     |
|||||||||
 |
|||||||||
 |
 |
 |
 |
 |
 |
 |
 |
||
 |
 |
 |
 |
||||||
In FocusApril 16, 2001 | In Focus Archive »Unscrambling TargetRunning
Target Corp. through the Chicks'
Dozen I just flew in to Minnesota today. Chicks Lynn, Julie and I are doing the book tour all this week. That is, we'll be signing books between trying to keep our houses afloat down on the St. Croix River. If you're in the area, please come to the book signings!! (And feel free to bring some sandbags.) Or you can turn on your TV or radio to see where we are.
My favorite thing about coming to Minnesota, and you gotta remember I'm a Chick and not a fisherman, is Target. Yep. Target. They don't have Target stores everywhere and there isn't a one in Canada, so every trip to "the states" I have to go to Target. You know me and that I can only write about what's really on my mind at that moment, and today, it's Target, and getting there. Target Corp. (TGT)
2. K.I.S.S. (Keep It Simple Sister) Ummmm... can it get any simpler? It's a big red bulls-eye target. The kind you play darts on. But then you go inside the store and it's merchandise galore. Don't bring in your credit card. To top it off, Target owns Marshall Fields and Mervyn's! Simple. To make it even simpler, they have Target.com. I just bought our web guy's wedding present from there. So simple. (Tim, if you're reading this, pretend I just wrote that I got your wedding gift from Saks.) You really should check out www.target.com. I love it. 3. Industry Target is in the retail industry. More specifically, discount retail. Target hasn't saturated the market yet. There are 914 Target stores in 44 States (Alaska, Connecticut, Hawaii, Vermont and West Virginia are all Target-less.) Like I said above, they have no stores internationally. There's a lot of room to grow. Remember when McDonalds used to be just state-side? 4. Leader In It's Field Target's competitors are Wal-mart (WMT), Costco (COST) and K-mart (KM). Target is not the leader in its field. That blue ribbon is worn by Wal-mart. Target has been around since 1962, the same year Wal-mart opened, but Wal-mart does 191 billion dollars in sales each year, while Target does 36 billion. That's quite a gap. K-mart does 37 billion. But because Target's stock is so much more valuable that K-mart's, Target's market cap is at 32 billion while K-mart's is barely 5 billion. So Target is the leading #2 discount retail store. 5. Repeat Profitability Again, toothpaste, shampoo, tampons, chips, pop, the latest t-shirt, the newest Dixie Chicks CD, kid's clothes, birthday presents etc... And then repeat this all again next month. I'm telling you, I'm a repeat $100 a month customer. I got the following numbers from our Chick's Research a Company link (this is new at our site and so exciting.) I typed in TGT in each box. Here is Target's Income Statement, and here is their Balance Sheet. All numbers in millions of dollars. 6. Gross Margins (Sales - Cost of Goods Sold) / Sales (36,903 - 25,295) / 36,903 = 11,608 / 36,903 = .315 .315 x 100 = 31.5% Not quite at our 50% requirement, but there's a reason it's one of the top discount retailers. They don't charge you an arm and a leg for the products they carry... and this is exactly why I shop there. 7. Net Margins Net Income / Sales 1,264 / 36,903 = .034 .034 x 100 = 3.4% 3.4% also doesn't meet our 8% requirement, same reason as above. Target only makes 3.4 cents on every dollar. 8. Cash to Long Term Debt Cash* / Long Term Debt 356 / 5,634 = .06x Woops.not even close to the Chicks wanting them to have as much as they do long term debt. That number would be 1.0, but Target has 0.06. Matter of fact, if you flip the numbers, Target has 15 times more debt than it has cash. *cash, including short term investments 9. Flow Ratio (Current Assets - Cash*) / (Current Liabilities - Short Term Debt) (3,596.4 - 254.3) / (2,140.0 - 924.2) = 3342.1/1215.8 = 2.75 Actually, that's not that bad considering how little cash they have. It still doesn't meet the Chick requirement, but it's a respectable number considering the industry they are in. 10. Increasing Growth (most recent year's sales - last year's sales) / last year's sales = X (36,903 - 33,702) 33,702 = 3,201 / 33,702= .095 .095 x 100 = 9.5% Nice growth!! Right on Target for a Chick company! Here's a graph of Target's ten-year stock chart. Over the past ten years, Target is up 450% compared to the S & P's 200%. That's pretty impressive stock growth, which goes hand in hand with their sales growth. 11. Strong Management and History Robert Ulrich is the Chairman and CEO of Target Corporation. I found this new website when looking for information on the management of a company. It's called Business.com. Great site. Look what I got when I typed in Robert Ulrich. (I also got all the other guys who are executives at Target.) Mr. Ulrich is fifty-six years old and has been with the company in some way, shape or form since 1967. The interesting thing I found at Business.com was what Mr. Ulrich's salary is, what his bonus was last year, and what his stock options are worth. Hmmmm... looks like he is currently worth 116,000 million in Target wealth. Not bad for a Minnesota boy. When looking at Target's "Leadership Team" as they call it, it looks like a "Who's Who" of Minnesota companies. The Chairman and CEO of 3M (MMM) Livio D. Simone is on the board, Chairman and CEO of Medtronic (MDT) William George is on the board, and the Chairmen from Xerox, Wells Fargo Banks, and the list continues. The company started as Dayton's in downtown St. Paul, and through the years changed its name a couple of times. They were Dayton-Hudson for a while, but in 2000 they combined all their companies and put them under one roof and changed the name to Target Co. 12. Buy On Sale You know as a Chick we only use the stock price as a tiebreaker. That is, if two of the companies you are looking at are dead even in the vote, you might want to see which of your two companies is on sale. As for being on sale today, Target's 52-week high is $39.69, and its 52-week low is $21.62. Its 52-week average then is 30.66. Today Target is selling for $35.85. Not on sale, but then again, everything in their store is. Gotta run, I have to get one of those Chick
t-shirts to wear for tomorrow's television interview! --Chick Karin |
|||||||||
| About Us | Register | Contact Us | Information & Policies | Site Index | Search | Home © Everything you see on this site that isn't copyrighted by someone else is copyright ChickSite, LLC 2000 Web design by T2Designs. Programming by Custom Software Solutions. |
|||||||||
 |
 |
1.
Buy What You Know Growing up in Minnesota there was a Target store exactly
six miles from my house. I could walk there, but I didn't have to... my mom went
at least once a week. Target's headquarters are in Minneapolis; hence, I've
known it forever. I love Target. I can't get out of a Target store without
spending at least $100. I'll get some underwear, a CD, a Chick's t-shirt (See
the Club Chick picture? They're all wearing Target Chick T-shirts.), some
toothpaste, shampoo, a bathing suit, film, a Chick t-shirt, chips, a birthday
card for Motley Fool Tom Gardner whose birthday is today and my card is going to
be late, and an Enquirer.