Target 2003 Annual Report Download - page 3

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To Our Shareholders
For decades, Target Corporation has been guided by
principles, and devoted to strategies, that are intended
to enhance our long-term financial performance and
success. We have maintained a steadfast commitment
to initiatives that fuel consistent growth over time
because we believe that managing our business
this way continues to generate substantial value
for our shareholders.
At Target Stores, which now represents more than
90 percent of our total pretax segment profit, our vision
is clear and unwavering, reinforced by the strength and
consistency of our financial results and the power of
our brand. Target continues to enjoy strong market
share gains and significant increases in profitability.
At Mervyn’s and Marshall Field’s, our path is less
clear. In March, we announced plans to review strategic
alternatives for both of these divisions, including, but
not limited to, the possible sale of one or both divisions
to existing retailers or other qualified buyers. Arriving
at this decision was not easy or hasty. We have dedi-
cated significant effort to increasing sales and profits
at Mervyn’s and Marshall Field’s over many years and
we continue to believe that both of these businesses are
valuable as ongoing operations. Mervyn’s and Marshall
Field’s have been important contributors to Target
Corporation’s overall strategy and financial performance
for decades — providing fashion leadership, manage-
ment talent, and financial services expertise as well as
significant cash flow that has allowed us the luxury of
simultaneously pursuing terrific growth opportunities
for our Target Stores division, while maintaining both
a balanced capital structure and strong investment
grade debt ratings. Additionally, these businesses have
provided critical scale benefits to the Corporation,
allowing us to leverage our fixed costs across a much
larger retail organization. In recent years, however,
both of these divisions have experienced considerable
challenges to their top-line growth, resulting in unfavor-
able trends in their financial performance. While each
of these businesses continues to generate meaningful
profits and substantial positive cash flow, the absolute
amounts are much lower than their historical levels.
As stewards of the Corporation’s assets, our senior
management team and our Board of Directors remain
intently focused on our responsibilities to our share-
holders, our team members, our guests and the
communities we serve. While we believe that it is
appropriate to identify and evaluate possible strategic
alternatives for Mervyn’s and Marshall Field’s, it is not
clear that our review will result in either division being
sold. Despite this uncertainty, we remain confident that
Target Corporation is well-positioned to build on our
record of outstanding performance and to generate
profitable growth and superior shareholder value in
2004 and well into the future.