REDcard Penetration |
| July 30, |
| July 31, |
| July 30, |
| July 31, |
|
(unaudited) |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
|
Target Credit Cards |
| 6.6 | % | 4.7 | % | 6.2 | % | 4.5 | % |
Target Debit Cards |
| 2.1 | % | 0.5 | % | 1.9 | % | 0.5 | % |
Total Store REDcard Penetration |
| 8.7 | % | 5.2 | % | 8.1 | % | 5.0 | % |
Represents the percentage of Target store sales that are paid for using REDcards.
|
| Number of Stores |
| Retail Square Feet(a) |
| ||||||||
Number of Stores and Retail Square Feet |
| July 30, |
| January 29, |
| July 31, |
| July 30, |
| January 29, |
| July 31, |
|
(unaudited) |
| 2011 |
| 2011 |
| 2010 |
| 2011 |
| 2011 |
| 2010 |
|
Target general merchandise stores |
| 774 |
| 1,037 |
| 1,169 |
| 93,699 |
| 127,292 |
| 144,926 |
|
Expanded food assortment |
| 736 |
| 462 |
| 323 |
| 97,058 |
| 61,823 |
| 43,046 |
|
SuperTarget stores |
| 252 |
| 251 |
| 251 |
| 44,681 |
| 44,503 |
| 44,503 |
|
Total |
| 1,762 |
| 1,750 |
| 1,743 |
| 235,438 |
| 233,618 |
| 232,475 |
|
(a) In thousands; reflects total square feet, less office, distribution center and vacant space.
Subject to reclassification
TARGET CORPORATION
U.S. Credit Card Segment
|
| Three Months Ended |
| Three Months Ended |
| Six Months Ended |
| Six Months Ended |
| ||||||||||||
|
| July 30, 2011 |
| July 31, 2010 |
| July 30, 2011 |
| July 31, 2010 |
| ||||||||||||
U.S. Credit Card Segment Results |
| Amount |
| Annualized |
| Amount |
| Annualized |
| Amount |
| Annualized |
| Amount |
| Annualized |
| ||||
(millions) (unaudited) |
| (in millions) |
| Rate(d) |
| (in millions) |
| Rate(d) |
| (in millions) |
| Rate(d) |
| (in millions) |
| Rate(d) |
| ||||
Finance charge revenue |
| $ | 278 |
| 17.9 | % | $ | 324 |
| 18.3 | % | $ | 570 |
| 18.0 | % | $ | 674 |
| 18.4 | % |
Late fees and other revenue |
| 44 |
| 2.8 |
| 54 |
| 3.0 |
| 86 |
| 2.7 |
| 113 |
| 3.1 |
| ||||
Third party merchant fees |
| 23 |
| 1.5 |
| 28 |
| 1.6 |
| 44 |
| 1.4 |
| 54 |
| 1.5 |
| ||||
Total revenues |
| 345 |
| 22.2 |
| 406 |
| 22.9 |
| 700 |
| 22.1 |
| 841 |
| 23.0 |
| ||||
Bad debt expense |
| 15 |
| 1.0 |
| 138 |
| 7.8 |
| 27 |
| 0.9 |
| 335 |
| 9.2 |
| ||||
Operations and marketing expenses(a) |
| 137 |
| 8.8 |
| 93 |
| 5.2 |
| 262 |
| 8.3 |
| 193 |
| 5.3 |
| ||||
Depreciation and amortization |
| 4 |
| 0.3 |
| 5 |
| 0.3 |
| 9 |
| 0.3 |
| 9 |
| 0.2 |
| ||||
Total expenses |
| 156 |
| 10.0 |
| 236 |
| 13.3 |
| 298 |
| 9.4 |
| 537 |
| 14.7 |
| ||||
EBIT |
| 189 |
| 12.2 |
| 170 |
| 9.6 |
| 402 |
| 12.7 |
| 304 |
| 8.3 |
| ||||
Interest expense on nonrecourse debt collateralized by credit card receivables |
| 18 |
|
|
| 21 |
|
|
| 37 |
|
|
| 44 |
|
|
| ||||
Segment profit |
| $ | 171 |
|
|
| $ | 149 |
|
|
| $ | 365 |
|
|
| $ | 260 |
|
|
|
Average gross credit card receivables funded by Target(b) |
| $ | 2,398 |
|
|
| $ | 2,950 |
|
|
| $ | 2,451 |
|
|
| $ | 2,656 |
|
|
|
Segment pretax ROIC(c) |
| 28.5 | % |
|
| 20.2 | % |
|
| 29.7 | % |
|
| 19.6 | % |
|
|
(a) Loyalty Program discounts are recorded as reductions to sales in our U.S. Retail Segment. Effective with the October 2010 nationwide launch of our new 5% REDcard Rewards loyalty program, we changed the formula under which our U.S. Credit Card segment reimburses our U.S. Retail Segment to better align with the attributes of the new program. In the three and six months ended July 30, 2011, these reimbursed amounts were $66 million and $115 million, respectively, compared with $17 million and $34 million in the corresponding periods in 2010. In all periods these amounts were recorded as reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing expenses within the U.S. Credit Card Segment.
(b) Amounts represent the portion of average gross credit card receivables funded by Target. These amounts exclude $3,817 million and $3,888 million for the three and six months ended July 30, 2011, respectively, and $4,148 million and $4,667 million for the three and six months ended July 31, 2010, respectively, of receivables funded by nonrecourse debt collateralized by credit card receivables.
(c) ROIC is return on invested capital, and this rate equals our segment profit divided by average gross credit card receivables funded by Target, expressed as an annualized rate.
(d) As an annualized percentage of average gross credit card receivables.
|
| Three Months Ended |
| Three Months Ended |
| Six Months Ended |
| Six Months Ended |
| ||||||||||||
|
| July 30, 2011 |
| July 31, 2010 |
| July 30, 2011 |
| July 31, 2010 |
| ||||||||||||
|
| Yield |
| Yield |
| Yield |
| Yield |
| ||||||||||||
Spread Analysis - Total Portfolio |
| Amount |
| Annualized |
| Amount |
| Annualized |
| Amount |
| Annualized |
| Amount |
| Annualized |
| ||||
(unaudited) |
| (in millions) |
| Rate |
| (in millions) |
| Rate |
| (in millions) |
| Rate |
| (in millions) |
| Rate |
| ||||
EBIT |
| $ | 189 |
| 12.2 | %(c) | $ | 170 |
| 9.6 | %(c) | $ | 402 |
| 12.7 | %(c) | $ | 304 |
| 8.3 | %(c) |
LIBOR(a) |
|
|
| 0.2 | % |
|
| 0.3 | % |
|
| 0.2 | % |
|
| 0.3 | % | ||||
Spread to LIBOR(b) |
| $ | 186 |
| 12.0 | %(c) | $ | 164 |
| 9.3 | %(c) | $ | 395 |
| 12.5 | %(c) | $ | 293 |
| 8.0 | %(c) |
(a) Balance-weighted average one-month LIBOR.
(b) Spread to LIBOR is a metric used to analyze the performance of our total credit card portfolio because the vast majority of our portfolio earns finance charge revenue at rates tied to the Prime Rate, and the interest rate on all nonrecourse debt securitized by credit card receivables is tied to LIBOR.
(c) As a percentage of average gross credit card receivables.
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| Three Months Ended |
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| Six Months Ended |
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Receivables Rollforward Analysis |
| July 30, |
| July 31, |
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| July 30, |
| July 31, |
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(millions) (unaudited) |
| 2011 |
| 2010 |
| Change |
| 2011 |
| 2010 |
| Change |
| ||||
Beginning gross credit card receivables |
| $ | 6,286 |
| $ | 7,260 |
| (13.4 | )% | $ | 6,843 |
| $ | 7,982 |
| (14.3 | )% |
Charges at Target |
| 1,140 |
| 765 |
| 49.1 |
| 2,143 |
| 1,484 |
| 44.4 |
| ||||
Charges at third parties |
| 1,353 |
| 1,522 |
| (11.1 | ) | 2,603 |
| 2,948 |
| (11.7 | ) | ||||
Payments |
| (2,792 | ) | (2,717 | ) | 2.8 |
| (5,793 | ) | (5,706 | ) | 1.5 |
| ||||
Other |
| 215 |
| 158 |
| 36.7 |
| 406 |
| 280 |
| 45.2 |
| ||||
Period-end gross credit card receivables |
| $ | 6,202 |
| $ | 6,988 |
| (11.2 | )% | $ | 6,202 |
| $ | 6,988 |
| (11.2 | )% |
Average gross credit card receivables |
| $ | 6,215 |
| $ | 7,098 |
| (12.4 | )% | $ | 6,339 |
| $ | 7,323 |
| (13.4 | )% |
Accounts with three or more payments (60+ days) past due as a percentage of period-end gross credit card receivables |
| 3.0 | % | 5.0 | % |
|
| 3.0 | % | 5.0 | % |
|
| ||||
Accounts with four or more payments (90+ days) past due as a percentage of period-end gross credit card receivables |
| 2.1 | % | 3.5 | % |
|
| 2.1 | % | 3.5 | % |
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| Three Months Ended |
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| Six Months Ended |
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Allowance for Doubtful Accounts |
| July 30, |
| July 31, |
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| July 30, |
| July 31, |
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(millions) (unaudited) |
| 2011 |
| 2010 |
| Change |
| 2011 |
| 2010 |
| Change |
| ||||
Allowance at beginning of period |
| $ | 565 |
| $ | 930 |
| (39.2 | )% | $ | 690 |
| $ | 1,016 |
| (32.1 | )% |
Bad debt expense |
| 15 |
| 138 |
| (89.1 | ) | 27 |
| 335 |
| (91.9 | ) | ||||
Write-offs(a) |
| (142 | ) | (256 | ) | (44.4 | ) | (326 | ) | (573 | ) | (43.1 | ) | ||||
Recoveries(a) |
| 42 |
| 39 |
| 7.2 |
| 89 |
| 73 |
| 21.0 |
| ||||
Allowance at end of period |
| $ | 480 |
| $ | 851 |
| (43.7 | )% | $ | 480 |
| $ | 851 |
| (43.7 | )% |
As a percentage of period-end gross credit card receivables |
| 7.7 | % | 12.2 | % |
|
| 7.7 | % | 12.2 | % |
|
| ||||
Net write-offs as a percentage of average gross credit card receivables (annualized) |
| 6.5 | % | 12.2 | % |
|
| 7.5 | % | 13.7 | % |
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(a) Write-offs include the principal amount of losses (excluding accrued and unpaid finance charges), and recoveries include current period principal collections on previously written-off balances. These amounts combined represent net write-offs.
Subject to reclassification
TARGET CORPORATION
Canadian Segment
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| Three Months Ended |
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| Six Months Ended |
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Canadian Segment Results |
| July 30, |
| July 31, |
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| July 30, |
| July 31, |
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(millions) (unaudited) |
| 2011 |
| 2010 |
| Change |
| 2011 |
| 2010 |
| Change |
| ||||
Sales |
| $ | — |
| $ | — |
| — | % | $ | — |
| $ | — |
| — | % |
Cost of sales |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||
Gross margin |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||
SG&A expenses(a) |
| 25 |
| — |
| 100.0 |
| 36 |
| — |
| 100.0 |
| ||||
EBITDA |
| (25 | ) | — |
| 100.0 |
| (36 | ) | — |
| 100.0 |
| ||||
Depreciation and amortization(b) |
| 11 |
| — |
| 100.0 |
| 11 |
| — |
| 100.0 |
| ||||
EBIT |
| $ | (36 | ) | $ | — |
| 100.0 | % | $ | (47 | ) | $ | — |
| 100.0 | % |
(a) SG&A expenses include our Canadian Segment start-up costs. These costs consisted primarily of legal, payroll, and consulting expenses.
(b) Depreciation and amortization result from depreciation of capital lease assets and leasehold interests acquired in our Zellers asset purchase. For the three and six months ended July 30, 2011, the lease payment obligation also gave rise to $10 million of interest expense, recorded in our consolidated statements of operations.
EBITDA is earnings before interest expense, income taxes, depreciation and amortization.
EBIT is earnings before interest expense and income taxes.
Subject to reclassification