Citi Comments On Target Corp. Following 10-K Release

Target Corp. TGT guided 2011 SSS to increase +4 to 5% and EPS to approach or exceed 10% growth YoY. Citi believes the low-end of TGT's SSS range should be achievable, and that there is potential upside if the macro economic environment improves throughout the year. Citi reiterates its Buy rating and $69 price target. In January 2011, TGT entered into an agreement to purchase the leasehold interests in up to 220 sites in Canada currently owned by Zellers Inc. in exchange for C$1.825Bn due in two payments, one in May 2011 and one in Sept. 2011. TGT expects the costs associated with its entry into Canada to add expenses of (-$0.10) per share for 2011 EPS. TGT expects the renovation of these Canadian stores to require an investment of over C$1Bn, primarily during 2013-2013, a portion of which may be funded by landlords. In 2010, TGT repurchased 47.8M shares for $2.508B under its $10B share repurchase plan authorized in Nov. 2007. TGT plans to repurchase $1.5-$2.0Bn of common stock in 2011. TGT will migrate its online operations from a platform currently operated by AMZN to a proprietary platform in Fall 2011. In January 2011, TGT announced that it will actively pursue the sale of its credit card receivable portfolio. Note that gross credit card receivables totaled $6.843Bn at 2010-end. TGT closed Tuesday at $49.16