Fitch Ratings Affirms Target Corporation's IDR at 'A+'; Outlook Stable.

CHICAGO -- Fitch Ratings has affirmed the ratings of Target Corporation (NYSE:TGT) (Target) as follows:

--Issuer Default Rating (IDR) 'A+';

--Bank credit facility 'A+';

--Senior notes 'A+';

--Commercial paper 'F1'.

Approximately $8.6 billion of long-term debt is affected by these actions. The Rating Outlook is Stable.

The affirmations and Stable Rating Outlook reflect Target's successful business strategy of offering unique merchandise at affordable prices and a diverse customer base, which has produced continued strong operating results and credit metrics. The ratings also consider Target's high percentage of real estate ownership balanced by intense competition in the discounter segment and the potential pressure on consumer spending from sustained high energy costs.

Target's relationships with designers, clean store environment and good customer service have positioned the company as an upscale discounter which attracts customers of various income levels. The company's solid mid single digit comparable store sales growth, combined with its strategic store growth, resulted in revenues growing 9.2% in the first quarter of 2007. Steady retail margins together with strong credit card performance allowed Target to expand its operating EBIT margin by 20 basis points to 8.7% in the latest twelve months ending May 5, 2007 from 8.5% in 2006.

The EBIT contribution from the credit card business increased to 18.3% in the first quarter of 2007 as compared to 17.8% in the first quarter of 2006 as operating profit grew 21.5%. The overall credit quality of the portfolio remains relatively intact as net write-offs as a percentage of average receivables increased to 6.0% in the first quarter of 2007 from 4.3% in the same time period in 2006.

Target's solid operating results and disciplined financial policies have resulted in steady to improving credit metrics, with EBITDAR coverage of interest and rents of 8.6x and total adjusted debt/EBITDAR of 1.8 times (x) in the latest twelve months ending May 5, 2007 as compared to 8.4x and 1.7x, respectively, in 2006. The company's cash and cash flow should be sufficient to fund capital expenditures and dividends, although share repurchases will likely be partly financed with debt. Nonetheless, Fitch expects Target will remain disciplined in its financial management.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.