Financial Analysis Paper for Target

2199 Words Nov 14th, 2010 9 Pages
Financial Analysis Paper Zeyuan Liu

Company Profile Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota. Target Corporation operates general merchandise and food discount stores in the United States. It operates as two reportable segments: Retail and Credit Card. The company offers household essentials, including electronics, music, and toys; apparel and accessories; home furnishings as well as seasonal merchandise. It also sells its merchandise under private-label brands, such as Archer Farms, etc. Target Corporation operates in-store amenities, such as Target Caféand Target Clinic as well. Its marketing strategy includes selling its products on its online shopping site Target.com and its network of
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18,727 12,838 5,889 1,808 4,081 $ $ 2007 61,471 42,929 18,542 12,557 5,985 1,643 4,342 Percent Change 2009/2008 0.9% (0.2) 3.5 1.2 8.4 11.0 7.3% 2008/2007 2.3% 2.9 1.0 2.2 (1.6) 10.1 (6.0)%

Credit Card Segment Results

Credit Card Segment Results Amount

2009

2008

2007

Amount Rate (d) (in millions) Rate (d)

Amount (in millions) Rate (d)

(in millions)

Finance charge revenue Late fees and other revenue Third party merchant fees 123 1.5 152 1.7 166 2.3 349 4.2 461 5.3 422 5.8 $ 1,450 17.4% $ 1,451 16.7% $ 1,308 18.0%

Total revenues

1,922

23.0

2,064

23.7

1,896

26.1

Bad debt expense Operations and marketing expenses (a) Depreciation and amortization

1,185

14.2

1,251

14.4

481

6.6

425

5.1

474

5.4

469

6.4

14

0.2

17

0.2

16

0.2

Total expenses

1,624

19.4

1,742

20.0

966

13.3

EBIT Interest expense on nonrecourse debt collateralized by credit card receivables

298

3.5

322

3.7

930

12.8

97

167

133

Segment profit

$

201

$

155

$

797

Average receivables funded by Target (b) Segment pretax ROIC (c) 7.0% 3.7% 16.3% $ 2,866 $ 4,192 $ 4,888

Segment Reporting
2009 Business Segment Results (millions) Retail Credit Card Total Retail Credit Card Total Retail Credit Card Total 2008 2007

Sales/Credit card revenues Cost of sales Bad debt expense (a) Selling, general and administrative/ Operations and marketing expenses

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