Target Essay

1099 WordsJul 27, 20115 Pages
TANGIBLES Profitability Net Profit Margin Target’s profitability as a percentage of sales, from 2003 to 2008, appears to be within industry average, at least when compared to two other leading companies, Wal-Mart and Khol’s. Comparative analysis shows us that Target has an average net profit margin of 5.64%, compared to Wal-Mart and khol’s, 4.10% and 7.81 %, respectively. Taking a closer look at these numbers, we see that Target had a better compounded annual growth rate. Target’s CAGR was 3.60%, while Wal-Mart’s and Khol’s CAGR were 0.61% and -1.37%, respectively. Target’s net profit margin growth over this 5 year span outperformed its competitors, especially Khol’s. Gross Profit Margin A review of Target’s ability to produce sales after cost of goods are paid, demonstrates that between the years of 2003 and 2008 are also within industry average. Target’s gross profit margin was 40.04%, compared to Wal-Mart’s 28.29% and Khol’s 42.20%. One can also see that during this time frame, Target’s gross profit margin was approximately 1.41 times greater than Wal-Mart’s. Unfortunately, Target’s CAGR during this time was -0.49%, while Wal-Mart and Khol’s were 1.89% and 1.19%. Target’s gross profit margin remaind relatively flat during these years, while Wal-Mart and Khol’s, all be it rather mildly incremental, was able to increase their gross profit margins. Return on Equity (single year weighted averages) A look of profitability in terms of its shareholder equity, shows us that once again, Target’s ability to produce income on its investor’s equity was within margins of its competitors. Target’s return on equity was 23.68% with a -0.74% CAGR. Its poor CAGR during this time frame maybe related to its three average of 15.57% (2004-2006), as compared to its previous year ROE of 20.41% (2003). Comparatively, Wal-Mart’s ROE was 25.45% with a

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