Target Corporation

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Target Corporation

• Jessica Blakley
• Dan Bowyer
• Tracie Franklin
• Candice Hakemack
• Anna Hegerhorst

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Issues

• Not currently operating internationally
• Target customer is young
• Remain competitive on price and stay stylish

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Financial Analysis Liquidity

• Current Ratio - In 2006 Targets current ratio
  was 1.32.
  
• Calculation
• Current Assets / Current Liabilities
  14.706(Billion)11.117(Billion)1.32
  
• Interpretation - One of the best known and used
  measure of liquidity. This value is a little low,
  probably due to the recent increase in return on
  assets.

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Financial Analysis Liquidity

• Quick Ratio - Targets quick ratio was .76
• Calculation
• (Current Assets Inventory) Current
  Liabilities (14.706 B - 6.254 B) 11.117 B
  .76
  
• Interpretation - This is considered a better
  measure of liquidity than the current ratio
  because it removes the value of inventory from
  the assets. However, Target has excellent
  inventory turnover performance. It is still good
  to consider because Target does have a large
  amount of their assets in inventory.

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Financial Analysis Activity

• Inventory Turnover - Target turned over its
  inventory every 56 days in 2006.
  
• Calculation
• Cost of Goods Sold Average Inventory 39.399 B
  6.046 B 6.5 times.
  
• 365 days 7 every 52 days.
• Interpretation - The inventory is very liquid.
  This is a good indicator of managements
  effectiveness at moving product.
  

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Financial Analysis Activity

• Asset Turnover Ratio - Target had a turnover
  ratio of 1.64 in 2006.
  
• Calculation
• (Net Sales Avg. Total Assets) 59.490 B
  36.172 B 1.64
  
• Interpretation - The asset turnover ratio shows
  that Target generated sales of 1.64 per dollar
  per dollar of assets in 2006
  

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Financial Analysis Profitability

• Profit Margin on Sales - Target had 4.69 profit
  margin in 2006.
  
• Calculation
• (Net Income Net sales) 2.787 B 59.490 B
  4.69
  
• Interpretation - This is a very attractive profit
  margin in general and in this industry.
  

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Financial Analysis Profitability

• Rate of Return on Assets - Target had a ROA of
  8.93 in 2006.
  
• Calculation
• (Net Income Avg. Total Assets) 2.787 B
  31.209 B 8.93.
  
• Interpretation -The ROA measures the
  profitability well because it combines the
  effects of profit margin and asset turnover.
  
• 8.93 is a very strong value that represents the
  effectiveness of the management at Target.
  

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Present Domestic Competitors

• Home Depot
• Costco
• Kroger
• Sears
• Wal- Mart

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Present Foreign Competitors

• Aeon
• Ito-Yokado
• Tesco

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External Forces

• Political/Legal
• Demographic/Socio-cultural
• Technological
• Economic

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Strengths

• Plans to increase market presence by 25 over the
  next 5 years
  
• Target pays attention to its store environment
  and displays
  
• Target is constantly adjusting its advertising
  strategies to fit ever-changing trends
  
• Target has a good relationship with its
  employees
  

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Weaknesses

• Do not intend to enter international market for 5
  10 years
  
• Low starting wage
• Geographic concentration in the U.S.
• Online retailing missing the mark

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Opportunities

• Store expansion
• Increased online spending
• Growth in private labels
• Rising health care spending

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Threats

• Slow down in consumer spending
• Increased market rates
• Industry consolidation
• High oil prices

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Outlook

• Food-only distribution centers
• CEO Robert Ulrich will retire in 2008
• Will go overseas within 5-10 years

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Recommendations

• Competitive pricing
• Increase market share
• Increase brand recognition

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Final Recommendation

• Stick to increasing market share
• Implementation
• Marketing and Advertising
• Spokesperson
• Employees
• Prescriptions

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Potential Spokesperson
Youre fired unless you shop at Target!
If I could turn back time, Id always shop at
Target.
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Questions

• 1. Who is the present CEO of Target?
• 2. What are some of Targets main strengths?
• 3. What were the three main issues focused on?
• 4. What was the main recommendation?