2001 Annual Report
To Our Shareholders Business Discussion Financial Review Corporate Information

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Target Stores provides the cornerstone of growth for the corporation through investment in new discount stores and SuperTarget stores as well as through a disciplined store remodeling program. This investment underscores our commitment to protect the integrity of the Target brand by delivering excitement to our guests and by ensuring uniformity throughout the chain. Over the past five years, we have increased the net square footage of this division by more than 50 percent, while enhancing our already high standards of financial performance. We expect this division to drive our growth for many more years to come.

During 2001, we continued our store expansion, producing a net increase in square footage of about 11 percent for the full year. New discount store locations accounted for slightly more than half of this growth and included the opening of our first store in Maine, our 47th state, as well as substantial buildbacks in New York, Los Angeles and Phoenix. In 2002, we expect to increase net square footage by approximately 12 percent, as we open most of the 35 sites acquired from Montgomery Ward and 75 to 85 other locations. Beyond 2002, we expect our annual rate of square footage growth to return to an average of 8 to 10 percent, in line with historical levels.

SuperTarget continues to be an important component of Target’s expansion strategy, with its store count more than doubling to 62 stores during 2001. To maintain our guests’ strong acceptance of this format, we continue to focus on delivering unsurpassed freshness, quality and value in produce and other perishables and to ensure that every facet of our grocery assortment is as differentiated as our general merchandise. Additionally, we are improving SuperTarget’s productivity by leveraging existing resources and systems, and streamlining operations in areas that do not affect guest service. Of Target’s expected net square footage growth in 2002, nearly 5 million square feet, or 40 percent, will be attributable to additional SuperTarget locations.

For forty years, Target Stores has delivered consistent and profitable new store growth, demonstrating the strength and sustainability of our strategy. We believe these decades of success validate our innovative and disciplined approach to growth and provide a foundation for further expansion in the foreseeable future.
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