Throughout Target Corporation, we are committed to offering our guests an exciting shopping experience that combines fashion newness, trend-right design and superior quality with compelling value and exceptional convenience. Through innovative merchandising, marketing and presentation, we provide our guests with more reasons to shop our stores, resulting in consistent top-line growth and market share gains. Additionally, by maintaining operational and financial discipline, we deliver substantial value to our guests and to our shareholders, even in a challenging environment.

During 2001, Target Stores remained focused on both content differentiation and assortment balance. To help us fulfill our “Expect More” promise to our guests, we continued our successful partnerships with Michael Graves and Sonia Kashuk and established new relationships with Mossimo, Waverly and Eddie Bauer. In addition, we introduced new brands including Tupperware, Levolor and Carter’s Baby Tykes. Equally important, we fulfilled our “Pay Less” commitment by refining our mix of good, better and best products within key merchandise areas and sharpening our opening price points throughout the store. In 2002, we will continue to execute our fundamental strategy, remaining competitive in our pricing and differentiated in our merchandising. New brand introductions are expected to include Woolrich in textiles, Armetale in home décor, Stride Rite in shoes and Physical Science in boys’ and young men’s apparel.

Mervyn’s and Marshall Field’s are also keenly focused on offering fashion newness and value within their respective middle-market and traditional department store formats. In 2001, we increased the visibility of up-trending brands and categories at Mervyn’s, expanded our presence in nationally-branded apparel and intensified our key item focus throughout the store. At Field’s, we completed the conversion of our Dayton’s and Hudson’s stores to Marshall Field’s, leveraging the strength of this well-known brand name. We also revitalized our trend and seasonal merchandise, and rebalanced our assortment for price and quality. In 2002, we plan to continue pursuing these and other initiatives that increase guest traffic and drive higher sales and profits.

In this increasingly competitive environment, we believe that our focus on fashion and innovation in tandem with our commitment to value and quality will continue to make us the preferred shopping destination for our guests and will generate incremental returns for our shareholders.