Target Corporation Company Profile

Purveyor of all that is cheap, yet chic, Target Corp. is the US's #2 discount chain (behind Wal-Mart). The fashion-forward discounter operates some 1,925 Target and SuperTarget stores across North America, as well as an online business at Target and its larger grocery-carrying incarnation, SuperTarget, have carved out a niche by offering more upscale, trend-driven merchandise than rivals Wal-Mart and Kmart. Target also issues its proprietary Target credit card, good only at Target. The company is growing its grocery business, aggressively remodeling and expanding stores, and entered the Canadian market in 2013; however, it has struggled there and endured a high-profile data breach in 2013. 

Geographic Reach

Canada, Target's first international market, accounts for about 2% of its total sales. The US accounts for the rest. (Target's biggest markets by total sales are California, Texas, and Florida.) The retailer opened about 125 locations in Canada in 2013 and aims to have 200 stores there by 2015. The chain has 40 distribution centers (37 in the US and three in Canada).


Following a reorganization on the heels of the sale of its US credit card business in March 2013, the retailer operates two reportable segments: US and Canadian. The US segment includes Target general merchandise stores and the larger grocery-carrying SuperTarget stores. Target also operates an online business in the US. The newly-formed Canadian segment was created as a result of Target's purchase of leasehold interests in Canada from now-defunct Zellers Inc. in 2011. 

An interesting, little-known sideline for Target is its business-to-business subsidiary, Target Commercial Interiors (TCI). TCI operates about a half-dozen showrooms in Illinois, Minnesota, and Wisconsin that provide products and services for office environments. The interior design company, whose clients include some of America's largest companies, is attempting to expand its business by reaching out to small and midsized companies.

Sales and Marketing

Target Corp. spent $1.7 billion on advertising in fiscal 2014 (ended January), compared with $1.4 billion in fiscal 2013. Newspaper circulars, Internet ads, and media broadcast made up the majority of the company's advertising costs. The vast majority of its merchandise is distributed to Target stores through its network of 40 distribution centers.

Financial Performance

Target's retail sales declined 1% in fiscal 2014 (ended January) to $72.6 billion, compared with $73.3 billion the prior year. The modest decline was the result of trouble north and south of the US-Canada border. Target's fourth quarter US same-store sales (down 2.5%) swung from positive to negative following the announcement on December 19, 2013 of a massive data breach. For the year, Target's same-store sales fell 0.4% in fiscal 2014, compared with increases of 2.7% and 3% in fiscal 2013 and 2012, respectively. The sale of the company's US consumer credit card operation also had a negative impact on revenue in fiscal 2014,

Target rang up $1.3 billion in sales in Canada in fiscal 2014, its first year in the market. The company opened 124 stores during the year, with approximately 55% of the stores opened during the first half of the year, 20% during the third quarter, and the remaining 25% opening during the fourth quarter. While Target's entry into Canada is a long-term growth opportunity, in the short term start-up costs are a drain on profitability. Over the past two years start-up costs have totaled about $346 million. Indeed, net income declined 34% in fiscal 2014 versus the prior year, to just shy of $2 billion.

Capital expenditures increased in fiscal 2014 versus the prior year, to about $3.5 billion, the majority going to new stores, due to Canadian expenditures, partially offset by fewer remodels and new stores in the US. Cash flow from operation was $6.5 billion in fiscal 2014, versus $5.3 billion and $5.4 billion in fiscal 2013 and 2012, respectively.


Target was attracted to Canada's relatively-healthy retail market, which presents ample opportunity for growth. That's important for the chain which has faced falling and stagnant sales of apparel, electronics, and home furnishings and decor (historically strong suits for Target) since fiscal 2008. But sales of food and pet supplies and household essentials have risen as cash-strapped consumers stick to the basics. To capitalize on the new frugality, Target has taken a page from archrival Wal-Mart's playbook and has opened new formats that devote more space to food, especially its house brands Archer Farms and Market Pantry, and other household basics. More than 1,200 Target stores now feature expanded food assortments, as do the company's 250 SuperTarget stores. In fiscal 2013, Target remodeled an additional 230 general merchandise Target stores to house expanded food assortments, including fresh produce. In 2012 Target launched a small-format CityTarget store in urban areas, including Seattle, Chicago, and Los Angeles, that sell food and general merchandise on a smaller scale than traditional supermarkets.

Target has been making efforts to combat increased pressure from online retailers (particularly Amazon) and adapt to "showrooming" (where customers browse items in stores, but use their smartphones to check prices and buy from cheaper, often online, sources). In 2012 it began offering free Wi-Fi in its stores; it is also experimenting with in-store pickup of online orders and in-store concierges offering tips, recommendations, and other enhanced customer services. In 2013 the company announced it would match Amazon's prices. Target is also working to improve its own online customer experience: It launched a pilot subscription program in 2013 called Target Subscriptions and established an innovation center in San Francisco to help grow its online and mobile business.

Another key to Target's strategy has been its proprietary credit and debit cards (REDcards, collectively), which encourage customer loyalty and drive sales. Use of the cards for store purchases more than doubled from fiscal 2010 (about 6%) to fiscal 2014 (nearly 20%). In late 2013, however, a data breach at the company resulted in the personal information of some 110 million customers -- including some 40 million credit and debit card accounts -- being compromised. Target has seen meaningfully weaker sales since the breach became public and cashiers temporarily stopped asking shoppers if they would like to participate in the REDcard program. In a bid to rescue its image and its business, Target has announced plans to invest some $5 million in new security measures and is offering guests a free year of credit monitoring and identity theft protection. It's also looking for a replacement for its chief information officer, who resigned. To boot, Target is facing more than 80 civil lawsuits filed on behalf of its customers, payment card issuing banks, and shareholders, as a result of the breach.

Mergers, Acquisitions, and Divestments

To grow its cooking and kitchenware business, Target in 2013 acquired CHEFS Catalog and the assets of in two separate transactions. CHEFS Catalog sells cookware, bakeware, cutlery, and kitchen tools from such brands as All-Clad, Cuisinart, KitchenAid, and others. operates branded online stores including the Food Network Store, Calphalon Store, and Rachel Ray Store.

In March 2013, Target sold its entire US consumer credit card portfolio to TD Bank Group for a recognized gain of $391 million. As a result, TD now underwrites, funds and owns Target's poprietary credit and debit cards (REDcards, collectively), and Target Visa.

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1000 Nicollet Mall
Minneapolis, MN 55403-2542
Phone: 1 (612) 304-6073
Fax: 1 (612) 761-5555


  • Employer Type: Public
  • Stock Symbol: TGT
  • Stock Exchange: NYSE
  • Chairman and CEO: Brian C. Cornell
  • EVP and CIO: Robert P. DeRodes
  • EVP and CFO: John J. Mulligan

Major Office Locations

  • Minneapolis, MN

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