20 Target Corporation

This spreadsheet supports the STUDENT analysis of the case,
"Target Corporation" (Case 20).
Copyright 2008 by the University of Virginia Darden School Foundation. All rights reserv
Revised 3.18.2010
Foundation. All rights reserved.
Timothy R. Baer
Michael R. Francis
John D. Griffith
Jodeen A. Kozlak
Troy H. Risch
Janet M. Schalk
Douglas A. Scovanner
Terrence J. Scully
Gregg W. Steinhafel
Robert J. Ulrich
Chairman and CEO Bob Ulrich, 62. Ulrich began his career at Dayton-Hudson as a merchandising traine
position of CEO of Target Stores in 1987 and to the position of Dayton-Hudsons CEO in 1994
EVP and CFO Doug Scovanner, 49. Scovanner was named Target CFO in February 2000 after previous
Hudson.
President of Target Stores Gregg Steinhafel, 50. Steinhafel began his career at Target as a merchandising
president in 1999.
EVP of Stores Troy Risch, 37. Risch was promoted to EVP in September 2006.
EVP of Property Development John Griffith, 44. Griffith was promoted to EVP in February 2005 from
president of Property Development he had held since February 2000.
Executive Officers and Capital Expenditure Committee Members
Executive Vice President, General Counsel, and Corporate Secretary

Executive Vice President, Marketing
Executive Vice President, Property Development
Executive Vice President, Human Resources
Executive Vice President, Stores
Executive Vice President, Technology Services and Chief Information Officer
Executive Vice President and Chief Financial Officer
President, Target Financial Services
President
Chairman and Chief Executive Officer
O Bob Ulrich, 62. Ulrich began his career at Dayton-Hudson as a merchandising trainee in 1967. He advanced to the
Target Stores in 1987 and to the position of Dayton-Hudsons CEO in 1994
g Scovanner, 49. Scovanner was named Target CFO in February 2000 after previously serving as CFO of Dayton-
Stores Gregg Steinhafel, 50. Steinhafel began his career at Target as a merchandising trainee in 1979. He was named
y Risch, 37. Risch was promoted to EVP in September 2006.
evelopment John Griffith, 44. Griffith was promoted to EVP in February 2005 from the position of senior vice
ty Development he had held since February 2000.
CEC
CEC
CEC
CEC
CEC
dvanced to the
FO of Dayton-
9. He was named
enior vice
Retail Company Financial Information
Revenue Basic Debt

($ billions) EPS ($ billions)
Bed Bath & Beyond Inc. $5.80 $1.95 $0.00

Best Buy Co., Inc. $30.80 $2.33 $0.60
Costco Wholesale Corp. $52.90 $2.24 $0.80
Dicks Sporting Goods, Inc. $2.60 $1.47 $0.20
J.CPenney Company, Inc. $18.80 $4.30 $3.50
Kohls Corporation $13.40 $2.45 $1.20
Sears Holdings Corporation $49.10 $5.63 $4.00
Wal-Mart Stores, Inc. $315.70 $2.68 $38.80
Target Corporation $52.60 $2.73 $9.90

Information
Market Capitalization
Debt Rating Fiscal Year as of Oct. 31, 2006
(S&P) Beta Ended ($ billions)
BBB 1.05 6-Feb $11.40

BBB 1.25 6-Feb $26.20
A 0.85 5-Aug $24.10
Not Rated 1.15 6-Jan $1.30
BB+ 1.05 6-Jan $16.60
BBB 0.9 6-Jan $23.10
BB+ NMF 6-Jan $26.90
AA 0.8 6-Jan $199.90
A+ 1.05 6-Jan $50.10

Target Income Statements (dollars in millions)
Fiscal Year Ending 28-Jan-06 29-Jan-05
Net revenues 52,620 46,839

Cost of goods sold 34,927 31,445
Depreciation, depletion, and amortization 1,409 1,259
Gross income 16,284 14,135
Selling, general, and admin. expenses 11,961 10,534
Operating income 4,323 3,601
Net interest expense 463 570
Pretax income 3,860 3,031
Income taxes 1,452 1,146
Net income before extra items 2,408 1,885
Gain (loss) sale of assets 1,313
Net income after extra items 2,408 3,198
Capital expenditures 3,330 3,012

Capital expenditures/sales 6.30% 6.40%
Balance Sheet Statements ($ millions)
Fiscal Year Ending 28-Jan-06

Assets
Cash and cash equivalents 1,648
Accounts receivable (net) 5,666
Inventory 5,838
Other current assets 1,253
Total current assets 14,405
Property plant and equipment, net 19,038
Other assets 1,552
Total assets 34,995
Liabilities
Accounts payable 6,268
Current portion of LT debt and notes payable 753
Income taxes payable 374
Other current liabilities 2,193
Total current liabilities 9,588
Long-term debt 9,119
Other liabilities 2,083
Total liabilities 20,790
Shareholders equity
Common equity 2,192
Retained earnings 12,013
Total liabilities and shareholders equity 34,995
atements ($ millions)
29-Jan-05 31-Jan-04
2,245 708
5,069 4,621
5,384 4,531
1,224 3,092
13,922 12,952
16,860 15,153
1,511 3,311
32,293 31,416
5,779 4,956
504 863
304 382
1,633 2,113
8,220 8,314
9,034 10,155
2,010 1,815
19,264 20,284
1,881 1,609
11,148 9,523
32,293 31,416
CAPITAL PROJECT REQUEST B/(P) Proto => Better or Poorer relative to
the prototype
Capital Expenditure Committee:
FINANCIAL SUMMARY
TOTAL R&P SALES Project B/(P) Proto NPV & Investment
1st year 2006 Equivalent $27,000 $2,588 25.0
5th year 2006 Equivalent $34,155 $3,279
Sales maturity 1.27 0.00 20.0
15.0
INCREMENTAL R&P SALES Project B/(P) Proto
1st year 2006 Equivalent $23,000 ($1,412) 10.0
5th year 2006 Equivalent $34,155 $3,279 5.0

Sales maturity 1.49 0.22
0.0
INVESTMENT Project B/(P) Proto Project

Land $3,802 ($202) Inv estment NPV -10% S
Sitework 3,804 (812)
Subtotal $7,606 ($1,014)
Building 12,786 (2,736) 40 SALES
Other 1,295 (53)
Total Net Investment $21,687 ($3,804) 35
30
VALUE IRR NPV B/(P) Proto
Store 12.8% $12,860 $1,860
25
Credit 10.2% $3,767 $322
TOTAL 12.6% $16,626 $2,182
20
STORE SENSITIVITIES
HURDLE ADJUSTMENT NPV IRR 15
Sales (3.0%) 1.0% 1 2 3
Gross Margin (0.55) 0.19
Construction (Building & Sitework) $2,398 ($498)
Full Transfer Impact 4.0% 7.5% 2007 COMPETITION
COMPETITION
RISK/OPPORTUNITY
10% sales decline ($6,259) (1.8)
1 pp GM decline ($3,388) (1.0) 33%
10% Const. cost increase ($1,287) (0.6)

Market margin, wage rate, etc. ($603) (0.2)
10% sales increase $6,269 1.8
67%
VARIANCE TO PROTOTYPE
Land ($219) (0.1)
TARGET
Non-Land Investment ($2,660) (1.5) Wal-Mart
Sales $4,818 1.4 WMSC
Real Estate Tax ($79) 0.0 2.2 Sam's Club
Kmart
P&L SUMMARY SF/Cap Other
EBIT IMPACT Project B/(P) Proto Other
Thru Open Yr ($1,060) ($117)
5th Yr $4,066 $455
Project: Sensitivities Key - Dashboard Ex
Market: St. Louis
Prototype: P04
> Better or Poorer relative to
Developer: NA
Address: NA
Anchors: NA
INVESTMENT DETAIL
NPV & Investment Land Acres: 11.00
PSF: $7.93
Closing: 10/2007
Options None
BUILDING COST VS. PROTOTYPE
Subgeographic
Proto Update
Market Conditions
Government Fees
Architectural
Project Prototype Technical
Inv estment NPV -10% Sales +10% Sales
Procurement
A/E Fees
Signs
SALES Contingency
Total Variance
INCENTIVE SUMMARY
None Available
DEMOGRAPHICS
Total Characteristics MSA
Incremental 2005 Population (000's) 0
Prototy pe
2000-2005 Growth 0.0%
2 3 4 5 Median HH Income $0
# HH +$50,000 (000's) 0
% Adults 4+ Yrs. College, 2005 0%
007 COMPETITION
COMPETITION 2009 COMMENTS
22%
33% 33%
45%
TARGET TARGET
Wal-Mart Wal-Mart
WMSC WMSC
Sam's Club 3.3 Sam's Club
Kmart Kmart
Other SF/Cap Other WMSC = Wal-Mart Super Center
Other Other
ey - Dashboard Example
Open:
Size: 126,842
Own/Lease: Own
ESTMENT DETAIL
Sitework N/A
RE Tax-Per Corp Tax $222
B/(P) Proto ($8)
COST VS. PROTOTYPE

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
NTIVE SUMMARY
Vendor Fee $0
Legal Fee $0
EMOGRAPHICS
Trade Area 3-Mile Radius
0 0
0.0% 0.0%
$0 $0
0 0
0% 0%
COMMENTS
Dashboard Sensitivities Key (use with "Sensitivities Key - Dashboard Example")
Dashboard Example: P04; Store NPV: $12,860; Store IRR: 12.8%
HURDLE ADJUSTMENT (CPR Dashboard)
Sales Land
NPV ($219)
IRR 1.0%
Gross Margin the amounts listed are the amounts

NPV 0.55
IRR 0.19
Construction (Building & Sitework) For this Dashboard Example:

NPV $2,398
IRR ($498)
Full Transfer Impact Prototype Assumption: A nearby store transferring sales to a new store, fully recovers these s
Sensitivity Assumption: If transfer sales are NOT fully recovered by the transferring store in y
NPV 4.0%
IRR 7.5%
RISK/OPPORTUNITY
10% Sales Decline
NPV ($6,259)
IRR (1.8)
1 pp GM Decline Cost NPV %

NPV ($3,388)
IRR (1.0)
10% Construction Cost Increase

NPV ($1,287)
IRR (0.6)
Market Margin, Wage Rate, etc.

NPV ($603)
IRR (0.2)
10% Sales Increase

NPV $6,269
IRR 1.8
The example dashboard with a Store NPV of $12,860 is $1,860K above Prototypical Store NPV. The f
Land
NPV ($219)
IRR (0.1)
Non-Land Investment
NPV ($2,660)
IRR (1.5)
Sales
NPV $4,818
IRR 1.4
Real Estate Taxes

NPV ($79)
IRR 0.0
ey (use with "Sensitivities Key - Dashboard Example")
Store NPV: $12,860; Store IRR: 12.8%
Sales could decrease (3.0%) and still achieve Prototype Store NPV
Sales would have to increase 1.0% to achieve Prototype Store IRR
d are the amounts

Gross Margin could decrease (0.55) pp and still achieve Prototype Store NPV
Gross Margin would have to increase 0.19 pp to achieve Prototype Store NPV
ork) For this Dashboard Example:

Construction costs could increase $2,398 and still achieve Prototype Store NPV
Construction costs would have to decrease ($498) to achieve Prototype Store IRR
rototype Assumption: A nearby store transferring sales to a new store, fully recovers these sales by the 5th yr.
ensitivity Assumption: If transfer sales are NOT fully recovered by the transferring store in year 5:
Sales would have to increase 4.0% to achieve Prototype Store NPV IRR: $3,436; Target could only pay
Sales would have to increase 7.5% to achieve Prototype Store IRR $3,436 to achieve Proto Store IRR.
If sales decline by 10%, Store NPV would decline by ($6,259).

If sales decline by 10%, Store IRR would decline by (1.8) pp.
If margin decreased by 1 pp, Store NPV would decline by ($3,388).

If margin decreased by 1 pp, Store IRR would decline by (1.0) pp.
If construction costs increased by 10%, Store NPV would decline by ($1,287).

If construction costs increased by 10%, Store IRR would decline by (0.6) pp.
If we applied market specific assumptions, Store NPV would decrease by ($603).

If we applied market specific assumptions, Store IRR would decrease by (0.2) pp.
If sales increased by 10%, Store NPV would increase by $6,269.

If sales increased by 10%, Store IRR would increase by 1.8 pp.
th a Store NPV of $12,860 is $1,860K above Prototypical Store NPV. The following items contributed to the varia
Land cost contributed a negative ($219) to the variance from Prototype.

Land cost contributed a negative (0.1) pp to the variance from Prototype.
Building/Sitework costs contributed a negative ($2,660) to the variance from Prototype.

\Building/Sitework costs contributed a negative (1.5) pp to the variance from Prototype.
Sales contributed a positive $4,818 to the variance from Prototype.

Sales contributed a positive 1.4 pp to the variance from Prototype.
Real Estate Taxes contributed a negative ($79) to the variance from Prototype.
Real Estate Taxes contributed a negative (0.0) pp to the variance from Prototype.
Approx $ IMPACT ON STORE NPV
Cost NPV %
Land: $100K $100K 110%
Sitework: $100K $100K 70%
Building: $100K $100K 85%

On-Ggoing Exp: $100K $100K x10
On-going Expense: eg. Real Estate Taxes, Operating Expense
Assumes Store Opening occurs 1 year after closing.
buted to the variance:

Economic Analysis Summary of Project Proposal
Net Present Value*
Base Case 10% Sales

Investment NPV Decline
($000) ($000) ($000) IRR
Gopher Place $23,000 $16,800 ($4,722) 12.30%
Whalen Court $119,300 $25,900 ($16,611) 9.80%
The Barn $13,000 $20,500 ($4,066) 16.40%
Goldies Square $23,900 $300 ($4,073) 8.10%
Stadium Remodel $17,000 $15,700 ($7,854) 10.80%
*
NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows.
**
Trade area is the geographical area from which 70% of store sales will be realized.
ummary of Project Proposals
Trade Area**
Population % Adults
Increase Median 4+ yrs
Population 2000-2005 Income college
70,000 27% $56,400 12%
632,000 3% $48,500 45%
151,000 3% $38,200 17%
222,000 16% $56,000 24%
N. Ap. N. Ap. $65,931 42%
redit-card cash flows.

CAPITAL PROJECT REQUEST
Capital Expenditure Committee: November 2006
FINANCIAL SUMMARY
15.0
1st year 2005 Equivalent $22,800 ($455) 10.0

0.0

Land $3,205 $264 Inv estment NPV -10% S
Subtotal $6,369 ($315)
Building 15,420 (5,052) 40 SALES
Other 1,227 (96)
Total Net Investment $23,016 ($5,463) 35
30
Store 12.7% $13,201 $2,493
25
Credit 8.1% $3,554 $544
TOTAL 12.3% $16,755 $3,038
20
STORE SENSITIVITIES
Sales (5.3%) 2.2% 1 2 3
Gross Margin (0.72) 0.29
Construction (Building & Sitework) $3,102 ($751)
COMPETITION
RISK/OPPORTUNITY
10% sales decline ($4,722) (1.3)
1 pp GM decline ($3,481) (0.9)
Market margin, wage rate, etc. ($5,434) (1.5)
Land $287 0.1
Non-Land Investment ($4,741) (2.6)
Sales $6,331 1.9
Real Estate Tax $615 0.2 0.0
P&L SUMMARY SF/Cap
EBIT IMPACT Project B/(P) Proto
Thru Open Yr ($567) ($97)
5th Yr $4,452 $886
Project: "Gopher Place"
Market: Gopherville
Prototype: P04.383-MSP
Developer: Henderson Associates
Address: SWC of Hudson and Elk
Anchors: Freestanding
INVESTMENT DETAIL
PSF: $7.52
Closing: 11/2006
Options Garden Center, Seismic
Subgeographic
Proto Update
Market Conditions
Government Fees
Architectural
Procurement
A/E Fees
Signs
SALES Contingency
Total Variance
INCENTIVE SUMMARY
None Available
DEMOGRAPHICS
Prototy pe
2000-2005 Growth 15.0%
2 3 4 5 Median HH Income $46,700
# HH +$50,000 (000's) 97
06 COMPETITION
- Target currently operates 5 stores in the market.
- Transfer Sales: T-1526: 8% (7 miles E) derives 19% of sales from the pro
24% trade area.
- R&P Sales assume Wal-Mart relocates a store to a Supercenter in 2007;
Wal-Mart adds an additional Supercenter in Badgerville in 2008.
76%
TARGET
Wal-Mart
WMSC
6.5 Sam's Club
Kmart
SF/Cap Other
Other
opher Place"
Open: October, 2007
Size: 127,000
Own/Lease: Own
ESTMENT DETAIL
Sitework Pro Rata, Maximum
B/(P) Proto $62
COST VS. PROTOTYPE

($1,238)
(117)
(1,158)
(1,049)
(485)
(615)
(239)
(81)
6
(75)
($5,052)
NTIVE SUMMARY
Vendor Fee $0
Legal Fee $0
EMOGRAPHICS
70 16
27.0% 20.0%
$56,400 $59,400
11 3
12% 11%
COMMENTS
19% of sales from the proposed
o a Supercenter in 2007;
gerville in 2008.
FINANCIAL SUMMARY
80.0
60.0
1st year 2005 Equivalent $79,600 $45,785
40.0
20.0
0.0

Lease $87,309 ($78,855) Inv estment NPV -10% S
Sitework 0 3,796
Subtotal $87,309 ($75,059)
Building 29,434 (15,128) 135 SALES
Other 2,520 93 115
Total Net Investment $119,263 ($90,094)
95
75
Store 9.9% $14,225 ($3,174)
Credit 8.2% $11,650 $7,164 55
TOTAL 9.8% $25,875 $3,989
STORE SENSITIVITIES 35
Sales 1.9% 31.1% 1 2 3
Gross Margin 0.28 4.58
Construction (Building & Sitework) ($4,289) ($41,070)
COMPETITION
RISK/OPPORTUNITY
10% sales decline ($16,611) (1.0)
1 pp GM decline ($11,494) (0.7)
Lease ($78,912) (15.1)
Non-Land Investment ($10,168) (7.9)
Sales $99,963 22.9
Real Estate Tax ($637) (0.2) 0.0
P&L SUMMARY SF/Cap
Thru Open Yr ($1,599) ($1,136)
5th Yr $14,034 $8,509
Project: "Whalen Court"
Market: Buildback
Prototype: Unique Single Level
Developer: Sawicky and Co.
Address: NWQ of Gopher and High Investment Blvd.
Anchors: Home Depot, Best Buy
INVESTMENT DETAIL
NPV & Investment Lease Type: Building Lease
Rent: Prepay+$3.3K
Closing: 10/2006
Options L4: Unique Risk Security, District Office, 13k sf Exp. S
Subgeographic
Proto Update
Market Conditions
Government Fees
Architectural
Procurement
A/E Fees
Signs
SALES Contingency
Total Variance
INCENTIVE SUMMARY
DEMOGRAPHICS
Incremental 2005 Population (000's) 18,768
Prototy pe
2000-2005 Growth 2.0%
# HH +$50,000 (000's) 3,750
06 COMPETITION
See attached for additional information.
100%
TARGET
Wal-Mart
WMSC
0.5 Sam's Club
Kmart
SF/Cap Other
Other
halen Court"
Open: October, 2008
Size: 173,585
Own/Lease: Lease
STMENT DETAIL
Sitework N/A
RE Tax (net of abatement) $358
B/(P) Proto ($60)
District Office, 13k sf Exp. Stock, 2nd Lvl Stock
COST VS. PROTOTYPE
($1,200)
(124)
0
0
0
(7,927)
(2,429)
(428)
(18)
(3,000)
($15,128)
NTIVE SUMMARY
Vendor Fee $92
Legal Fee $0
MOGRAPHICS
632 1,248
3.0% 2.0%
$48,500 $43,800
143 238
45% 37%
COMMENTS
PROJECT SUMMARY
PROJECT SUMMARY
Project Information
Store Square Footage Level 2
Sales Level 113,489
Stock 3,586
Support 10,397
Total 127,472
- Stock Capacity: Additional stock space will be required in the first year of operation. Stock square foot ca
- District Office: Project includes a District Office on mezzanine level.
- CAM: CAM expense assumed at $6 psf to cover operating costs and taxes on parking structure commen
- Legal Fees: $175K for external counsel.
Incentives
- ICIP: First full year real estate taxes reduced to $358K for 15 years. In years 17-25, taxes phased in to g
Gross Benefit: $56.6M; NPV Impact: $15.3M; Vendor Fees: $20K.
- Zone: Wage Tax Credits: Gross Benefit: $188K, NPV Impact: $112K.
Income Tax Credit: Gross Benefit: $750K, NPV Impact: $308K.
Sales Tax Exemption: Gross Benefit: $380K, NPV Impact: $378K. Exemption on construc
Vendor Fees: $72K
Market / Sales
- Target currently operates 45 stores in this market. Total Target buildout for this market is currently estima
159 stores, of which 30 are active/near term opportunites.
- Transfer Sales: 5% (2 miles N) scheduled to open 10/2009.
- R&P Sales assume Target joins a new retail development co-anchored by Home Depot.
Project: "Whalen Court"
Market: Buildback
Prototype: Unique Single Level
Developer: Sawicky and Co.
Address: NWQ of Gopher and High Investment Blvd.
Anchors: Home Depot, Best Buy
Mezzanine Level 1 Cellar Total Target

- ### - 113,489
- 3,502 34,632 41,720
4,733 851 2,395 18,376
4,733 4,353 37,027 173,585
of operation. Stock square foot capacity is 84% of guide; cubic capacity is 61% of guide.
axes on parking structure commencing at store open; $1M annual cost.
n years 17-25, taxes phased in to get to fully assessed taxes of $5M in year 26.
ct: $378K. Exemption on construction materials and equipment.
t for this market is currently estimated at
d by Home Depot.
"Whalen Court"
Open: October, 2008
Size: 173,585
Own/Lease: Lease
FINANCIAL SUMMARY
TOTAL R&P SALES Project B/(P) Proto NPV & Investm
25.0
20.0
15.0
10.0
5.0
0.0

Land $10 $3,390 Inv estment NPV
Sitework 2,303 290
Subtotal $2,313 $3,680
Building 9,705 (378) 33 SALES
Other 998 121 31
Total Net Investment $13,017 $3,423 29
27
VALUE IRR NPV B/(P) Proto 25
Store 17.5% $17,406 $7,326 23
Credit 8.2% $3,121 $279 21
TOTAL 16.4% $20,527 $7,605 19
Sales (18.1%) (23.2%) 1 2 3
Gross Margin (2.35) (3.04)
Construction (Building & Sitework) $8,908 $6,973
2006 COMPETIT
COMPETIT
RISK/OPPORTUNITY
23%
10% sales decline ($4,066) (1.9)
1 pp GM decline ($3,111) (1.5)
10% Const. cost increase ($988) (1.0)
Market margin, wage rate, etc. ($2,999) (1.4) 10%
67%
Land $3,675 3.2
TARGET
Non-Land Investment ($570) (0.3) Wal-Mart
Sales $3,603 1.4 WMSC
Real Estate Tax $617 0.2 5.7 Sam's Club
Kmart
SF/Cap Other
Other
TARGET
Wal-Mart
WMSC
Sam's Club
Kmart
SF/Cap Other
Other
Project: "The Barn"
Market: Moose Land
Developer: Hulbert Ventures
Address: NWQ of Badger and Wolverine
Anchors: Lowe's
INVESTMENT DETAIL
PSF: $0.02
Closing: 4/2006
Options L3: Enhanced Risk Security
Subgeographic
Proto Update
Market Conditions
Government Fees
Architectural
Procurement
A/E Fees
Signs
SALES Contingency
Total Variance
INCENTIVE SUMMARY
None Available
DEMOGRAPHICS
Prototy pe
2000-2005 Growth 3.0%
# HH +$50,000 (000's) 20
06 COMPETITION
- Target is entering a new small market. The nearest Target stores are 80 m
13% NE, 80 miles S, 90 miles NW.
20%
- R&P Sales assume Target is part of a major retail development of 600K s
- See attached Resubmission Summary.
9%
67%
58%
TARGET TARGET
Wal-Mart Wal-Mart
WMSC WMSC
Kmart Kmart
Other SF/Cap Other
Other Other
TARGET TARGET
Wal-Mart Wal-Mart
WMSC WMSC
Sam's Club Sam's Club
Kmart Kmart
Other SF/Cap Other
Other Other
The Barn"
Open: March, 2007
Size: 126,842
Own/Lease: Own
ESTMENT DETAIL
Sitework Fixed Cost
B/(P) Proto $62
COST VS. PROTOTYPE

$523
(22)
(410)
0
(95)
(122)
(91)
(76)
(9)
(75)
($378)
NTIVE SUMMARY
Vendor Fee $0
Legal Fee $0
EMOGRAPHICS
151 19
3.0% 7.0%
$38,200 $47,300
22 4
17% 34%
COMMENTS
rest Target stores are 80 miles
ail development of 600K sf.

PROJECT SUMMARY
Capital Expenditure Committee: March 2006
PROJECT SUMMARY
Resubmission: This project is being resubmitted due to the change in developer. Negotiations between Target and
(Naughton & Co.) fell through after the project was approved in 2001 due to a disagreement regarding co-tenancy
no longer apart of the deal, the shopping center development was put on hold.
Prior Submission: Prior

CPR
Opening Date July, 2002
Land $1,510
Sitework $1,503
Building $7,121
Other $1,067
Total Investment $11,201
First year sales ('05 equiv) $19,287

Fifth year sales ('05 equiv) $25,967
Store NPV @ 9% $4,326

Store IRR 11.5%
Project: "The Barn"
Market: Moose Land
Developer: Hulbert Ventures
Address: NWQ of Badger and Wolverine
Anchors: Lowe's
Negotiations between Target and the original developer

greement regarding co-tenancy rights. Since Target was
Current
Request B/(P)
March, 2007 Delayed 4 years, 8 months
$10 $1,500
$2,303 ($800)
$9,705 ($2,584)
$998 $69
$13,017 ($1,591)
$24,000 $4,713
$30,500 $4,533
$17,406 $13,080
17.5% 6.0%
"The Barn"
Open: March, 2007
Size: 126,842
Own/Lease: Own
FINANCIAL SUMMARY
5th year 2005 Equivalent $42,000 ($14,036) 25.0
Sales maturity 1.24 (0.03) 20.0
15.0
10.0
1st year 2005 Equivalent $25,900 ($18,404)
5.0
5th year 2005 Equivalent $42,000 ($14,036)
(5.0) Project
INVESTMENT Project B/(P) Proto (10.0)
Land $3,615 $1,385
Inv estment NPV -10% S
Subtotal $7,310 $960
Building 14,969 (313) 60 SALES
Other 1,660 48 55
Total Net Investment $23,939 $694 50
45
VALUE IRR NPV B/(P) Proto 40
Store 8.1% ($3,319) ($18,222) 35
Credit 8.1% $3,635 ($1,294) 30
TOTAL 8.1% $317 ($19,516) 25
Sales 45.1% 47.2% 1 2 3
Gross Margin 4.64 4.91
Construction (Building & Sitework) ($22,167) ($14,576)
COMPETITION
RISK/OPPORTUNITY
10% sales decline ($4,073) (1.1) 20%
1 pp GM decline ($3,929) (1.1)

Market margin, wage rate, etc. $6,059 1.6 14%
66%
Land $1,501 0.3
TARGET
Non-Land Investment ($581) (0.1) Wal-Mart
Sales ($16,455) (4.4) WMSC
Real Estate Tax ($2,682) (0.7) 2.5 Sam's Club
Kmart
P&L SUMMARY SF/Cap Other
EBIT IMPACT Project B/(P) Proto Other
Thru Open Yr ($1,921) ($654)
5th Yr $2,951 ($2,343)
Project: "Goldie's Square"
Market: Goldie Country
Prototype: SUP04M
Developer: Barsky Enterprises
Address: SWQ of Ocean and Beach
Anchors: JC Penney, Circuit City, Borders, Bed Bath & Beyond, Ross
INVESTMENT DETAIL
PSF: $7.10
Closing: 8/2006
Options None
Subgeographic
Proto Update
Market Conditions
Government Fees
Project Prototype Architectural
Technical
Procurement
A/E Fees
Signs
SALES Contingency
Total Variance
INCENTIVE SUMMARY
None Available
DEMOGRAPHICS
Incremental 2005 Population (000's) 1,415
Prototy pe
2000-2005 Growth 13.0%
# HH +$50,000 (000's) 291
06 COMPETITION
- Target currently operates 12 stores in the market. Total Target buildout fo
17%
market is currently estimated at 24 of which 7 are active/near term opport
20% Build out will include 12 SuperTarget units, 50% of the total.
- Transfer Sales: 25% from a store located 2.1 miles NE; 4% from a store
7 miles N; 25% of sales from a store 4 miles away.
14% - General Merchandise/Hardlines C Mix: 82/18.
- Alternatives to this buildback scenario:
>Relo: T-683 closes when Goldie's Square opens: Total NPV: $6M; Total
83% >T-683 closes 1 yr after Goldie's Square opens: Total NPV: $3.9M; Tota
>T-683 closes 2 yrs after Goldie's Square opens: Total NPV: $3.6M; Total
TARGET TARGET
Wal-Mart Wal-Mart
WMSC WMSC
Kmart Kmart
Other SF/Cap Other
Other Other
die's Square"
Open: October, 2007
Size: 173,770
Own/Lease: Own
ESTMENT DETAIL
Sitework Fixed Cost
B/(P) Proto ($269)
COST VS. PROTOTYPE

$829
(153)
545
0
(469)
(799)
(170)
(71)
50
(75)
($313)
NTIVE SUMMARY
Vendor Fee $0
Legal Fee $0
EMOGRAPHICS
222 67
16.0% 4.0%
$56,000 $50,000
41 12
24% 26%
COMMENTS
t. Total Target buildout for this
e active/near term opportunities.
of the total.
iles NE; 4% from a store located
ns: Total NPV: $6M; Total IRR: 9.3%.

: Total NPV: $3.9M; Total IRR: 8.9%.
s: Total NPV: $3.6M; Total IRR: 8.9%.
FINANCIAL SUMMARY
25.0
20.0
INCREMENTAL R&P SALES Project B/(P) Proto 15.0
5th year 2005 Equivalent $9,300 ($46,760) 5.0
Status Quo Proposed New Total N
INVESTMENT Project B/(P) Proto
Land $0 $5,000
Inv estment NPV -10% S
Sitework 1,173 2,097
Subtotal $1,173 $7,097
Building 12,411 2,245 75 SALES
Other 3,271 (1,618) 65
Total Net Investment $16,855 $7,724
55
VALUE IRR NPV
45
Store 12.5% $14,911
Credit 4.6% $828 35
TOTAL 10.8% $15,739
Sales 1 2 3
Gross Margin Remodel
Construction (Building & Sitework)
RISK/OPPORTUNITY
10% sales decline ($7,854) (1.8)
1 pp GM decline ($6,457) (1.5)
10% Const. cost increase ($910) (0.3)
P&L SUMMARY
Thru Open Yr ($6,103) ($4,812)
5th Yr $1,272 ($4,025)
Project: "Stadium Remodel"
Market: Boardwalk
Scope: Interior Remodel
Prototype Before & After: SUP1.1 / S04
Expansion Availability: Not Site Constrained
Offsite Whse/Dist Office: N/A
PROJECT DETAIL
NPV & Investment Write Off
RE Tax-Per Corp Tax
B/(P) Proto
SQUARE FOOTAGE
Original Sq Ft
Quo Proposed New Total New Store Prototype Additional Sq Ft
Total Sq Ft After Remodel
SUP04 Prototype
B/(P) Prototype
SALES B/(P) Guide 1st FY
DEMOGRAPHICS
Characteristics
2005 Population (000's)
2000-2005 Growth
Median HH Income
Total # HH +$50,000 (000's)
Incremental % Adults 4+ Yrs. College, 2005
Prototy pe
COMMENTS
2 3 4 5 - Entered market in 1972. Currently operate 8 stores in this market.
- A successful store at a strong long-term location serving an affluent family
area.
- 2006 YTD Sales Trend: -0.9%.
- Post-remodel sales assume a 17% sales lift over R&P base case sales. B
sales assume a (10)% impact from buildback (3.3 miles, October 2007);
the store is also in the process of being impacted by Park Place South.
- Current Value of T-0530: $18.8M; R&P base case sales; Prototypical Inter
2007; Tax benefit of depreciable property write-off: $0.4M; Rank: 783 of 1
- General Merchandise/Hardlines C Mix: 68/32; based on T-0530 historical
- Options: New Entrance System, Relocate Pharmacy, Relocate Electrical R
- Scope: Refrigeration Replacement, 4 Phases of Grocery Staging, Flooring
Roof Replacement, Temp Pharmacy, New Food Avenue, New Starbucks,
New Portrait Studio, New Signage.
"Stadium Remodel"
Remodel Cycle: Cycle 3 2007
Last Remodel: NA
Own/Lease: Own
Sides Before & After: 484 / 455
POG Length: 24'/28'
PROJECT DETAIL
$1061 ($657 Bldg, $43 Roof, $361 Other)
$332
($62)
SQUARE FOOTAGE
Total Sales Stock Support

203,300 153,019 35,245 15,036
- (10,544) 12,870 (2,326)
203,300 142,475 48,115 12,710
177,376 136,616 27,500 13,260

25,924 5,859 20,615 (550)
20,615
DEMOGRAPHICS
MSA Trade Area 3-Mile Radius
806 113 84
5.0% 16.0% 15.0%
$50,774 $65,931 $64,597
158 29 21
28% 42% 44%
COMMENTS
tly operate 8 stores in this market.
ng-term location serving an affluent family-oriented trade
7% sales lift over R&P base case sales. Base case

om buildback (3.3 miles, October 2007);
f being impacted by Park Place South.
; R&P base case sales; Prototypical Interior Remodel in
property write-off: $0.4M; Rank: 783 of 1395.
C Mix: 68/32; based on T-0530 historical trend.
Relocate Pharmacy, Relocate Electrical Room.
nt, 4 Phases of Grocery Staging, Flooring Replacement,
acy, New Food Avenue, New Starbucks, New Optical,

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20 Target Corporation

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This spreadsheet supports the STUDENT analysis of the case,

"Target Corporation" (Case 20).

Executive Vice President, General Counsel, and Corporate Secretary

y Risch, 37. Risch was promoted to EVP in September 2006.

Revenue Basic Debt

Bed Bath & Beyond Inc. $5.80 $1.95 $0.00

Target Corporation $52.60 $2.73 $9.90

BBB 1.05 6-Feb $11.40

A+ 1.05 6-Jan $50.10

Fiscal Year Ending 28-Jan-06 29-Jan-05

Net revenues 52,620 46,839

Capital expenditures 3,330 3,012

Fiscal Year Ending 28-Jan-06

5th year 2006 Equivalent $34,155 $3,279 5.0

INVESTMENT Project B/(P) Proto Project

10% Const. cost increase ($1,287) (0.6)

COST VS. PROTOTYPE

Gross Margin the amounts listed are the amounts

Construction (Building & Sitework) For this Dashboard Example:

1 pp GM Decline Cost NPV %

10% Construction Cost Increase

Market Margin, Wage Rate, etc.

10% Sales Increase

Real Estate Taxes

d are the amounts

ork) For this Dashboard Example:

If sales decline by 10%, Store NPV would decline by ($6,259).

If margin decreased by 1 pp, Store NPV would decline by ($3,388).

If construction costs increased by 10%, Store NPV would decline by ($1,287).

If we applied market specific assumptions, Store NPV would decrease by ($603).

If sales increased by 10%, Store NPV would increase by $6,269.

Land cost contributed a negative ($219) to the variance from Prototype.

Building/Sitework costs contributed a negative ($2,660) to the variance from Prototype.

Sales contributed a positive $4,818 to the variance from Prototype.

Building: $100K $100K 85%

Assumes Store Opening occurs 1 year after closing.

buted to the variance:

Net Present Value*

Base Case 10% Sales

redit-card cash flows.

5th year 2005 Equivalent $35,100 $5,688 5.0

INVESTMENT Project B/(P) Proto Project

COST VS. PROTOTYPE

19% of sales from the proposed

INVESTMENT Project B/(P) Proto Project

Mezzanine Level 1 Cellar Total Target

axes on parking structure commencing at store open; $1M annual cost.

ct: $378K. Exemption on construction materials and equipment.

t for this market is currently estimated at

INVESTMENT Project B/(P) Proto Project

COST VS. PROTOTYPE

ail development of 600K sf.

Prior Submission: Prior

Opening Date July, 2002

First year sales ('05 equiv) $19,287

Store NPV @ 9% $4,326

Negotiations between Target and the original developer

March, 2007 Delayed 4 years, 8 months

1 pp GM decline ($3,929) (1.1)

COST VS. PROTOTYPE

ns: Total NPV: $6M; Total IRR: 9.3%.

Total Sales Stock Support

177,376 136,616 27,500 13,260

7% sales lift over R&P base case sales. Base case