Target Finance Case Study Essay

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Target Corporation

Michael Holt
Dontae Threatt

Target Corporation was founded in 1902 in Minneapolis as the Dayton Dry Goods Company, though the first Target store was opened in 1962 in nearby Roseville, Minnesota. Not until 1995, was the first Super Target was built. In 1999 Target launched their website Target.com. Target grew and eventually became the largest division of Dayton Hudson Corporation, culminating in the company being renamed as Target Corporation in August 2000. The Corporation became a major retailing power house with $52.6 billion in revenues from 1,397 stores in 47 states by 2005. Realizing a 12.1% sales growth over the past five years target had announced plans to continue its growth by opening …show more content…
This store has been remodeled twice since 1972 and the investment would certainly give a lift to the lagging sales. To measure the effect each project would have on EPS, Target’s Income Statement was forecasted for two years using percentage of sales method to compute projections. The EBIT impact was given for each of the five projects, and individually added to future EBIT projections to see its impact on the EPS. Though the impact was miniscule, positive and negative impacts on the EPS were observed amongst the five projects.
After reviewing the five projects along with their data, we concluded that the ranking is as follows: * #1 – The Barn – easily the safest, most uncontroversial project. Brings Target into new market, with little competition, and at the least amount total investment. * #2 – Gopher Place – Good return in a short amount of time, with the highest population growth, thus opportunity for future profits * #3 – Stadium Remodel – A stalwart in the market since 1972, the most affluent community, of the 5, needs a Target that will fit the personality of the community, thus the remodel is needed * #4 – Whalen Court – The largest and most ambitious project of the 5, has the potential for the greatest amount of profit, and in a very high density, affluent community. But, it will not open until 08’ thus lowering NPV + IRR even further * #5 – Goldie’s Square – Compared to its prototype, sales need to
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