|
11. Segment Reporting
In January 2011, we entered into an agreement to purchase leasehold interests in up to 220 sites in Canada currently operated by Zellers. We believe this transaction will allow us to open 100 to 150 Target stores in Canada, primarily during 2013. We are still in the process of evaluating each location currently leased by Zellers. We have selected 105 locations and expect to finalize the acquisition of these sites by early June 2011. We have the right to select up to 115 additional leases in advance of the second payment in third quarter 2011. As a result of this transaction, we now have three reportable business segments: U.S. Retail, U.S. Credit Card and Canadian.
Our measure of profit for each segment is a measure that management considers analytically useful in measuring the return we are achieving on our investment.
|
Business Segment Results |
|
Three Months Ended April 30, 2011 |
|
Three Months Ended May 1, 2010 |
|
|
|
|
U.S. |
|
U.S.
Credit |
|
|
|
|
|
U.S. |
|
U.S.
Credit |
|
|
|
|
|
|
(millions) |
|
Retail |
|
Card |
|
Canadian |
|
Total |
|
Retail |
|
Card |
|
Canadian |
|
Total |
|
|
Sales/Credit card revenues |
|
$ |
15,580 |
|
$ |
355 |
|
$ |
— |
|
|
$ |
15,935 |
|
$ |
15,158 |
|
$ |
435 |
|
$ |
— |
|
$ |
15,593 |
|
|
Cost of sales |
|
10,838 |
|
— |
|
|
— |
|
|
10,838 |
|
10,412 |
|
— |
|
— |
|
10,412 |
|
|
Bad debt expense(a) |
|
— |
|
12 |
|
|
— |
|
|
12 |
|
— |
|
197 |
|
— |
|
197 |
|
|
Selling, general and administrative/ Operations and marketing expenses(a), (b) |
|
3,173 |
|
125 |
|
|
11 |
|
|
3,309 |
|
3,126 |
|
100 |
|
— |
|
3,226 |
|
|
Depreciation and amortization |
|
507 |
|
5 |
|
|
— |
|
|
512 |
|
512 |
|
4 |
|
— |
|
516 |
|
|
Earnings/(loss) before interest expense and income taxes |
|
1,062 |
|
213 |
|
|
(11 |
) |
|
1,264 |
|
1,108 |
|
134 |
|
— |
|
1,242 |
|
|
Interest expense on nonrecourse debt collateralized by credit card receivables |
|
— |
|
19 |
|
|
— |
|
|
19 |
|
— |
|
23 |
|
— |
|
23 |
|
|
Segment profit/(loss) |
|
$ |
1,062 |
|
$ |
194 |
|
$ |
(11 |
) |
|
$ |
1,245 |
|
$ |
1,108 |
|
$ |
111 |
|
$ |
— |
|
1,219 |
|
|
Unallocated (income) and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest expense |
|
|
|
|
|
|
|
164 |
|
|
|
|
|
|
|
165 |
|
|
Interest income |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
(1 |
) |
|
Earnings before income taxes |
|
|
|
|
|
|
|
$ |
1,081 |
|
|
|
|
|
|
|
$ |
1,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The combination of bad debt expense and operations and marketing expenses, less amounts reimbursed to the U.S. Retail Segment, within the U.S. Credit Card Segment represent credit card expenses on the Consolidated Statements of Operations.
(b) Loyalty Program discounts are recorded as reductions to sales in our U.S. Retail Segment. Effective with the October 2010 nationwide launch of our new 5% REDcard Rewards loyalty program, we changed the formula under which our U.S. Credit Card segment reimburses our U.S. Retail Segment to better align with the attributes of the new program. In the three months ended April 30, 2011, these reimbursed amounts were $49 million compared with $17 million in the corresponding period in 2010. In all periods these amounts were recorded as reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing expenses within the U.S. Credit Card Segment.
Note: The sum of the segment amounts may not equal the total amounts due to rounding.
|
Total Assets by Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2011 |
|
January 29, 2011 |
|
May 1, 2010 |
|
|
|
|
U.S. |
|
U.S.
Credit |
|
|
|
|
|
U.S. |
|
U.S.
Credit |
|
|
|
|
|
U.S. |
|
U.S.
Credit |
|
|
|
|
|
|
(millions) |
|
Retail |
|
Card |
|
Canadian |
|
Total |
|
Retail |
|
Card |
|
Canadian |
|
Total |
|
Retail |
|
Card |
|
Canadian |
|
Total |
|
|
Total assets |
|
$ |
37,032 |
|
$ |
5,934 |
|
$ |
30 |
|
$ |
42,996 |
|
$ |
37,324 |
|
$ |
6,381 |
|
$ |
— |
|
$ |
43,705 |
|
$ |
36,633 |
|
$ |
6,690 |
|
$ |
— |
|
$ |
43,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Substantially all of our revenues are generated in, and long-lived assets are located in, the United States. However, as we expand our operations, an increasing proportion of our business will be in Canada. |