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greater value, reliability and convenience, quicker delivery of new product and faster, friendlier service GLYPH<209>in short, to do what we have always done, but better. As described in the following pages of this report, our plans in 2004 include the continued profitable expansion of the Target store base in line with our historical growth in the range of 8 to 10 percent net new square footage annually. We expect to add approxi- mately 95 to 100 total new stores, or about 80 to 85 new stores net of closings and relocations. We are very excited about the modifications we are introducing in our new store design in 2004 because we believe this current iteration of Target store is more pleasant and inviting and promotes our goal of being the preferred 

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shopping destination for our guests. In addition, we are optimistic about the potential future benefits provided by other programs we are pursuing, such as our global sourcing and guest relationship management efforts. Many of these initiatives increasingly reflect the inte- gration of cross-functional disciplines, allowing us to leverage our resources, improve our efficiency and increase our overall agility and speedGLYPH<209>critical factors in sustaining our competitive advantage in a dynamic retail environment with a competitor as formidable as Wal*Mart. 

One of the reasons for the success of Target over the long term in this competitive arena is the continuity and consistency of our strategy. For more than four decades, we have been able to replicate the unique Target formula across the country by remaining focused on who our guest is and what she wants, and by consistently creating the excitement that our guests value. We have demonstrated our ability to execute, to innovate and to grow profitably over time. 

GLYPH<210>As we look to the future, we are confident in the underlying strategy, growth and profit potential of Target Stores. Based on our proven track record of performance, we believe that Target will continue to deliver a brand experience that is preferred by our guests.GLYPH<211> 

In the past ten years, Target has approximately doubled its number of stores, roughly tripled its revenues, and more than quadrupled its pretax segment profit and Target Corporation has delivered nearly an 18 percent increase in average annual earnings per share and a total annualized return to shareholders of about 23 percent. 

As we look to the future, we are confident in the underlying strategy, growth and profit potential of Target Stores. Based on our proven track record of performance, we believe that Target will continue to deliver a brand experience that is preferred by our guests, and as a result, we believe that Target still has significant opportunities for profitable expansion and market share increases in the continental United States. 

Though our outlook for MervynGLYPH<213>s and Marshall FieldGLYPH<213>s is less certain at this time, we firmly believe that the strategic review we are undertaking and our resulting decision and actions serve the long-term interests of Target Corporation overall and re-affirm our primary objective to create substantial value for our shareholders. 

Sincerely, 

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