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Target Corporation First Quarter 2004 Earnings Per Share $0.48

From: ASAP

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Target Corporation (NYSE: TGT) reported earnings per share for the first quarter ended May 1, 2004 of 48 cents, compared with 38 cents in the first quarter ended May 3, 2003. All earnings per share figures refer to diluted earnings per share. First quarter net earnings increased 25.4 percent to $438 million, compared with $349 million in 2003.

"We are pleased with our first quarter results," said Bob Ulrich, chairman and chief executive officer of Target Corporation. "Our performance reflects year-over-year growth in profits at all three retail segments, with particular strength at Target Stores."

Total revenues in the first quarter increased 12.3 percent to $11.587 billion from $10.322 billion in 2003, driven by a 14.0 percent revenue increase at Target Stores attributable to comparable store sales growth and the contribution from new store expansion. Comparable-store sales for the corporation in the first quarter 2004 increased 6.6 percent. (Total revenues include retail sales and net credit revenues. Comparable-store sales are sales from stores open longer than one year.)

For the quarter, pre-tax segment profit increased 19.2 percent to $927 million, compared with $777 million in the first quarter 2003. Pre-tax profit at Target Stores increased $132 million, or 17.9 percent. Pre-tax profit also increased at both Mervyn's and Marshall Field's by $15 million and $3 million, respectively. (Pre-tax segment profit is the company's core measure of profitability, and is a required disclosure for segment reporting under generally accepted accounting principles.)

In the first quarter, the company's gross margin rate improved from the prior year, reflecting markdown improvements at all three divisions, while the company's expense rate was slightly unfavorable to prior year. (Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales.)

Results of the company's credit card operations continued to develop in line with our expectations, reflecting improvements in delinquencies and write-offs. The contribution of consolidated credit card operations to pre- tax segment profit in the quarter was $166 million, an increase of 10.2 percent, or $15 million. Compared to last year at this time, average receivables grew 3.0 percent in the first quarter to $5.949 billion, and pretax yield rose to 11.2 percent from 10.4 percent. Results of credit card operations are included in the pre-tax segment profit for each of the company's three business segments.

Other Factors

Net interest expense for the quarter increased $2 million compared with first quarter 2003 reflecting a higher loss on debt repurchase partially offset by the benefit of a lower average portfolio interest rate and slightly lower average funded balances.

The company's effective income tax rate was 37.8 percent, compared with 38.0 percent in the first quarter last year.

Miscellaneous

Target Corporation will webcast its first quarter earnings conference call at 9:30am CDT today. Investors and the media are invited to listen to the call through the company's website at www.target.com (click on "company/Target Corporation/investor information/webcasts"). A telephone replay of the call will be available beginning at approximately 11:30am CDT today through the end of business on May 14, 2004. The replay number is (402) 344-6815.

Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company's 2003 Form 10-K.

Target Corporation operates large-store general merchandise formats, including discount stores, moderate-priced promotional and traditional department stores, as well as an on-line business called target.direct. The company currently operates 1,577 stores in 47 states. This includes 1,249 Target stores, 266 Mervyn's stores and 62 Marshall Field's stores.

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