Target Corporation Third Quarter Earnings Per Share From Continuing Operations $0.49

MINNEAPOLIS, Nov. 10 /PRNewswire-FirstCall/ -- Target Corporation today reported earnings from continuing operations for the third quarter ended October 29, 2005 of $435 million, or 49 cents per share, compared with $324 million, or 36 cents per share, in the third quarter ended October 30, 2004. Including 23 cents per share from the combination of earnings from discontinued operations and gain on disposal of discontinued operations, third quarter 2004 earnings per share totaled 59 cents per share. All earnings per share figures refer to diluted earnings per share.

"As our robust third quarter performance developed over the past several months, we have expressed growing confidence in Target's ability to deliver diluted EPS of $1.50, or more, in the second half of this year," said Bob Ulrich, chairman and chief executive officer of Target Corporation. "Our strategic discipline, consistent execution, and commitment to delight Target's guests with the right combination of innovation, design and value reinforce our belief that we will continue to grow market share profitably in this year's fourth quarter and well beyond. Specifically, our outlook envisions that, beginning in this year's fourth quarter, we are likely to achieve a more typical mid-teen percentage growth in EPS, consistent with our long-term growth objectives."

For reference, the company earned 90 cents per share from continuing operations in the fourth quarter of 2004.

Continuing Operations

Total revenues in the third quarter increased 11.9 percent to $12.206 billion from $10.909 billion in 2004, driven by a 5.9 percent increase in comparable store sales combined with the contribution from new store expansion and our credit card operations. (Total revenues include retail sales and net credit revenues. Comparable-store sales are sales from stores open longer than one year.)

For the quarter, earnings before interest and income taxes (EBIT) increased 31.2 percent to $831 million, compared with $633 million in the third quarter 2004. The contribution from the company's credit card operations to EBIT was $158 million, an increase of $38 million, or 31.3 percent. (Contribution from credit card operations includes the aggregate of finance charge revenue, late fees, other revenue, intracompany and third party merchant fees less bad debt provision and operations and marketing expense.)

In the third quarter, the company's gross margin rate improved sharply from the prior year, primarily due to higher markup. Favorability in markdowns and inventory shrink also contributed to the improvement. The company's expense rate was unfavorable to prior year due to the net effects of three hurricanes and several other unfavorable factors, partially offset by the benefit of the previously-disclosed Visa/MasterCard settlement and several other favorable factors. (Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales.)

Net interest expense for the quarter increased $5 million compared with third quarter 2004. This increase reflects higher average funded balances, partially offset by a lower average portfolio interest rate in the current year.

Other Factors

During the third quarter, the company adjusted its year-to-date 2005 effective income tax rate for continuing operations to approximately 38.2 percent, which resulted in a third quarter income tax rate of about 39.0 percent. The effective income tax rate in 2004 was 37.8 percent for both the year-to-date and third quarter periods.

In June 2004, the company announced a $3 billion share repurchase program. Under this program, the company repurchased $365 million of its common stock during the third quarter of 2005, acquiring 6.7 million shares at an average price of $54.36 per share. Program to-date, the company has acquired 46.1 million shares of its common stock at an average price per share of $47.18, reflecting a total investment of approximately $2.17 billion.

Target Corporation also announced today that its Board has increased its current $3 billion share repurchase authorization by $2 billion, for a total authorization of $5 billion. The company expects to continue to execute this program primarily in open market transactions, subject to market conditions, and expects to complete the aggregate $5 billion program in approximately two to three years.

Miscellaneous

Target Corporation will webcast its third quarter earnings conference call at 9:30am CST today. Investors and the media are invited to listen to the call through the company's website at http://www.target.com/ (scroll down to the bottom of the Home page and click on "Investors", then click on "Events+Calendar", then click "webcasts"). A telephone replay of the call will be available beginning at approximately 11:30am CST today through the end of business on November 11, 2005. The replay number is (706) 645-9291.

Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company's 2005 Second Quarter Form 10-Q.

Target Corporation's continuing operations include large, general merchandise discount stores, as well as an on-line business called Target.com. At quarter-end, the company operated 1,400 Target stores in 47 states.

Target Corporation news releases are available at http://www.target.com/ or http://www.prnewswire.com/ .

(Tables Follow) CONSOLIDATED RESULTS OF OPERATIONS Three Months Ended (Millions, except per share data) October 29, October 30, % (Unaudited) 2005 2004 Change Sales $11,863 $10,619 11.7 % Net credit revenues 343 290 18.1 Total revenues 12,206 10,909 11.9 Cost of sales 8,034 7,319 9.8 Selling, general and administrative expense 2,786 2,448 13.8 Credit expense 201 185 8.9 Depreciation and amortization 354 324 9.4 Earnings from continuing operations before interest expense and income taxes 831 633 31.2 Net interest expense 118 113 4.5 Earnings from continuing operations before income taxes 713 520 37.0 Provision for income taxes 278 196 41.3 Earnings from continuing operations 435 324 34.5 Earnings from discontinued operations, net of $2 and $46 tax - 4 (100.0) Gain on disposal of discontinued operations, net of $132 and $782 tax - 203 (100.0) Net earnings $435 $531 (18.0)% Basic earnings per share: Continuing operations $0.49 $0.36 36.7 % Discontinued operations - - - Gain on disposal of discontinued operations - 0.23 (100.0) Basic earnings per share $0.49 $0.59 (16.6)% Diluted earnings per share: Continuing operations $0.49 $0.36 37.2 % Discontinued operations - - - Gain on disposal of discontinued operations - 0.23 (100.0) Diluted earnings per share $0.49 $0.59 (16.3)% Weighted average common shares outstanding: Basic 881.2 896.0 Diluted 887.0 905.0 CONSOLIDATED RESULTS OF OPERATIONS Nine Months Ended (Millions, except per share data) October 29, October 30, % (Unaudited) 2005 2004 Change Sales $34,701 $30,805 12.6 % Net credit revenues 972 840 15.7 Total revenues 35,673 31,645 12.7 Cost of sales 23,418 21,097 11.0 Selling, general and administrative expense 7,931 6,909 14.8 Credit expense 567 532 6.7 Depreciation and amortization 1,040 915 13.7 Earnings from continuing operations before interest expense and income taxes 2,717 2,192 24.0 Net interest expense 339 463 (26.8) Earnings from continuing operations before income taxes 2,378 1,729 37.6 Provision for income taxes 909 653 39.1 Earnings from continuing operations 1,469 1,076 36.7 Earnings from discontinued operations, net of $2 and $46 tax - 75 (100.0) Gain on disposal of discontinued operations, net of $132 and $782 tax - 1,222 (100.0) Net earnings $1,469 $2,373 (38.1)% Basic earnings per share: Continuing operations $1.66 $1.19 40.2 % Discontinued operations - 0.08 (100.0) Gain on disposal of discontinued operations - 1.35 (100.0) Basic earnings per share $1.66 $2.62 (36.5)% Diluted earnings per share: Continuing operations $1.65 $1.17 40.4 % Discontinued operations - 0.08 (100.0) Gain on disposal of discontinued operations - 1.34 (100.0) Diluted earnings per share $1.65 $2.59 (36.4)% Weighted average common shares outstanding: Basic 883.8 906.7 Diluted 890.6 915.2 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION SUBJECT TO RECLASSIFICATION (Millions) October 29, October 30, (Unaudited) 2005 2004 ASSETS Cash and cash equivalents $490 $1,587 Accounts receivable, net 5,127 4,551 Inventory 7,488 6,559 Other current assets 1,293 1,104 Current assets of discontinued operations - - Total current assets 14,398 13,801 Property and equipment, net 18,573 16,473 Other non-current assets 1,514 1,536 Non-current assets of discontinued operations - - Total assets $34,485 $31,810 LIABILITIES AND SHAREHOLDERS' INVESTMENT Accounts payable $6,953 $6,164 Current portion of long-term debt and notes payable 752 506 Other current liabilities 1,923 1,803 Current liabilities of discontinued operations - - Total current liabilities 9,628 8,473 Long-term debt 9,143 9,082 Deferred income taxes 973 768 Other non-current liabilities 1,185 1,011 Non-current liabilities of discontinued operations - - Shareholders' investment 13,556 12,476 Total liabilities and shareholders' investment $34,485 $31,810 Common shares outstanding 879.2 895.4 CONSOLIDATED STATEMENTS OF CASH FLOWS SUBJECT TO RECLASSIFICATION Nine Months Ended (Millions) October 29, October 30, (Unaudited) 2005 2004 OPERATING ACTIVITIES Net earnings $1,469 $2,373 Earnings from and gain on disposal of discontinued operations, net of tax - (1,297) Earnings from continuing operations 1,469 1,076 Reconciliation to cash flow: Depreciation and amortization 1,040 915 Deferred income tax - 136 Bad debt provision 337 327 Loss on disposal of fixed assets, net 48 40 Other non-cash items affecting earnings 41 78 Changes in operating accounts providing/(requiring) cash: Accounts receivable originated at Target (26) 3 Inventory (2,104) (2,028) Other current assets (69) (7) Other non-current assets (14) (155) Accounts payable 1,174 1,208 Accrued liabilities 194 139 Income taxes payable (303) (65) Other 20 (17) Cash Flow Provided by Operations 1,807 1,650 INVESTING ACTIVITIES Expenditures for property and equipment (2,657) (2,206) Proceeds from disposal of fixed assets 22 15 Change in accounts receivable originated at third parties (369) (260) Proceeds from sale of discontinued operations - 4,893 Cash Flow (Required) / Provided by Investing Activities (3,004) 2,442 FINANCING ACTIVITIES Increase in notes payable, net 924 - Additions to long-term debt 13 - Reductions of long-term debt (527) (1,486) Dividends paid (230) (200) Repurchase of stock (898) (990) Stock option exercises 161 118 Other (1) - Cash Flow Required by Financing Activities (558) (2,558) Net Cash Required by Discontinued Operations - (655) Net (Decrease) / Increase in Cash and Cash Equivalents (1,755) 879 Cash and Cash Equivalents at Beginning of Period 2,245 708 Cash and Cash Equivalents at End of Period $490 $1,587 Target Corporation (Millions) (Unaudited) NUMBER OF STORES, RETAIL SQUARE FEET and COMPARABLE STORE SALES Retail square feet in thousands; reflects total square feet less office, distribution center and vacant space. Number of Stores Retail Square Feet October 29, October 30, October 29, October 30, % 2005 2004 2005 2004 Change Target General Merchandise Stores 1,243 1,177 150,879 141,503 6.6 % SuperTarget Stores 157 136 27,764 24,057 15.4 Total 1,400 1,313 178,643 165,560 7.9 % Three Months Ended Nine Months Ended October 29, October 30, October 29, October 30, 2005 2004 2005 2004 Continuing Operations Comparable Store Sales 5.9% 4.5% 6.3% 5.2% CREDIT CARD CONTRIBUTION OF CONTINUING OPERATIONS Three Months Nine Months Ended Ended October October October October 29, 30, 29, 30, 2005 2004 2005 2004 Revenues Finance charges, late fees and other revenues $311 $264 $883 $771 Merchant fees Intracompany 16 15 48 43 Third-party 32 26 89 69 Total revenues 359 305 1,020 883 Expenses Bad debt provision 120 111 337 327 Operations and marketing 81 74 230 205 Total expenses 201 185 567 532 Pre-tax credit card contribution $158 $120 $453 $351 As a percent of average receivables (annualized) 11.5% 10.0% 11.2% 9.8% ALLOWANCE FOR DOUBTFUL ACCOUNTS Three Months Nine Months Ended Ended October October October October 29, 30, 29, 30, 2005 2004 2005 2004 Allowance at beginning of period $409 $351 $387 $352 Bad debt provision 120 111 337 327 Net write-offs (112) (99) (307) (316) Allowance at end of period $417 $363 $417 $363 As a percent of period-end receivables 7.5% 7.4% 7.5% 7.4% SUPPLEMENTAL DATA October October 29, 30, 2005 2004 Period-end receivables $5,544 $4,914 Total past due as a percent of period-end receivables * 3.2% 3.8% * Accounts with three or more payments past due. Three Months Nine Months Ended Ended October October October October 29, 30, 29, 30, 2005 2004 2005 2004 Total revenues as a percent of average receivables (annualized): 26.2% 25.3% 25.2% 24.6% Net write-offs as a percent of average receivables (annualized): 8.1% 8.2% 7.6% 8.8% Average receivables $5,499 $4,821 $5,392 $4,786