Target 2013 Annual Report Download - page 26

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21
(c) Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as intimate apparel, jewelry,
(d)
Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce and pet supplies.
(e)
Includes furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement,
automotive and seasonal
merchandise such as patio furniture and holiday décor.
The collective interaction of a broad array of macroeconomic, competitive and consumer behavioral factors, as well
as sales mix, and transfer of sales to new stores makes further analysis of sales metrics infeasible.
Credit is offered by TD to qualified guests through Target-branded credit cards: the Target Credit Card and the Target
Visa Credit Card (Target Credit Cards). Additionally, we offer a branded proprietary Target Debit Card. Collectively, we
refer to these products as REDcards®. Guests receive a 5 percent discount on virtually all purchases when they use
a REDcard at Target. We monitor the percentage of sales that are paid for using REDcards (REDcard Penetration)
because our internal analysis has indicated that a meaningful portion of incremental purchases on our REDcards are
also incremental sales for Target.
REDcard Penetration 2013 2012 2011
Target Credit Cards 9.3% 7.9% 6.8%
Target Debit Card 9.9 5.7 2.5
Total store REDcard Penetration 19.3% 13.6% 9.3%
Note: The sum of Target Credit Cards and Target Debit Card penetration may not equal Total store REDcard Penetration due to rounding.
Gross Margin Rate
Our gross margin rate was 29.8 percent in 2013, 29.7 percent in 2012 and 30.1 percent in 2011. The 2013 increase
is primarily the result of a change in vendor contracts regarding payments received in support of marketing programs.
Increases to the rate were offset by our integrated growth strategies of our 5 percent REDcard Rewards loyalty program
and our store remodel program.
The 2013 change to certain merchandise vendor contracts resulted in more vendor consideration being recognized
as a reduction of our cost of sales rather than a reduction of SG&A. This change increased our gross margin rate for
2013, with an equal and offsetting increase in our SG&A rate, and has no impact on EBITDA or EBIT margin rates.
accessories and shoes.