"Second quarter earnings were stronger than expected due to very strong operating margin in our retail segment, and credit card segment performance in line with expectations," said Gregg Steinhafel, chairman, president and chief executive officer. "Looking forward to the second half of the year, we are focused on initiatives to drive incremental traffic and sales in our stores while maintaining disciplined execution in both of our business segments."

Retail Segment Results

Sales decreased 2.7 percent in the second quarter to $14.6 billion in 2009 from $15.0 billion in 2008, due to a 6.2 percent decline in comparable-store sales partially offset by the contribution from new store expansion. Retail segment earnings before interest expense and income taxes (EBIT) were $1,064 million in the second quarter of 2009, a 3.1 percent decrease from $1,098 million in 2008.

Second quarter gross margin rate increased to 31.9 percent from 31.2 percent in 2008, due to gross margin rate improvements within categories, partially offset by the unfavorable mix impact of faster sales growth in non-discretionary lower margin rate categories. Second quarter selling, general and administrative (SG&A) expense dollars were 0.4 percent lower than 2008, benefiting from productivity improvements that more-than-offset the expense of operating additional stores in 2009. At quarter-end, the company was operating 71 more stores than a year ago.

Credit Card Segment Results

Average credit card receivables in the quarter decreased $150 million, or 1.8 percent, from the second quarter of 2008, and quarter-end receivables decreased $349 million, or 4.0 percent, from the same period a year ago.

Credit card segment profit in the quarter declined to $63 million from $74 million last year as a result of Target's reduced investment in the segment and lower floating interest rates, partially offset by improved portfolio performance. Target's pretax return on invested capital (ROIC) from its investment in the credit card segment increased to 8.8 percent in the second quarter from 8.2 percent in 2008.

Net write-offs in the quarter were $304 million, in line with expectations. The allowance for doubtful accounts was $1,004 million at quarter-end, compared with $1,005 million at the end of the first quarter.

Other Expenses

Net interest expense for the quarter decreased $22 million from second quarter 2008 to $194 million, reflecting a lower average portfolio interest rate combined with modestly lower average debt balances.

The company's effective income tax rate for the second quarter was 37.9 percent in 2009, up from 36.8 percent in 2008, primarily due to the favorable resolution of specific tax uncertainties in 2008 that did not recur in 2009. For the full year, the company now expects an effective income tax rate in the range of 37.0 to 38.0 percent.

Miscellaneous

Target Corporation will webcast its second quarter earnings conference call at 9:30am CDT today. Investors and the media are invited to listen to the call through the company's website at www.target.com/investors (click on "webcasts"). A telephone replay of the call will be available beginning at approximately 11:30am CDT today through the end of business on August 20, 2009. The replay number is (800) 642-1687 (passcode: 73958812).

The statement on the expected tax rate is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertaintieswhich could causethe company'sactual resultsto differ materially. The most important risks and uncertainties are described inItem 1Aof the company'sForm 10-K for the fiscal year ended January 31, 2009.

Target Corporation's retail segment includes large, general merchandise and food discount stores, and a fully integrated on-line business called Target.com. In addition, the company operates a credit card segment that offers branded proprietary and Visa credit card products. At quarter-end, the company operated 1,719 Target stores in 49 states.

Target Corporation news releases are available at www.target.com.

  TARGET CORPORATION                                                                                                                                                                                                                                                                                                        Consolidated Statements of Operations                                                                                                                                                                                     Three Months Ended                              Six Months Ended                                                                                             August 1,        August 2,                      August 1,        August 2,                      (millions, except per share data)                            2009             2008             Change        2009             2008             Change                                                                     (unaudited)      (unaudited)                    (unaudited)      (unaudited)                    Sales                                                        $  14,567        $  14,971        (2.7   )  %   $  28,928        $  29,273        (1.2   )  %   Credit card revenues                                            500              501           (0.1   )         972              1,001         (2.9   )      Total revenues                                                  15,067           15,472        (2.6   )         29,900           30,274        (1.2   )      Cost of sales                                                   9,914            10,304        (3.8   )         19,851           20,202        (1.7   )      Selling, general and administrative expenses                    3,136            3,153         (0.6   )         6,150            6,190         (0.7   )      Credit card expenses                                            388              347           12.0             772              620           24.5          Depreciation and amortization                                   478              448           6.7              950              884           7.5           Earnings before interest expense and income taxes               1,151            1,220         (5.7   )         2,177            2,378         (8.5   )      Net interest expense                                                                                                                                          Nonrecourse debt collateralizedby credit card receivables      24               48            (49.5  )         51               67            (24.2  )       Other interest expense                                         171              179           (4.3   )         348              369           (5.8   )       Interest income                                                (1        )      (10       )   (89.8  )         (2        )      (19       )   (87.1  )      Net interest expense                                            194              217           (10.3  )         397              417           (5.1   )      Earnings before income taxes                                    957              1,003         (4.7   )         1,780            1,961         (9.2   )      Provision for income taxes                                      363              369           (1.8   )         664              724           (8.2   )      Net earnings                                                 $  594           $  634           (6.4   )  %   $  1,116         $  1,237         (9.8   )  %   Basic earnings per share                                     $  0.79          $  0.82          (4.1   )  %   $  1.48          $  1.57          (5.5   )  %   Diluted earnings per share                                   $  0.79          $  0.82          (3.9   )  %   $  1.48          $  1.56          (5.3   )  %   Weighted average common shares outstanding                                                                                                                    Basic                                                          752.0            770.3                          752.1            787.9                        Diluted                                                        754.4            773.9                          754.2            791.8                                                                                                                                                                                                                                                                                                                                                 Subject to reclassification                                                                                                                                                                                                                                                                     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  TARGET CORPORATION                                                                                                                                                                                                                                                          Consolidated Statements of Financial Position                                                                                                                                                                            August 1,        January 31,      August 2,        (millions)                                                                            2009             2009             2008          Assets                                                                             (unaudited)                       (unaudited)      Cash and cash equivalents, including marketable securitiesof $385, $302 and $904   $  957           $  864           $  1,527         Credit card receivables, net of allowance of $1,004,$1,010 and $661                   7,288            8,084            7,980         Inventory                                                                             7,528            6,705            7,313         Other current assets                                                                  1,910            1,835            1,800          Total current assets                                                                 17,683           17,488           18,620        Property and equipment                                                                                                                 Land                                                                                 5,726            5,767            5,687          Buildings and improvements                                                           21,530           20,430           19,511         Fixtures and equipment                                                               4,481            4,270            4,031          Computer hardware and software                                                       2,540            2,586            2,498          Construction-in-progress                                                             978              1,763            1,851          Accumulated depreciation                                                             (9,543    )      (9,060    )      (8,426    )    Property and equipment, net                                                          25,712           25,756           25,152        Other noncurrent assets                                                               838              862              1,368         Total assets                                                                       $  44,233        $  44,106        $  45,140        Liabilities and shareholders' investment                                                                                              Accounts payable                                                                   $  6,233         $  6,337         $  6,606         Accrued and other current liabilities                                                 3,004            2,913            3,030         Unsecured debt and other borrowings                                                   517              1,262            1,723         Nonrecourse debt collateralized by credit card receivables                            56               -                -              Total current liabilities                                                            9,810            10,512           11,359        Unsecured debt and other borrowings                                                   11,983           12,000           12,465        Nonrecourse debt collateralized by credit card receivables                            5,458            5,490            5,467         Deferred income taxes                                                                 494              455              534           Other noncurrent liabilities                                                          1,886            1,937            1,858          Total noncurrent liabilities                                                         19,821           19,882           20,324        Shareholders' investment                                                                                                               Common stock                                                                         63               63               63             Additional paid-in capital                                                           2,822            2,762            2,707          Retained earnings                                                                    12,266           11,443           10,861         Accumulated other comprehensive loss                                                 (549      )      (556      )      (174      )    Total shareholders' investment                                                       14,602           13,712           13,457        Total liabilities and shareholders' investment                                     $  44,233        $  44,106        $  45,140        Common shares outstanding                                                             751.9            752.7            755.0                                                                                                                                                                                                                                                                                     Subject to reclassification                                                                                                                                                                                                                                                  -------------------------------------------------------------------------------  

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