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Target Corp. Overview

Target Corp. Overview. Spring 2010 Capstone Class. Jan. 2009 Shareholder Letter. Elevated prominence of “Pay Less” Enhance one stop shopping Sharp focus on inventory management Intensified expense reduction Focused capital; 114 new stores (91 net) 8% stock repurchase

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Target Corp. Overview

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  1. Target Corp. Overview Spring 2010 Capstone Class

  2. Jan. 2009 Shareholder Letter • Elevated prominence of “Pay Less” • Enhance one stop shopping • Sharp focus on inventory management • Intensified expense reduction • Focused capital; 114 new stores (91 net) • 8% stock repurchase • Sold credit card receivables

  3. Jan. 2009 Shareholder LetterFuture Strategies • Invest in food offerings, drive greater frequency • Consolidating owned brand portfolio • Work with vendors to reduce costs • Open another 75 stores (60 net) • Maintain operational discipline

  4. WSJ Article Jan. 22, 2010 • Slowing new store growth, will pour $1 billion into remodeling • Emphasis on groceries • 8 quarters of profit decline until Q3 • Analyst concerns about retaining distinctive features • Will test small urban store concepts • International push coming for Canada, Mexico, and Latin America

  5. Financial Update

  6. Feb. 2010 Earnings Call • Q4 EPS $1.24 vs. $1.10 estimate • Jan. 2010 year EPS $3.30 • Remodel 340 stores, 100 in Q1 • Open 13 new stores • New P-fresh food layout

  7. Target Corp.

  8. Target Corp. Overview

  9. Target Corp.

  10. Cash Flow From Operations/CAPX

  11. Dividends and Stock Repurchases

  12. Net Income

  13. Diluted EPS

  14. Recent Target Stock Price

  15. Competitors

  16. Financial Comparisons What will more direct grocery competition with WMT do to margins??

  17. Target vs. Walmart Stock

  18. Customers, Groceries, and Technology

  19. Target Typical Guest Age: 41 Median income: $58,000 College educated: 43% Female: 76% Children at home: 40%

  20. Grocery Competitors Discount: Walmart, Costco, Sams, BJs, Aldi Traditional: Winn Dixie, Albertsons, Safeway High End: Publix, Whole Foods, Fresh Markets

  21. Grocery Margins

  22. Private Label Share of Grocery Source: Credit Suisse

  23. P-Fresh Food Layout

  24. Accepting New Technology Highly Receptive Less Receptive 20 30 40 50 60 70 80 Consumer Age

  25. Target Financial Forecast

  26. Forecasted Sales Growth Rates

  27. Forecasted Sales

  28. Forecasted Gross Margin %

  29. Forecasted Cash Flow From Operations/CAPX

  30. Forecasted Tax Rates

  31. Forecasted Net Income

  32. Forecasted Diluted EPS $4.24 $3.62

  33. Forecasted Growth Rates

  34. CAPX Example

  35. Team Research • Review forecast in excel file • Read Q4 analyst presentation • Read 2010 shareholder letter • Read 2010 annual report & 10-K • Visit Target and competitor stores • Talk to family and friends

  36. Target Corp. Overview Spring 2010 Capstone Class

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