Target 2008 Annual Report Download - page 4

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2008 was a difficult year for Target as unprecedented economic
challenges, especially in the second half of the year, pressured
sales and profits in our retail segment and led to a meaningful
deterioration in our credit card segment risk metrics and
performance. Overall, revenues for the year rose 2.5 percent
to $64.9 billion; we generated net earnings of $2.2 billion and
our diluted earnings per share were $2.86.
While these results fell short of our expectations, we
continued to manage our business thoughtfully to fuel profitable
market share growth, control expenses while maintaining a
consistently positive guest experience, and invest capital to
deliver appropriate shareholder returns and ensure sufficient
liquidity in an uncertain market.
We achieved these objectives by balancing our commitment
to the vision, values, strategic priorities and “Expect More.
Pay Less.” brand promise that has been the foundation of our
success for decades with an equal dedication to remain relevant
in today’s environment by continuing to innovate, adapt and
evolve. Specifically,
• To ensure our guests understand our unique ability to meet
their desire for everyday essentials and affordable indulgences,
we elevated the prominence of the “Pay Less” half of our brand
promise in both our merchandising and marketing through
in-store signing and presentation as well as new campaigns
that emphasize our outstanding value. At the same time, we
continued to deliver differentiation and newness on the “Expect
More” side of our brand promise with the introduction of
Converse One Star in apparel and shoes, the launch of upscale
beauty brands, an expanded owned brand presence and a
continuous flow of designer collections at exceptional prices.
• We also intensified our efforts to enhance the one-stop
shopping convenience we provide to our guests by continuing
to expand our assortment of food, pharmacy and household
commodities in our general merchandise stores.
• We maintained our sharp focus on managing inventories and
in-stocks to balance markdown risk with guests’ expectations.
Our newly launched store and merchandise segmentation
strategy allowed us to customize our assortment, timing and
presentation based on the sales volume of individual stores
and local preferences.
• We intensified our enterprise-wide focus on reducing expense,
taking a thoughtful and strategic approach to managing our
business in an uncertain environment. Specific actions included
the introduction of new training initiatives and technology tools
in our stores, resulting in improved productivity and significant
savings in stores payroll, alignment of our headquarters staffing
with business needs and suspension of salary increases
for management.
• We remained focused on investing capital to create substantial
shareholder value over time. During 2008, we opened 114
total new stores, or 91 stores net of relocations and rebuilds,
including our first stores in Alaska. We also continued to invest
in technology, distribution and other infrastructure to capture
increased efficiencies, support key strategic initiatives, such
as perishable food distribution and pharmacy, and protect and
preserve our reputation.
• We were very deliberate in the management and application
of our cash resources, repurchasing approximately 8 percent
of outstanding shares during the year before suspending our
repurchase activity.
• And, we completed a transaction to sell an undivided interest
in our credit card receivables to JPMorgan Chase that provided
significant liquidity to Target from a single source unrelated to
debt capital markets and is expected to create substantial
financial and strategic rewards over time.
We look to the future fully aware of the short-term economic
pressures we face, yet optimistic that we will retain our position
as a leading retailer over the long term. We continue to balance
Letter To Our Shareholders