Target 2006 Annual Report Download - page 22

PART I
Item 1. Business.
General
Target Corporation (the Corporation or Target) was incorporated in Minnesota in 1902. We operate
large-format general merchandise and food discount stores in the United States, which include Target and
SuperTarget stores. We offer both everyday essentials and fashionable, differentiated merchandise at
exceptional prices. Our ability to deliver a shopping experience that is preferred by our guests is supported
by our strong supply chain and technology network, a devotion to innovation that is ingrained in our
organization and culture, and our disciplined approach to managing our current business and investing in
future growth. We operate as a single business segment.
Our credit card operations represent an integral component of our core retail business. Through our
branded proprietary credit card products (REDcard), we strengthen the bond with our guests, drive
incremental sales and contribute meaningfully to earnings. We also operate a fully integrated on-line
business, Target.com. Although Target.com is small relative to our overall size, its sales are growing at a
much more rapid annual pace than our other sales, and it provides important benefits to our stores and
credit card operations.
We are committed to consistently delighting our guests, providing a workplace that is preferred by our
team members and investing in the communities where we do business to improve the quality of life. We
believe that this unwavering focus, combined with disciplined execution of the fundamentals of our strategy,
will enable us to continue generating profitable market share growth and delivering superior shareholder
value for many years to come.
Financial Highlights
Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in
this report relate to fiscal years, rather than to calendar years. Fiscal year 2006 (2006) ended February 3,
2007 and consisted of 53 weeks. Fiscal year 2005 (2005) ended January 28, 2006 and fiscal year 2004
(2004) ended January 29, 2005, and both consisted of 52 weeks.
For information on key financial highlights for 2006 (along with other years), see the items referenced
in Item 6, Selected Financial Data, and Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations, of this Form 10-K.
Seasonality
Due to the seasonal nature of our business, a substantially larger share of total annual revenues and
earnings occur in the fourth quarter because it includes the peak sales period from Thanksgiving to the end
of December.
Merchandise
We operate Target general merchandise stores with a wide assortment of general merchandise and a
more limited assortment of food items, as well as SuperTarget stores with a full line of food and general
merchandise items. Target.com offers a wide assortment of general merchandise including many items
found in our stores and a complementary assortment, such as extended sizes and colors, sold only on-line.
A significant portion of our sales is from national brand merchandise. In addition, we sell merchandise
under private-label brands including, but not limited to, Archer Farmsᓼ, Choxieȶ, Circoᓼ, Embarkᓼ,
Gilligan & O’Malleyᓼ, Kool Toyzᓼ, Market Pantryᓼ, Meronaᓼ, ProSpiritᓼ, Room Essentialsȶ, Target Limited
Edition, Trutechᓼ and Xhilarationᓼ. We also sell merchandise through unique programs such as ClearRxSM,
Global Bazaar and Go International. In addition, we also sell merchandise under licensed brands
including, but not limited to, C9 by Champion, ChefMate, Cherokee, Eddie Bauer, Fieldcrest, Isaac Mizrahi
for Target, Kitchen Essentials by Calphalon, Liz Lange for Target, Michael Graves Design, Mossimo, Nick
and Nora, Genuine Kids by Osh Kosh, Sean Conway, Smith & Hawken, Simply Shabby Chic, Sonia Kashuk,
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