Target Reports Fourth Quarter and Fiscal 2012 Earnings

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Target Corporation Announces Fourth Quarter and Fiscal 2012 Earnings – Page 2 of 6 “We’re pleased with Target’s fourth quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty,” said Gregg Steinhafel, chairman, president, and chief executive officer of Target Corporation. “Outstanding discipline and execution by our team allowed us to achieve our full-year financial and strategic goals in 2012. We believe these results position us well to deliver on significant plans in 2013, including completion of the largest store opening program in our company’s history with 124 stores in Canada and additional Target and CityTarget locations in the U.S., investing in new processes and technology that will improve our guests’ multichannel experience and closing the sale of our credit card receivables.” Fiscal 2013 Earnings Guidance For fiscal 2013, the Company expects adjusted EPS of $4.85 to $5.05 and GAAP EPS of $4.70 to $4.90. The difference between the adjusted and GAAP EPS ranges reflects expected EPS dilution related to our Canadian Segment of approximately (45) cents, partially offset by expected accounting impacts of approximately 30 cents associated with the sale of Target’s entire consumer credit card receivables portfolio to TD Bank Group, which the Company now expects to close in first quarter 2013. In first quarter 2013, the Company expects adjusted EPS of $1.10 to $1.20 and GAAP EPS of $1.22 to $1.32. The difference between the adjusted and GAAP EPS ranges reflects expected EPS dilution related to our Canadian Segment of approximately (23) cents, more-than-offset by expected accounting impacts of approximately 35 cents associated with the sale of Target’s entire consumer credit card receivables portfolio to TD Bank Group. U.S. Retail Segment Results As previously reported, sales increased 6.8 percent to $22.4 billion in fourth quarter 2012 from $20.9 billion last year, reflecting a 0.4 percent increase in comparable-store sales combined with the contribution from new stores and one additional accounting week 1 . Segment earnings before interest expense and income taxes (EBIT) were $1,677 million in the fourth quarter of 2012, an increase of 3.2 percent from $1,625 million in 2011. – more –
Target Corporation Announces Fourth Quarter and Fiscal 2012 Earnings – Page 3 of 6 Fourth quarter EBITDA and EBIT margin rates were 9.8 percent and 7.5 percent, respectively, compared with 10.3 percent and 7.8 percent in 2011. Fourth quarter gross margin rate declined to 27.8 percent in 2012 from 28.4 percent in 2011, reflecting the impact of the Company’s integrated growth strategies combined with the impact of markdowns on seasonal merchandise. Fourth quarter selling, general and administrative (SG&A) expense rate was 18.0 percent in 2012, compared with 18.1 percent in 2011. Full-year 2012 sales increased 5.1 percent to $72.0 billion from $68.5 billion in 2011, reflecting a 2.7 percent increase in comparable-store sales combined with the contribution from new stores and one additional accounting week 1 . Full-year segment EBIT was $5,019 million in 2012, an increase of 5.3 percent from $4,765 million in 2011. Full-year 2012 EBITDA and EBIT margin rates were 9.8 percent and 7.0 percent, respectively, compared with 10.0 percent and 7.0 percent in 2011. Full-year gross margin rate was 29.7 percent in 2012, compared with 30.1 percent in 2011, reflecting the impact of the Company’s integrated growth strategies. Full-year SG&A expense rate was 19.9 percent in 2012, compared with 20.1 percent in 2011. 1 The three- and twelve-month periods ended February 2, 2013 were 14- and 53-week periods, respectively, compared with 13- and 52- week periods in 2011. The extra week has been excluded from the comparable-store sales calculation. U.S. Credit Card Segment Results 2 Fourth quarter average receivables decreased 4.6 percent to $6.1 billion in 2012 from $6.4 billion in 2011. Fourth quarter 2012 portfolio spread to LIBOR was $141 million, or 8.5 percent, compared with $111 million, or 6.9 percent, in 2011. Performance in fourth quarter 2012 reflected a $10 million reduction in the allowance for doubtful accounts, compared with a $1 million reduction in fourth quarter 2011. – more –
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Target Reports Fourth Quarter and Fiscal 2012 Earnings

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