Target Corporation reported earnings per share for the first quarter ended May 3, 2003 were flat at 38 cents, compared the first quarter last year. All earnings per share figures refer to diluted earnings per share. First quarter net earnings increased 1.3 percent to $349 million, compared with $345 million in 2002.

“In light of our soft sales performance during the quarter, we are pleased with our first quarter results,” said Bob Ulrich, chairman and chief executive officer of Target Corporation. “To continue to achieve profitable market share growth in this environment, we remain focused on maintaining operational and financial discipline and delivering even greater value to our guests.”

Total revenues in the first quarter increased 7.6 percent to $10.322 billion from $9.594 billion in 2002, driven by a 9.8 percent revenue increase at Target Stores, principally resulting from new store expansion and the growth in our credit card operations. Comparable-store sales for the corporation in the first quarter 2003 declined 0.1 percent. (Total revenues include retail sales and net credit revenues. Comparable-store sales are sales from stores open longer than one year.)

For the quarter, pre-tax segment profit increased 2.0 percent to $777 million, compared with $762 million in the first quarter 2002. Pre-tax profit at Target Stores increased $56 million, or 8.2 percent. Pre-tax profit declined at both Mervyn’s and Marshall Field’s by $28 million and $13 million, respectively. (Pre-tax segment profit is earnings before LIFO, interest, other expense and unusual items.)

In the first quarter, the company’s gross margin rate was essentially unchanged from the prior year. (Gross margin rate represents gross margin as a percentage of sales.) Expense rate, excluding credit card operations, was unfavorable to prior year due to a lack of sales leverage at all three divisions. (Expense rate represents selling, general and administrative expenses as a percentage of sales. It includes buying and occupancy, advertising, start-up and other expense, and excludes depreciation and expenses associated with credit card operations.)

Contribution to segment profit from the company’s credit card operations increased to $151 million in the first quarter from $115 million a year ago. At quarter-end, gross receivables were $5.682 billion, compared with $4.246 billion at the end of first quarter 2002, due to the continued growth in issuance and usage of the Target Visa card. First quarter-end receivables balances were lower than at year-end 2002, reflecting normal seasonality. Despite this sequential quarterly decline in receivables, the provision for bad debt expense exceeded write-offs by $8 million in the quarter as a result of the company’s consistent practice of providing for projected future write-offs as receivables are created. Results of credit card operations are included in the pre-tax segment profit for each of the company’s three business segments.

Net interest expense for the quarter increased $7 million compared with first quarter 2002 reflecting higher average funded balances, partially offset by the benefit of a lower average portfolio interest rate.

The company’s effective income tax rate was 38.0 percent, compared with 38.0 percent last year.

During the first quarter of 2003, the company adopted EITF No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor”. The adoption of this guidance had no material impact on our sales, net earnings, cash flows or financial position.

TARGET CORPORATION CONSOLIDATED RESULTS OF OPERATIONS

                                                    Three Months Ended
    (Millions, except per share data)         May 3,      May 4,       %
    (Unaudited)                                2003        2002      Change

    Sales                                     $9,983      $9,336       6.9%
    Net credit revenues                          339         258      31.5

    Total revenues                            10,322       9,594       7.6

    Cost of sales                              6,764       6,322       7.0
    Selling, general and administrative
     expense                                   2,326       2,127       9.4
    Credit expense                               210         165      27.4
    Depreciation and amortization                317         289       9.5
    Interest expense                             142         135       4.8

    Earnings before income taxes                 563         556       1.3

    Provision for income taxes                   214         211       1.3

    Net earnings                                $349        $345       1.3%