Company Description

Target Corporation operates general merchandise discount stores. The Company focuses on merchandising operations which includes general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards.

Extended Company Description  (Source: Hoover's Inc., a Dun & Bradstreet Company)

OVERVIEW

        Cheap-but-chic Target is the US's #2 discount chain (behind Wal-Mart ). The fashion-forward discounter operates 1,800-plus Target and SuperTarget stores across North America, as well as an online business at Target.com. 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. Target sold its pharmacy and clinics business to CVS in late 2015 in a $1.9 billion deal.

Operations

The company operates in four product categories: Household Essentials, more than 20% of sales, offers pharmacy, beauty, personal care, baby care, cleaning, and paper products; Food and pet supplies., more than 20% of sales, offers dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies; Apparel and accessories, 20% of sales, offers apparel for women, men, boys, girls, toddlers, infants and newborns, as well as intimate apparel, jewelry, accessories, and shoes; Hardlines, more than 15% of sales, offers electronics (including video game hardware and software), music, movies, books, computer software, sporting goods, and toys; and Home furnishings and decor, about 20% of sales,  offers furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement, automotive, and seasonal merchandise such as patio furniture and holiday décor.

Geographic Reach

Operating across the US, Target's biggest markets by total sales are California, Texas, and Florida (together about 30% of total stores). The chain has 40 distribution centers. It has offices in 12 other countries to support various trading and shipping functions.

Sales and Marketing

The vast majority of Target's merchandise is delivered to stores through its network of 40 distribution centers. It also sells online through its website.

Financial Performance

Steady revenue growth over the last decade faltered in fiscal 2017 (ended January), sliding back to $69.5 billion ? a 6% fall.

Sales in fiscal 2017 were impacted strongly by the sale of the pharmacy and clinics business in the end of 2015. Comparable store sales were also down 0.5%. Target witnessed a shift in its product sales: household essentials shrunk from 26% of total sales to 22% due to the pharmacy sale, while food, beverage, and pet supplies, apparel and accessories, and home furnishings and décor saw an uptick. Target?s digital sales channel also saw uplift.

Net income fell 19% to $2.7 billion due to lower revenue. Cash generated by operating activities recorded a similar fall of 9% to $5.4 billion.

Strategy

Going forward, Target's differentiation in the marketplace will be driven by a shopping experience that is centered on ease and inspiration, with mobile serving as the front door to all of Target. The retailer also plans to reassert its cultural leadership. In addition, Target plans to create a headquarters team that is more agile, efficient, and guest-focused.

Target revised its capital expenditure mix in 2017, reducing capital allocation to new stores and instead funneling money into existing stores and its IT and supply chain. Investment in stores includes remodels and guest experience enhancements. It also took out leases relating to future store openings worth a minimum of $550 million. Target expects capital expenditure to hit $2.0 billion for the first time in fiscal 2018.

Target's transformation road map includes a focus on areas like continued enhancements in technology, supply chain, and inventory management to create a shopping experience rooted in ease and inspiration; Style, Baby, Kids, and Wellness are being prioritized and will be the merchandise categories. It also plans to create a more guest-centric experience by offering more locally relevant products, and taking demographics, climate, and location into account.

Another key to Target's strategy has been its proprietary credit and debit cards (REDcards, collectively), which encourage customer loyalty and drive sales. The scheme has been tremendously successful, with sales paid with a REDcard shooting from 6% in 2010 to 24% in 2017. It shrugged off reputational losses in 2013 when a major data breach occurred and continued to grow.

Mergers and Acquisitions

In 2017 Target agreed to acquire Grand Junction, a start-up company that develops logistics software, to help improve delivery efficiency. The deal is part of Target's move to revamp its logistics to increase sales from its website and to compete against Amazon.com. Grand Junction handles same-day delivery arrangements for Target in a part of New York City. Also that year the retailer agreed to buy same-day delivery company Shipt in one of its largest acquisitions to date ($550 million). With Grand Junction and Shipt, Target plans to have same-day delivery as an option in most stores and in all major markets by the end of 2018.

HISTORY

   The panic of 1873 left Joseph Hudson bankrupt. After he paid his debts at 60 cents on the dollar, he saved enough to open a men's clothing store in Detroit in 1881. Among his innovations were merchandise-return privileges and price marking in place of bargaining. By 1891 Hudson's was the largest retailer of men's clothing in the US. Hudson repaid his creditors from 1873 in full, with interest. When Hudson died in 1912, four nephews expanded the business.

   Former banker George Dayton established a dry-goods store in 1902 in Minneapolis. Like Hudson, he offered return privileges and liberal credit. His store grew to a 12-story, full-line department store.

   After WWII both companies saw that the future lay in the suburbs. In 1954 Hudson's built Northland in Detroit, then the largest US shopping center. Dayton's built the world's first fully enclosed shopping mall in Edina, a Minneapolis suburb, in 1956. In 1962 Dayton's opened its first discount store in Roseville (naming the store Target to distinguish the discounter from its higher-end department stores).

   Dayton's went public in 1966, the same year it began the B. Dalton bookstore chain. Three years later it merged with the family-owned Hudson's, forming Dayton Hudson. Dayton Hudson purchased more malls and invested in such specialty areas as consumer electronics and hard goods. Target had 24 stores by 1970.

   The Target chain became the company's top moneymaker in 1977. The next year Dayton Hudson bought California-based Mervyn's (later Mervyns). In the late 1970s and 1980s, it sold nine regional malls and several other businesses, including the 800-store B. Dalton chain to Barnes & Noble. The Target stores division purchased Indianapolis-based Ayr-Way (1980) and Southern California-based Fedmart stores (1983). In the late 1980s Dayton Hudson took Target to Los Angeles and the Northwest. Robert Ulrich, who began with the company as a merchandise trainee in 1967, became president and CEO of the Target stores division in 1987 and chairman and CEO of Dayton Hudson in 1994.

   Dayton Hudson opened the first Target Greatland store in 1990. By this time it had 420 Target stores. Also that year Dayton Hudson bought the Marshall Field's chain of 24 department stores from B.A.T Industries. Marshall Field's began as a dry-goods business that Marshall Field bought in 1865 and subsequently built into Chicago's premier upscale retailer.

   SuperTarget stores were introduced in 1995. The Target stores division opened stores in the Mid-Atlantic and Northeast the next year, while the department store division began selling off its Marshall Field's locations in Texas.

   In 1998 Dayton Hudson boosted its Internet presence by purchasing direct-marketing company Rivertown Trading; it also bought apparel supplier Associated Merchandising that year. In 2000 Dayton Hudson renamed itself Target Corporation. In early 2001 the company renamed its Dayton's and Hudson's chains Marshall Field's. Also that year Target acquired the rights to 35 former Montgomery Wards stores from the bankrupt retailer.

   The nation's #2 discounter was #1 when it came to corporate giving in 2001. Target topped the       Forbes      list of America's Most Philanthropic Companies that year, donating 2.5% of its 2000 income (nearly $86 million). By comparison, Wal-Mart gave away $116.5 million in 2001, less than 1% of its income in 2000.

   In 2002 the company reopened 30 of the former Montgomery Ward stores as Target outlets. Net of closings, 94 Target stores opened in 2002, while neither Mervyns nor Marshall Field's added to their store counts. In March 2003 three new SuperTarget stores opened in the Dallas/Fort Worth area.

   2004 was a year of divestments for Target. In January the discounter announced it was exiting the catalog business. To that end, in April Target sold its Signals and Wireless gifts catalogs to Universal Screen Arts for an undisclosed sum. In July Target sold its Marshall Field's business to The May Department Stores Co. for about $3.2 billion in cash. In September Target completed the sale of 257 Mervyns stores in 13 states to an investment group that includes Cerberus Capital Management, Lubert-Adler/Klaff and Partners, and Sun Capital Partners, as well as its Mervyns credit card receivables to GE Consumer Finance for a combined sum of approximately $1.65 billion in cash. (Later, Mervyns filed for bankruptcy and closed the last of its stores by the end of 2008.)

   In October 2005 vice chairman Gerald Storch resigned unexpectedly after more than a dozen years with the company. No reason was given for his departure. In the largest mass opening in Target's history, the retailer opened 60 new stores on October 9.

   In July 2006 Target.com extended its partnership with Amazon Enterprise Solutions, a unit of online retailer Amazon.com, through August 2010. Amazon provides e-commerce technology to the discount chain.

   In May 2008 Ulrich, who served as chairman and CEO since 1994, handed his CEO title to president Gregg Steinhafel. (Steinhafel joined the retailer in 1979 and worked his way up the executive ranks.) Also in May Target closed on the sale of a 47% stake in its credit-card receivable to JPMorgan Chase for $3.6 billion. The five-year deal allows Target to buy back the stake at the end of the term. In October the company opened a pair of stores in Alaska, thereby expanding its retail presence to 48 states. In November  Target said no thanks to a plan Ackman had proposed for Target to spin off its real estate holdings in a bid to increase shareholder value, citing uncertainty about valuation assumptions and the potential reduction in financial flexibility as a result of spin off.

   Ulrich retired from the board in January 2009 and Steinhafel added the chairman's title to his job description.

   In April 2010 Target stopped offering new credit card applicants its co-branded Visa credit card.

   Chairman, president and CEO Steinhafel resigned in May 2014, five months after a massive data breach at the company. In July 2014, the company named retail veteran Brian Cornell as chairman and CEO. Cornell, 55, joined Target from PepsiCo Americas Foods, where he served as CEO and oversaw the global food business. Before joining PepsiCo, Cornell served as president and CEO of Sam's Club, a division of Wal-Mart Stores.