Target 2013 Annual Report Download - page 28

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23
Canadian Segment
Canadian Segment Results Percent Change
(dollars in millions) 2013 2012 2011 2013/2012 2012/2011
Sales $ 1,317 $ — $ — n/a n/a
Cost of sales 1,121 — — n/a n/a
Gross margin 196 — — n/a n/a
SG&A expenses 910 272 74 234.9 268.7
EBITDA (714) (272) (74) 162.6 268.7
Depreciation and amortization 227 97 48 133.6 103.2
EBIT $ (941) $ (369) $ (122) 155.0% 203.5%
Canadian Segment Rate Analysis 2013
Gross margin rate 14.9%
SG&A expense rate 69.1
EBITDA margin rate (54.2)
Depreciation and amortization expense rate 17.3
EBIT margin rate (71.5)
Note: Rate analysis metrics are computed by dividing the applicable amount by sales.
Due to the start-up nature of our Canadian Segment, the rates above may not be indicative of future results.
Sales
Sales include merchandise sales, net of expected returns, and gift card breakage. Refer to Note 2 of the Notes to
Consolidated Financial Statements for a definition of gift card breakage.
We opened 124 Canadian Target general merchandise stores during 2013 with 14.2 million total retail square feet.
Canadian sales of $1,317 million represent a partial year of operation, with approximately 55 percent of the stores
opened during the first half of the year, 20 percent during the third quarter and the remaining 25 percent during the
fourth quarter.
Credit is offered to guests by Royal Bank of Canada (RBC) through our co-branded credit card: the Target RBC
MasterCard. Additionally, we offer a proprietary Target Debit Card. Consistent with our branded payment products in
the U.S., these payment products are referred to as REDcards. Guests receive a 5 percent discount on virtually all
purchases when they use a REDcard at Target.
REDcard Penetration 2013
Target Credit Cards 1.4%
Target Debit Card 1.5
Total store REDcard Penetration 2.9%
Gross Margin Rate
The gross margin rate of 14.9 percent reflects efforts to clear excess inventory following lower than anticipated sales
and supply chain start-up challenges.
Selling, General and Administrative Expense Rate
In addition to operating expenses during 2013, our Canadian Segment SG&A expense for 2013, 2012 and 2011
included start-up costs including compensation, benefits and third-party service expenses.