Target Presentation Slides

Target Corporation
Term Project
By: Maria Konstantidelis
Nguyen Le
Yalong Lai
ACC 503
Professor Pilato
Company History
Target Corporation began as the Dayton Dry
Goods Company in 1902 by James Dayton.
First Target store opened in 1962 in
Minnesota
Target recently celebrated its 50th
anniversary.
Company Timeline
Company Strategy
Where Style Meets Value
Cheap Chic Store
Expansion into Canada

4
Company Information
Company Information Contd

Three store types:
Sells national brands, owned brands and exclusive

brands.
Product Sales
Industry & Economic Analysis

Target is currently ranked third in the top
one hundred retailers, in sales.
Biggest competitor Walmart
Wal-Mart grew 2.6% from 2010 to 2011,

while Target saw an increase of 4.1%.
Risks
Quality Control & Reputation
Must remain relevant to guests and remain a
trustworthy brand.
Target brand is known as reliable and affordable and it
must preserve this image in its stores.
Workforce
Unionization of employees and managing the growing
work force. (365,000 employees)
Macroeconomic conditions.
Risks from its suppliers.
Competitors
Financial Analysis
Highlights
10
Financial Analysis
Highlights
Revenue in 2011 is $69,865 million, 3.7%
increased from the prior year
Cash flow for operation in 2011 is $5,435
million, an increase from 2010 but slight
decreased in comparison with that of 2009
Adjusted diluted earnings per share increased
14.3% to $4.41 in 2011 from $3.86 in 2010
Acquired leasehold interests in 189 Zellers
sites in Canada final net purchase price
$1,636 million
11
Financial Analysis
Income Statement
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
Final
Final
Final
Final
Final
Sales/Revenue
63,367.0
64,948.0
65,357.0
67,390.0
69,865.0
Cost of Goods Sold (COGS) incl. D&A
44,391.0
47,592.0
47,606.0
48,669.0
50,437.0
COGS excluding D&A
42,732.0
45,766.0
45,583.0
46,585.0
48,306.0
Depreciation & Amortization Expense
1,659.0
1,826.0
2,023.0
2,084.0
2,131.0
Depreciation
1,644.0
1,805.0
1,999.0
2,060.0
2,107.0
Amortization of Intangibles
15.0
21.0
24.0
24.0
24.0
Gross Income
18,976.0
17,356.0
17,751.0
18,721.0
19,428.0
SG&A Expense
13,704.0
12,954.0
13,078.0
13,469.0
14,106.0
EBIT (Operating Income)
5,272.0
4,402.0
4,673.0
5,252.0
5,322.0
Pretax Income
4,625.0
3,536.0
3,872.0
4,495.0
4,456.0
Income Taxes
1,776.0
1,322.0
1,384.0
1,575.0
1,527.0
Income Taxes - Current Domestic
1,846.0
1,231.0
1,020.0
1,130.0
1,156.0
Income Taxes - Deferred Domestic
-70.0
91.0
364.0
445.0
371.0
2,849.0
2,214.0
2,488.0
2,920.0
2,929.0
Target Corp.
Source: FactSet Fundamentals
Net Income
12
Financial Analysis
Sales & Revenue

TARGET Net Income vs. Competitors
million US dollar
18,000
16,081
16,000
14,000
12,000
10,000
8,000
5,454
6,000
4,000
2,849
2,214
2,488
2,920
2,929
Jan '10
Jan '11
Jan '12
2,000
0
Jan '08
Jan '09
Wall-mart
Industry
Gross Margin in Retail Industry

32.3%
28.4%
27.7%
24.4%
24.4%
12.4%
Target
Corp.
Wal-Mart
Home
Walgreen
Costco
Stores Inc. Depot Inc.
Co.
Wholesale
Corp.
Average
13
Financial Analysis
Balance Sheet
Target Corp.
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
Final
Final
Final
Final
Final
2,083.0
488.0
1,847.0
1,363.0
794.0
232.0
186.0
230.0
234.0
600.0
Total Short Term Investments
1,851.0
302.0
1,617.0
1,129.0
194.0
Total Accounts Receivable
9,018.0
9,129.0
8,235.0
7,424.0
6,927.0
Accounts Receivables, Gross
570.0
10,139.0
1,016.0
690.0
430.0
Bad Debt/Doubtful Accounts
-570.0
-1,010.0
-1,016.0
-690.0
-430.0
Inventories
6,780.0
6,705.0
7,179.0
7,596.0
7,918.0
Other Current Assets
1,025.0
1,166.0
1,163.0
830.0
810.0
Total Current Assets
18,906.0
17,488.0
18,424.0
17,213.0
16,449.0
Property, Plant & Equipment - Gross
31,982.0
34,816.0
35,765.0
37,048.0
41,531.0
Buildings
18,329.0
20,430.0
22,152.0
23,081.0
26,837.0
Land & Improvements
5,522.0
5,767.0
5,793.0
5,928.0
6,122.0
Construction in Progress
1,852.0
1,763.0
502.0
567.0
963.0
Computer Software and Equipment
2,421.0
2,586.0
2,575.0
2,533.0
2,468.0
Other Property, Plant & Equipment
3,858.0
4,270.0
4,743.0
4,939.0
5,141.0
Accumulated Depreciation
7,887.0
9,060.0
10,485.0
11,555.0
12,382.0
Total Investments and Advances
793.0
468.0
450.0
497.0
485.0
Other Long-Term Investments
793.0
468.0
450.0
497.0
485.0
Intangible Assets
79.0
89.0
104.0
107.0
118.0
Other Assets
687.0
305.0
275.0
395.0
429.0
Deferred Charges
523.0
143.0
135.0
116.0
124.0
Tangible Other Assets
164.0
162.0
140.0
279.0
305.0
44,560.0
44,106.0
44,533.0
43,705.0
46,630.0
in million US dollar
Assets
Cash & ST Investments
Cash Only
Total Assets
14
Financial Analysis
Balance Sheet
Target Corp.
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
Final
Final
Final
Final
Final
ST Debt & Curr. Portion LT Debt
2,552.0
1,262.0
1,696.0
119.0
3,786.0
Accounts Payable
6,133.0
6,337.0
6,511.0
6,625.0
6,857.0
111.0
430.0
490.0
144.0
257.0
2,986.0
2,483.0
2,630.0
3,182.0
3,387.0
in million US dollar
Liabilities & Shareholders' Equity
Income Tax Payable

Other Current Liabilities
Dividends Payable
0.0
120.0
127.0
176.0
202.0
891.0
903.0
1,122.0
1,079.0
1,062.0
Miscellaneous Current Liabilities
2,095.0
1,460.0
1,381.0
1,927.0
2,123.0
Total Current Liabilities
11,782.0
10,512.0
11,327.0
10,070.0
14,287.0
Long-Term Debt
15,126.0
17,490.0
15,118.0
15,607.0
13,697.0
Accrued Payroll
Provision for Risks & Charges
0.0
0.0
0.0
441.0
449.0
470.0
455.0
835.0
934.0
1,191.0
Other Liabilities
1,875.0
1,937.0
1,906.0
1,166.0
1,185.0
Other Liabilities (excl. Deferred Income)
Deferred Tax Liabilities
1,875.0
1,937.0
1,906.0
770.0
764.0
Deferred Income
--
--
--
396.0
421.0
Total Liabilities
29,253.0
30,394.0
29,186.0
28,218.0
30,809.0
Common Equity
15,307.0
13,712.0
15,347.0
15,487.0
15,821.0
68.0
63.0
62.0
59.0
56.0
Additional Paid-In Capital/Capital Surplus
2,656.0
2,762.0
2,919.0
3,311.0
3,487.0
Retained Earnings
12,761.0
11,443.0
12,947.0
12,698.0
12,959.0
-178.0
0.0
0.0
0.0
0.0
Other Appropriated Reserves
--
-556.0
-581.0
-581.0
-681.0
Total Shareholders' Equity
15,307.0
13,712.0
15,347.0
15,487.0
15,821.0
Total Equity
15,307.0
13,712.0
15,347.0
15,487.0
15,821.0
15
Liabilities & Shareholders' Equity
44,560.0
44,106.0
44,533.0
43,705.0
46,630.0
Common Stock Par/Carry Value
Unrealized Gain/Loss Marketable Securities
Financial Analysis
Operating Cash Flow

Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
Final
Final
Final
Final
Final
Net Income / Starting Line
2,849.0
2,214.0
2,488.0
2,920.0
2,929.0
Depreciation, Depletion & Amortization
1,659.0
1,826.0
2,023.0
2,084.0
2,131.0
Deferred Taxes & Investment Tax Credit
-70.0
91.0
364.0
445.0
371.0
Other Funds
634.0
1,738.0
1,488.0
492.0
266.0
Funds from Operations
5,072.0
5,869.0
6,363.0
5,941.0
5,697.0
Changes in Working Capital
-947.0
-1,439.0
-482.0
-670.0
-263.0
Net Operating Cash Flow
4,125.0
4,430.0
5,881.0
5,271.0
5,434.0
Target Corp. Operating Activities
16
Financial Analysis
Operating Cash Flow

Cash Flow Margin in Reail Industry '12
9.9%
8.0%
6.1%
6.6%
5.5%
3.4%
Target
Corp.
Wal-Mart
Home
Walgreen
Costco
Co.
Wholesale
Corp.
Average
Working Capital
5,253.0
3,145.0
Target Corp.
Wal-Mart
Stores Inc.
-11,702.0
Home Depot Inc.
4,069.0
Walgreen Co.
2,225.0
Costco Wholesale
Corp.
17
Financial Ratios
Short-term liquidity ratio

Current Ratio = Current assets / Current liabilities
1.60
1.66
1.63
1.71
1.55
1.31
1.15
0.83
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
5 Yr AVG Wall-mart Industry
Quick ratio = (Current assets inventory) / Current liabilities

1.03
1.03
0.99
0.96
0.60
0.92
0.232
Jan '08
Jan '10
Jan '12
0.51
Wall-mart
18
Financial Ratios
Short-term liquidity ratio
Accounts receivable turnover =
Accounts receivable turnover of Target in 2011 is 10.08 times, which is higher than
that of 2010 (9.0 times), meaning that for an average of 360/10.08 = 35.7 days, the
firm collects all its receivables. This ratio is either high or low depending on
companys policy.
Inventory Turnover
in Retail Industry '11
12.39
8.59
7.79
7.14
6.66
4.15
Target Corp.
Wal-Mart
Stores Inc.
Home Depot Walgreen Co.

Inc.
Costco
Wholesale
Corp.
Average
19
Financial Ratios
Solvency ratio
LT Debt/Total Assets (%)
39.7
33.9
33.9
35.7
34.5
29.4
23.3
18.3
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
5 Yr AVG Wall-mart Industry
Long-term debt to tangible asset =
This ratio of Target in 2011 is 29.7%, compared to 26.4% that of Wall-mart.

Target has higher long-term solvency risk than other competitors in retail industry
because it has quite high long-term debt to asset, which is 29.4 in 2011, compared
with 23.3 of Wall-mart and the average 18.3 of main competitors. However, in
general, Target is doing better since it managed to decrease this ratio in the last 5
years. Targets long-term debt is rated A+ by Standard and Poors.
20
Financial Ratios
Solvency ratio
Interest coverage =
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
Final
Final
Final
Final
Final
5,272.0
4,402.0
4,673.0
5,252.0
5,322.0
Interest Expense
669.0
965.0
804.0
811.0
910.0
Interest Coverage
7.88
4.56
5.81
6.48
5.85
Target Corp.
EBIT
Operating cash flow to total liabilities =
In 2011, this CFO is $5,434, increased from $5,271 in 2010.

And the ratio remained over the years at 0.3x.
21
Financial Ratios
Profitability ratio
Net Margin (%)
4.0
4.2
4.3
3.8
4.5
3.4
Return on Assets (%)

5 Yr AVGJan '12 Jan '11 Jan '10 Jan '09 Jan '08
5 Yr
AVG
6.6
5.6
Jan '11
Jan '10
6.5
6.1
Jan '12
5.0
Jan '09
7.0
Jan '08
Return on Equity (%)

17.7
18.7
5 Yr AVG Jan '12
18.9
Jan '11
17.1
Jan '10
18.4
15.3
Jan '09
Jan '08
22
Financial Ratios
Market Prospect ratio

Price / Earnings (x)
3.0
16.6
15.5
Jan '09
Jan '10
2.5
2.5
13.7
11.9
10.9
Jan '08
Price / Book Value (x)
Jan '11
2.1
1.7
Jan '12
Jan '08
Jan '09
Jan '10
Jan '11
Jan '12
Net Margin
in Retail Industry '11
24.0%
22.7%
17.2%
16.2%
12.9%
4.2%
Target Corp.
Wal-Mart
Stores Inc.
Home Depot Walgreen Co.

Inc.
Costco
Wholesale
Corp.
Average
23
Financial Ratios

Return on Assets
8.4%
7.0%
5.0%
Jan '08
Jan '09
5.6%
Jan '10
6.6%
6.5%
6.1%
Jan '11
Jan '12
5 Yr AVG
Wall-mart
7.9%
Industry
Return on Equity
18.4%
15.3%
Jan '08
Jan '09
17.1%
Jan '10
18.9%
Jan '11
24.0%
19.7%
19.0%
17.8%
Jan '12
5 Yr AVG
Wall-mart
Industry
24
Financial Ratios

Total Asset Turnover
2.66
2.36
1.59
Target
Corp.
3.47
2.35
1.66
Wal-Mart
Home
Walgreen
Co.
Costco
Wholesale
Corp.
Average
228,679
Market Value
93,642
40,906
30,361
1,382
Target
Corp.
Wal-Mart
Home
Walgreen
Co.
Costco
Wholesale
Corp.
25
Financial Ratios

Company Name
Price
Market
Enterprise
Cash &
Value
Value
Investments
Total Debt
Target Corp.
62.50
40,906.3
57,855.3
1,565.0
18,514.0
Costco Wholesale Corp.
95.69
41,378.7
38,063.7
4,854.0
1,382.0
Wal-Mart Stores Inc.
68.03 228,679.0 280,150.0
8,015.0
54,623.0
Home Depot Inc.
62.12
93,642.3
101,637.3
2,810.0
10,805.0
Walgreen Co.
32.16
30,360.8
34,455.8
1,297.0
5,392.0
Best Buy Co. Inc.
13.75
4,629.2
6,411.2
1,040.0
2,226.0
26
Conclusion
The above findings indicate that Target Corp. is a safe investment with
moderate industry growth
Target is performing well in the industry with most of the ratios are
close to industrys average. It is not easy to perform outstanding in the
crowded discount retail industry, but in comparison with the main
competitor Walmart, Target still does well to be stay comparable with
good liquidity ratios; net income and operating cash flow are positive
and increasing year by year. The company is solid and has strong
results for shareholders with annual revenues of about $70 billion.
Since Target is a top-notch operation with differentiated marketing and
financial strategy focusing on high-quality brands, creating longterm shareholder value to ensure liquidity and access to capital market
which is very promising, Target should be a core stock in your
27
portfolio.
Questions?
28

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Target Corporation

By: Maria Konstantidelis

Expansion into Canada

Company Information Contd

Sells national brands, owned brands and exclusive

Industry & Economic Analysis

Wal-Mart grew 2.6% from 2010 to 2011,

Cost of Goods Sold (COGS) incl. D&A

COGS excluding D&A

Depreciation & Amortization Expense

EBIT (Operating Income)

Income Taxes - Current Domestic

Income Taxes - Deferred Domestic

Source: FactSet Fundamentals

Sales & Revenue

Gross Margin in Retail Industry

Source: FactSet Fundamentals

Total Short Term Investments

Total Accounts Receivable

Accounts Receivables, Gross

Bad Debt/Doubtful Accounts

Other Current Assets

Total Current Assets

Property, Plant & Equipment - Gross

Land & Improvements

Computer Software and Equipment

Other Property, Plant & Equipment

Total Investments and Advances

Other Long-Term Investments

Tangible Other Assets

Source: FactSet Fundamentals

ST Debt & Curr. Portion LT Debt

Income Tax Payable

Miscellaneous Current Liabilities

Total Current Liabilities

Provision for Risks & Charges

Other Liabilities (excl. Deferred Income)

Source: FactSet Fundamentals

Deferred Tax Liabilities

Additional Paid-In Capital/Capital Surplus

Other Appropriated Reserves

Total Shareholders' Equity

Liabilities & Shareholders' Equity

Common Stock Par/Carry Value

Unrealized Gain/Loss Marketable Securities

Operating Cash Flow

Net Income / Starting Line

Depreciation, Depletion & Amortization

Deferred Taxes & Investment Tax Credit

Funds from Operations

Changes in Working Capital

Net Operating Cash Flow

Target Corp. Operating Activities

Source: FactSet Fundamentals

Operating Cash Flow

Source: FactSet Fundamentals

Home Depot Inc.

Short-term liquidity ratio

5 Yr AVG Wall-mart Industry

Quick ratio = (Current assets inventory) / Current liabilities

Source: FactSet Fundamentals

Short-term liquidity ratio