Dayton Hudson Corporation

777 Nicollet Mall
Minneapolis, Minnesota 55402
U.S.A.
(612) 370-6948
Fax: (612) 370-5521

Public Company
Incorporated: 1969
Employees: 161,215
Sales: $14.74 billion
Stock Exchanges: New York Pacific

Dayton Hudson Corporation operates the well-known Target discount stores, Mervyn’s moderately priced retail stores, and the Dayton’s, Hudson’s, and Marshall Field department stores in the Midwest. From its impecunious beginnings in 1902 on a small plot of land in Minneapolis, the Dayton Hudson Corporation grew by the 1990s into one of the five largest retailers in the United States, with stores in 33 states and annual sales of more than $13 billion. Its philanthropy has been and still is legendary. In 1989 Dayton Hudson received the America’s Corporate Conscience Award for its magnanimity, and in the same year, U.S. President George Bush presented the chairman and chief executive officer, Kenneth A. Macke, with the National Medal of Arts Award in recognition of the corporation’s generous financial support of the arts. Dayton Hudson also has been recognized for its efficiency. In 1984 the University of California’s School of Business Administration named it “best managed company in the U.S.A.”

Dayton Hudson bears the strong imprint of its founder, George Draper Dayton. Dayton’s father, a physician in New York state, could not afford to send him to college, in part because the doctor freely gave his services to the poor. Hence Dayton set off on his own in 1873 at age 16 to work in a coal and lumberyard. A workaholic, he undermined his health and a year later had to return to the family home to recuperate. Undeterred, he went on to become a banker. Less than ten years later, in 1883, he was rich enough to buy the Bank of Worthington in Minnesota. Meanwhile he had married and had become active in the Presbyterian Church.

Dayton’s connection with religion and the Presbyterian Church explains the rise of his Dayton Company. In 1893, the year of a recession that sent real estate prices tumbling, the Westminster Presbyterian Church in Minneapolis burned down. The insurance did not cover the cost of a new building, and the only other source of income, a corner lot next to the demolished church, was unsalable because the real estate market was doing poorly. The congregation prevailed on the Dayton family, who were faithful members of the church, to purchase it so the building of a new church could proceed. George Draper Dayton bought it and eventually erected a six-story building on the lot. Casting about for tenants, he decided to buy the nearby Goodfellow Dry Goods store and set it up in the new building. In the spring of 1902 the store was known as the Goodfellow Dry Goods store; it was then named the Dayton Dry Goods store, then simply the Dayton Company, the forerunner of Dayton Hudson Corporation.

Eventually the store would expand into the six-story edifice. George Draper Dayton, with no experience in the retail trade, wielded tight control of the company until his death in 1938. His principles of thrift and sobriety and his connections as a banker enabled the company to grow. As long as he was at the helm, the store was run as a family enterprise. Every Christmas Eve he would hand out candy to each employee of the store. Obsessed with punctuality, he was known to lock the doors at the onset of a meeting, forcing latecomers to wait and apologize to him in person afterwards. The store was run on strict Presbyterian guidelines: no liquor was sold, the store was closed on Sunday, no business travel or advertising was permitted on the Sabbath, and the Dayton Company refused to advertise in a newspaper that sponsored liquor ads.

This approach did not stifle business; the Dayton Company became extremely successful. A multi-million dollar business by the 1920s, the Dayton Company decided it was ready to expand, purchasing J.B. Hudson & Son, Minneapolis jewelers, in 1929, just two months before the stock market crash.

The Dayton Company managed to weather the Great Depression, although throughout it, the jewelry company operated in the red. George Draper Dayton’s son David had died in 1923 at age 43, and George turned more and more of the company business over to another son, Nelson. George Draper Dayton died in 1938. He left only a modest personal fortune, having given away millions of dollars to charity. In 1918 the Dayton Foundation had been established with $1 million.

Nelson Dayton took over the presidency of the Dayton Company in 1938, when it was already a $14 million business, and saw it grow to a $50 million enterprise. World War II did not hamper business; rather, Dayton’s turned the war into an asset. Consumer goods were so scarce that it was no longer necessary to persuade shoppers to buy what merchandise was available. Sales volume increased dramatically thanks to Dayton’s managers, who obtained goods to keep the store full. Nelson Dayton was scrupulous about complying with the government’s wartime control of business and when, for instance, the government carried out its drive for scrap metal, he ordered the store’s electric sign dismantled and added to the scrap heap. Until Nelson Dayton’s death in 1950, the company was run along the strict moral lines of its founder. In January 1944 Dayton’s became one of the first stores in the nation to offer to its workers a retirement policy, followed in 1950 by a comprehensive insurance policy.

With Nelson Dayton’s death in 1950, the Dayton Company embarked on a new era. Instead of one-man rule, the company was led by a team of five Dayton cousins, although one of them, Nelson’s son Donald Dayton, assumed the title of president. The prohibition of liquor in the store’s dining rooms was dropped, and soon the Dayton Company would be completely secularized, advertising and doing business on Sunday.

The new management of the Dayton Company undertook radical and costly innovations. In 1954 the J.L. Hudson Company, which would eventually merge with Dayton, opened the world’s largest shopping mall in Detroit. It was a great success, and two years later the Dayton Company decided to build a mall on a 500-acre plot of land outside of Minneapolis. Horrified to learn that Minneapolis had only 113 good shopping days a year, the architect decided to build a mall under cover, and the first enclosed shopping mall in history made its appearance.

The safe, conservative management style favored by George Draper Dayton and his son Nelson was history, and a younger, more aggressive management pushed for radical expansion and innovation. The company established the large discount chain Target in 1962, and in 1966 decided to enter the highly competitive market of retail bookselling, opening B. Dalton bookstores.

In 1967 the company, by then known as Dayton Corporation, made its first public stock offering. That year, it acquired San Francisco’s Shreve and Company, which merged with J.B. Hudson to form Dayton Jewelers. In 1968 it bought the plckwick Book Shops in Los Angeles and later merged them with B. Dalton. Also in 1968 the company acquired department stores in Oregon and Arizona. The following year brought the acquisition of J.E. Caldwell, a Philadelphia-based chain of jewelry stores, and Lechmere, a Boston retailer.

The year 1969 also saw a major acquisition, of the Detroit-based J.L. Hudson Company, a department store chain that had been in existence since 1881. The merger resulted in Dayton Hudson Corporation, the Uth-largest retailer in the United States. Dayton Hudson stock was listed on the New York Stock Exchange.

With the merger, the Dayton Foundation changed its name to the Dayton Hudson Foundation. Since 1946, 5% of the Dayton Company’s taxable income was donated to the foundation, which continued to be the case after the merger. The foundation inspired the Minneapolis Chamber of Commerce in 1976 to establish the Minneapolis 5% Club, which eventually included 23 companies, each donating 5% of their respective taxable incomes to charities.

Dayton Hudson bought two more jewelers in 1970—C.D. Peacock, Inc., of Chicago, and J. Jessop and Sons of San Diego. Company revenues surpassed $1 billion in 1971.

Mervyn’s, a line of moderate-price department stores, merged with Dayton Hudson in 1978. That year, Dayton Hudson became the seventh-largest general merchandise retailer in the U.S., its revenues topping $3 billion in 1979.

Dayton Hudson bought Ayr-Way, an Indianapolis-based chain of 50 discount stores, in 1980, and converted those units to Target stores. In 1982 the company sold Dayton Hudson Jewelers, and in 1986 it divested itself of B. Dalton.

The year 1987 brought an unsolicited takeover bid from Dart Group, a company controlled by the acquisition-minded Haft family. The struggle that ensued featured lawsuits by both parties as well as a bogus counteroffer by a small investor who, as it turned out, had no financing. The October stock market crash further complicated the matter, and Dart withdrew its bid. In 1990 Dayton Hudson bought the Marshall Field stores from BATUS Inc. for about $1 billion. The acquisition added 24 department stores to the Dayton Hudson group and doubled its department store retail space. The venerable Marshall Field’s was as much a landmark in the Chicago area as Dayton’s was in Minneapolis and the Hudson stores were in Detroit.

By 1991 the Dayton Hudson Corporation consisted of three major operating units: Target, with 420 discount stores in 32 states; Mervyn’s, with 227 stores in 15 states, and the Department Store Company, operating 20 Hudson’s, 17 Dayton’s, and 24 Marshall Field’s stores. Such vast expansion from the one building in which Dayton was housed for so long no doubt would have stunned the company’s founder. Capital expansion as well as more varied retailing had become the new mottos added to the old policies of thrift and sobriety. Hence while Dayton, Hudson, and Marshall Field department stores offer the monied customer more costly and sophisticated merchandise, the popular Target and Mervyn’s cater to the budget-conscious customer, offering apparel and recreational items on a self-service basis. With the onset of the 1990s, Target continued to be Dayton Hudson Corporation’s biggest money maker. The company opened its first Target Greatland, larger than typical Target stores, in 1990, and planned additional ones in 1991.

Dayton Hudson’s three units operate autonomously. Significant investment is made for the long term; in 1990 alone the company’s capital spending program amounted to $1 billion. Target and Mervyn stores will likely continue to be the fastest growing and most profitable for the corporation.

Operating Divisions

Department Store Division; Mervyn’s; Target.

Further Reading

Dayton, George Draper, II, Our Story: With Histories of the Dayton, McDonald and Winchell Families, Wyzata, Minnesota [n.p.], 1987.

—Sina Dubovoj

Dayton Hudson Corporation

777 Nicollet Mall
Minneapolis, Minnesota 55402
U.S.A.
(612) 370-6948
Fax: (612) 370-5521

Public Company
Incorporated: 1969
Employees: 213,000
Sales: $23.5 billion (1995)
Stock Exchanges: New York Pacific
SICs: 5311 Department Stores

Dayton Hudson Corporation operates the well-known Target discount stores, Mervyn’s moderately priced retail stores, and the Dayton’s, Hudson’s, and Marshall Field department stores in the Midwest. From its impecunious beginnings in 1902 on a small plot of land in Minneapolis, the Dayton Hudson Corporation had grown by the late 1990s to become the fourth largest retailer in the United States, with stores in 38 states and annual sales of more than $23 billion. Its philanthropy has been and still is legendary. In 1989 Dayton Hudson received the America’s Corporate Conscience Award for its magnanimity, and in the same year, U.S. President George Bush presented the chairman and chief executive officer, Kenneth A. Macke, with the National Medal of Arts Award in recognition of the corporation’s generous financial support of the arts. Committed to minimizing packaging waste through wide-ranging recycling efforts, Dayton Hudson also has been recognized for its managerial efficiency. In 1984 the University of California’s School of Business Administration named it “best managed company in the U.S.A.”

Dayton Hudson bears the strong imprint of its founder, George Draper Dayton. Dayton’s father, a physician in New York state, could not afford to send him to college, in part because the doctor freely gave his services to the poor. Hence Dayton set off on his own in 1873 at age 16 to work in a coal and lumberyard. A workaholic, he undermined his health and a year later had to return to the family home to recuperate. Undeterred, he went on to become a banker. Less than ten years later, in 1883, he was rich enough to buy the Bank of Worthington in Minnesota. Meanwhile he had married and had become active in the Presbyterian Church.

Early Years

Dayton’s connection with the Presbyterian Church proved to be instrumental to the rise of his Dayton Company. In 1893, the year of a recession that sent local real estate prices tumbling, the Westminster Presbyterian Church in Minneapolis burned down. The insurance did not cover the cost of a new building, and the only other source of income, a corner lot next to the demolished church, was unsalable because the real estate market was doing poorly. The congregation prevailed on the Dayton family, who were faithful members of the church, to purchase it so the building of a new church could proceed. Dayton bought it and eventually erected a six-story building on the lot. Casting about for tenants, he decided to buy the nearby Goodfellow Dry Goods store and set it up in the new building. In the spring of 1902 the store was known as the Goodfellow Dry Goods store; it was then named the Dayton Dry Goods store, then simply the Dayton Company, the forerunner of Dayton Hudson Corporation.

Eventually the store would expand to fill the six-story edifice. Dayton, with no previous experience in the retail trade, wielded tight control of the company until his death in 1938. His principles of thrift and sobriety and his connections as a banker enabled the company to grow. As long as he was at the helm, the store was run as a family enterprise. Every Christmas Eve he would hand out candy to each employee of the store. Obsessed with punctuality, he was known to lock the doors at the onset of a meeting, forcing latecomers to wait and apologize to him in person afterwards. The store was run on strict Presbyterian guidelines: no liquor was sold, the store was closed on Sunday, no business travel or advertising was permitted on the Sabbath, and the Dayton Company refused to advertise in a newspaper that sponsored liquor ads.

This approach did not stifle business; the Dayton Company became extremely successful. A multimillion-dollar business by the 1920s, the Dayton Company decided it was ready to expand, purchasing J.B. Hudson & Son, a Minneapolis-based jeweler, in 1929, just two months before the historic stock market crash.

The Dayton Company managed to weather the Great Depression, although its jewelry company operated in the red for its duration. Dayton’s son David had died in 1923 at age 43, and George turned more and more of the company business over to another son, Nelson. George Draper Dayton died in 1938. He left only a modest personal fortune, having given away millions of dollars to charity. In 1918 the Dayton Foundation had been established with $1 million.

Nelson Dayton took over the presidency of the Dayton Company in 1938, when it was already a $14 million business, and saw it grow to a $50 million enterprise. World War II did not hamper business; rather, Dayton’s turned the war into an asset. Consumer goods were so scarce that it was no longer necessary to persuade shoppers to buy what merchandise was available. Sales volume increased dramatically thanks to Dayton’s managers, who obtained goods to keep the store full. Nelson Dayton was scrupulous about complying with the government’s wartime control of business and when, for instance, the government carried out its drive for scrap metal, he ordered the store’s electric sign dismantled and added to the scrap heap. Until Nelson Dayton’s death in 1950, the company was run along the strict moral lines of his father, its founder. In January 1944 Dayton’s became one of the first stores in the nation to offer to its workers a retirement policy, followed in 1950 by a comprehensive insurance policy.

Sheds Conservative Image in the 1950s

With Nelson Dayton’s death in 1950, the Dayton Company embarked on a new era. Instead of one-man rule, the company was led by a team of five Dayton cousins, although one of them, Nelson’s son Donald Dayton, assumed the title of president. The prohibition of liquor in the store’s dining rooms was dropped, and soon the Dayton Company would be completely secularized, advertising and doing business on Sunday.

The new management of the Dayton Company undertook radical and costly innovations. In 1954 the J.L. Hudson Company, which would eventually merge with Dayton’s, opened the world’s largest shopping mall in suburban Detroit. It was a great success, and two years later the Dayton Company decided to build a mall on a 500-acre plot of land outside of Minneapolis. Horrified to learn that Minneapolis had only 113 good shopping days a year, the architect decided to build a mall under cover; Southgate, the first enclosed shopping mall in history, was the result.

The safe, conservative management style favored by George Draper Dayton and his son Nelson passed into history; a younger, more aggressive management pushed for radical expansion and innovation would follow in its wake. The company established the large discount chain Target in 1962, and in 1966 decided to enter the highly competitive market of retail bookselling, opening B. Dal ton Bookstores.

In 1967 the company, by then known as Dayton Corporation, made its first public stock offering. That year, it acquired San Francisco’s Shreve and Company, which merged with J.B. Hudson to form Dayton Jewelers. In 1968 it bought the Pickwick Book Shops in Los Angeles and merged them with B. Dalton. Also in 1968 the company acquired department stores in Oregon and Arizona. The following year brought the acquisition of J.E. Caldwell, a Philadelphia-based chain of jewelry stores, and Lechmere, a Boston retailer.

Acquires Detroit Department Store in 1969

The year 1969 also saw a major acquisition: the Detroit-based J.L. Hudson Company, a department store chain that had been in existence since 1881. The merger resulted in Dayton Hudson Corporation, the 14th-largest retailer in the United States. Dayton Hudson stock was listed on the New York Stock Exchange.

With the merger, the Dayton Foundation changed its name to the Dayton Hudson Foundation. Since 1946, five percent of the Dayton Company’s taxable income was donated to the foundation, which continued to be the case after the merger. The foundation inspired the Minneapolis Chamber of Commerce in 1976 to establish the Minneapolis 5% Club, which eventually included 23 companies, each donating five percent of their respective taxable incomes to charities. By the close of 1996 the foundation had donated over $352 million to social and arts-based programs.

Dayton Hudson bought two more jewelers in 1970—C.D. Peacock, Inc., of Chicago, and J. Jessop and Sons of San Diego. Company revenues surpassed $1 billion in 1971.

Mervyn’s, a line of moderate-price department stores, merged with Dayton Hudson in 1978. That year Dayton Hudson became the seventh-largest general merchandise retailer in the United States, its revenues topping $3 billion in 1979.

Dayton Hudson bought Ayr-Way, an Indianapolis-based chain of 50 discount stores, in 1980, and converted those units to Target stores. In 1982 the company sold Dayton Hudson Jewelers, and in 1986 it divested itself of B. Dalton.

The late 1980s found the company the focus of an unsolicited takeover bid by the Dart Group, which would involve lawsuits by both parties before a stock market crash in October 1987 ended the takeover attempt. A second attempt at takeover of the company would be made nine years later, when rival J.C. Penney Co. offered more than $6.5 billion for the retailer. The offer, which analysts considered an undervaluation of the company’s worth, was rebuffed. Meanwhile, Dayton Hudson continued its acquisitions, purchasing the Marshall Field stores from BATUS Inc. in 1990 for about $1 billion. Venerable Marshall Field’s was as much a landmark in the Chicago area as Dayton’s was in Minneapolis and the Hudson stores were in Detroit; the acquisition would add 24 department stores to the Dayton Hudson group while also doubling its department store retail space.

Diversifies into New Retail Markets in 1990s

While Dayton, Hudson, and Marshall Field department stores offered the monied customer more costly and sophisticated merchandise, the popular Target and Mervyn’s catered to the budget-conscious customer, offering apparel and recreational items on a self-service basis. With the approach of the twenty-first century, Target continued to be Dayton Hudson Corporation’s biggest moneymaker, combining a successful business mix of clean, easy-to-navigate stores with quality, trend-responsive merchandise. The year 1990 saw the opening of the first of over 50 expanded Target Greatland stores; in 1995, following the lead of such rivals as Wal-Mart and Kmart, the company opened its first SuperTarget, which combined the chain’s successful general merchandise mix with a grocery store. Along with expanding its traditional department stores along the East Coast, six new SuperTargets were planned for 1996 alone.

The proliferation of shopping malls and the recessionary economy of the early 1990s caused sharp changes in consumer spending patterns throughout the United States. By 1996 the country could boast 4.97 billion square feet of retail space—an average of 19 square feet per person nationwide—but retailers felt the pinch caused by such a large number of stores courting increasingly spending-shy consumers. This situation most negatively affected the mid-range and upper-range sales volumes generated by stores on the level of Mervyn’s, Dayton’s, Marshall Field’s, and Hudson’s. In response, Dayton Hudson developed new merchandising, customer service, and advertising strategies in an effort to stabilize these units’ falling sales volumes. Mervyn’s focused increase reliance upon national brands, coupling this with the growing use of print advertising and market expansion through the acquisition of six Jordan Marsh stores and five Lord & Taylor stores in south Florida. Dayton’s, Hudson’s, and Marshall Fields courted the upscale consumer through an increased mix of unique, quality merchandise, an increased emphasis on customer service, and an increased sales-floor staff, all of which heralded a return to the “old fashioned service” on which Dayton Hudson was founded. Meanwhile, the Department Store unit worked to reduce inventories and invest in remodeling and technologically enhancing some of its older stores.

In 1994 Target executive Robert J. Ulrich was named chairman and chief executive officer of Dayton Hudson. In that same year the company began a new strategy: developing a “boundless” corporate structure wherein resources and marketing and management expertise could be shared by each of the three divisions to create a more efficient organization.

Poised Towards Future with Efficient Organization

By 1997 the Dayton Hudson Corporation consisted of three major operating units: Target, with 735 discount stores in 38 states, represented the company’s primary area of growth; the moderately priced Mervyn’s chain operated 300 stores in 16 states, and the upscale Department Store Company operating 22 Hudson’s, 19 Dayton’s, and 26 Marshall Field’s stores. Such broad-based expansion from the first six-story building in which Dayton was housed no doubt would have stunned the company’s founder. Capital expansion, as well as more varied retailing, had taken their place alongside the old policies of thrift and sobriety.

Dayton Hudson’s three units operate autonomously. Significant investment is made for the long term; in 1990 alone the company’s capital spending program amounted to $1 billion. While there has been some speculation that the company was considering the sale of its Mervyn unit due to sluggish returns on investment, the Target stores are seen as a continuing source of growth and high profitability for the corporation.

Principal Operating Units

Department Store Division; Mervyn’s; Target.

Further Reading

Dayton, George Draper, II, Our Story: With Histories of the Dayton, McDonald and Winchell Families, Wayzata, Minnesota, [n.p.], 1987.

Chandler, Susan, “‘Speed Is Life’ at Dayton Hudson,” Business Week, March 27, 1995, pp. 84–85.

—Sina Dubovoj

—updated by Pamela L. Shelton

Dayton Hudson Corporation

founded: 1969

Contact Information:

headquarters: 777 nicollet mall
minneapolis, mn 55402 phone: (612)370-6948 fax: (612)370-5502 url: http://www.dhc.com

OVERVIEW

Dayton Hudson Corporation is a general merchandise retailer that may be more commonly known by its subsidiaries: The Department Store Division, Mervyn's California, and Target. The Department Store Division consists of 67 Dayton's, Hudson's, and Marshall Field's stores spread over nine states. The 295 Mervyn's California stores offer name brand casual apparel and home goods, and operate in 16 states. Target is a discount chain consisting of over 700 stores in 33 states. Customers are typically families and merchandise is varied, from trendy clothing to household goods. All of Dayton Hudson's customers are referred to as "guests." Overall, Dayton Hudson owns over 1,140 stores in 39 states.

COMPANY FINANCES

In fiscal year 1997 (ending January 31, 1998), revenues were $27.76 billion, a nine-percent increase over the previous fiscal year. Financial data for the past five years is as follows (all amounts shown are in millions): Revenue for 1997, $27,757; 1996, $25,371; 1995, $23,516; 1994, $21,311; and 1993, $19,233; net earnings for 1997, $751; 1996, $463; 1995, $311; 1994, $434, and 1993, $375; earnings per common share for 1997, $1.80; 1996, $1.05; 1995, $0.67; 1994, $1.70; 1993, $1.00. Of 1997 revenues, 74 percent were from Target, 15 percent were from Mervyn's, and the Department Store Division contributed 11 percent of revenues.

ANALYSTS' OPINIONS

Many industry analysts consider Dayton Hudson stock a stable or growth-oriented investment. Zacks research analysts, overall, recommend Dayton Hudson stocks. Of 14 brokers surveyed, seven call Dayton Hudson stock a "strong buy," four recommend it as a "moderate buy," and three recommend holding existing stocks. None suggested selling the Dayton Hudson stocks. Dayton Hudson stocks are ranked 11 of 24 within its industry. Zacks analysts further predict an increase in per share price from fiscal year 1997 to fiscal year 1998.

Dayton Hudson itself was "comfortable" with estimates conducted by median analysts for fiscal year 1998; a 16-percent growth for the year was predicted. Additionally, on May 19, 1998, Merrill Lynch announced that it had raised its estimates for Dayton Hudson based on first-quarter earnings exceeding earlier expectations.

HISTORY

The Dayton Hudson Corporation has its origins in companies founded more than 100 years ago and has a long history of acquisitions and expansions. In 1881 the J.L. Hudson Company was founded in Detroit. Over 20 years later, in 1902, the Dayton Company was founded in Minneapolis. The two companies didn't actually merge until 1969. In the meantime, however, the Dayton Company acquired J.B. Hudson, a jeweler in Minneapolis, in 1929. In 1956 Dayton opened Southdale, marking the origins of the mall concept—Southdale was the world's first completely enclosed two-tier shopping center. In 1954, J.L. Hudson opened Northland Center in Detroit, and it was the world's largest shopping center at that time. Entering its foray into discount chain stores, Dayton opened the first Target store in 1962. In 1966 Dayton created B. Dalton Bookseller and made its stock publicly available in 1967. Also in 1967, J.B. Hudson and Shreve and Co. merged to form Dayton Jewelers. A merger of Dayton Department Store, Lipmans, and Diamond's occurred in 1968, and in 1969 the Dayton Hudson Corporation was formed when Dayton Corporation and J.L. Hudson Company merged. Dayton Hudson continued to acquire companies including Lechmere, a hardgoods retailer out of Boston, and J.E. Caldwell, a jewelry chain based in Philadelphia. In 1971 revenues reached the $1 billion mark. In 1978 Dayton Hudson Corporation acquired Mervyn's; this made the company the seventh-largest merchandise retailer in the United States. In 1982 revenues reached the $5 billion mark. Annual revenues exceeded $10 billion in 1987, $20 billion in 1994, and $25 billion in 1996.

STRATEGY

Dayton Hudson's financial strategy involves keeping capital markets liquid, managing the amount of floating-rate debt, and maintaining a balanced range of debt maturities. The Target proprietary credit card, called the Target Guest Card, asserts the subsidiary's brand identity and elevates shoppers to a status usually associated with non-discount chains or upscale department stores. Mervyn's' individual strategy involved offering more national brands, such as Union Bay, Dockers, Villager by Liz Claiborne, and Haggar City Casuals. In a more focused marketing effort, Mervyn's vacated its Florida and Georgia markets in 1997 and closed seven other stores. Mervyn's also remodeled existing stores and invested in new fixtures and vendor merchandise shops for approximately 175 stores. Strategies for 1998 include installing vendor shops and completely renovating 10 store locations. The Department Store Division expanded its merchandise line for both vendor products and its own merchandise. In 1997 Hudson's of Port Huron, Michigan, and Marshall Field's in Columbus, Ohio, opened while two stores under the Department Store Division that were under-performing were closed.

Dayton Hudson continues to focus strategic efforts in the direction of the Target Guest Card to build customer loyalty. Strategies also involve consolidating operations and distributing data regarding key trends among its divisions. Dayton Hudson's long-range earnings growth objective is 15 percent or better.

Perhaps Dayton Hudson's biggest strategic undertaking is the implementation of its common information systems. Formerly, all of the finance, credit, sales processing, inventory management, and personnel systems were on a mainframe and handled independently through Dayton Hudson's three main divisions. Distribution centers and stores used client/server systems. Dayton Hudson is switching to an IP-based wide area network; the goal is to improve inventory management, which could result in a potential savings of $100 million annually. Also, the three divisions will be better able to facilitate the exchange and distribution of key trends and best practices. It is too soon to tell whether or not the strategy will pay off; if it fails, customer service would likely suffer, earnings may drop, and the system could turn out to be just too complex to handle. Dayton Hudson feels it's a risk worth taking because its ultimate success could result in a revolution in the 150-year-old retail industry. The control of labor and merchandise and a clear picture of consumers' needs are among the possible changes that could result. The way Dayton Hudson is handling the three-year project is by dividing it into hundreds of smaller projects with shorter turnaround times of six to twelve months in length.

INFLUENCES

Dayton Hudson's strategies have been influenced by pressure to improve financial performance or consider a merger. In 1996 Dayton Hudson rejected J.C. Penney's proposal to buy Dayton Hudson at what was then a substantial increase in per share price. J.C. Penney offered a stock-and-cash proposal of $90 to $95 per share while Dayton Hudson's stock was at $76. The bid would have been worth $6.82 billion. Although Target is Dayton Hudson's primary revenue producer, it is somewhat offset by the marginal profits of the mid-line Mervyn's. Thomas Buynak, an analyst at Society Asset Management, said, "This offer ups the pressure to deliver results and focus on their overall game plan." Dayton Hudson's Target chain represents about two-thirds of total sales and profits, so it is an attractive takeover choice.

CURRENT TRENDS

Besides the three-year plan to consolidate its systems operations, Dayton Hudson plans to continue its growth primarily through expansion and acquisition. In 1997 60 new Target stores were opened, including the retailer's first stores in Cincinnati, Philadelphia, and New York City. In April 1998 Dayton Hudson acquired Rivertown Trading, a direct marketing firm based in Minnesota. In October 1998 Dayton Hudson's Target division plans to open 23 new stores over 12 states, including its first store in Delaware. The stores will be opening in Exton, Pennsylvania; Wilmington, Delaware; Altoona, Pennsylvania; Princeton, Milltown, and Brick, New Jersey; Copiague, New York; College Point, Henrietta, and Victor, New York; Roanoke, Virginia; Kansas City, Missouri; Marietta and Douglasville, Georgia; Loveland, Colorado; Niles, Arlington Heights, and Highland Park, Illinois; Austin, Coon Rapids, and Fergus Falls, Minnesota; Watsonville, California; and Irving, Texas.

PRODUCTS

Dayton Hudson's Department Store Division has been focusing on expanding its own brands of merchandise in order to better penetrate the retail market and enhance company identification through product label. Products include Field Gear, Field Manor, 111 State, and Indeed. The Department Store Division has also been expanding its upscale merchandise to re-establish itself as a "fine" department store. The Division now offers Anne Klein II, Dana Buchman, Tommy Hilfiger, and Nautica. The Department Store Division also features a key trend or product in each of its stores. For example, in spring 1996 it introduced "The Player's Shop" to capitalize on the golf season. The shop was helped by the Dayton's Challenge Golf Tournament. Sales from golf equipment and apparel doubled over 1995.

FAST FACTS: About Dayton Hudson Corporation

Ownership: Dayton Hudson is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: DH

Officers: Robert J. Ulrich, Chmn. & CEO, 53; James T. Hale, Sr. VP, Gen. Counsel, & Sec., 56; Douglas A. Scovanner, Sr. VP & CFO, 41

Employees: 230,000

Principal Subsidiary Companies: Dayton Hudson Corporation owns and operates Dayton's, Hudson's, Marshall Field's, Target, and Mervyn's.

Chief Competitors: Dayton Hudson's primary competitors are both retail department stores and retail discount stores including: Ames Department Stores; Bradlees, Inc.; Dillard's, Inc.; J.C. Penney Company, Inc.; Kmart Corp.; Neiman-Marcus Group, Inc.; Sears, Roebuck & Co.; Strawbridge & Cloth-ier; The Bon-Ton Stores, Inc.; The Caldor Corporation; Value City Department Stores; Wal-Mart Stores, Inc.; and Woolworth Corporation.

Target competes with stores like K-Mart and Wal-mart by offering department-store quality merchandise at competitive discount prices. In 1996 Target launched a new line of its own products called Cherokee, consisting mainly of high quality casual wear such as t-shirts and sweatshirts. In its first six months, the Cherokee line exceeded the 18-month sales plan by $50 million.

Mervyn's plans to continually increase the name brands offered and to enhance product presentation in its stores. For example, Mervyn's added Fila and adidas to its athletic footwear merchandise offered and implemented in-store shops to increase brand recognition.

CORPORATE CITIZENSHIP

Dayton Hudson sponsors many community involvement programs through grants and volunteer work. In 1997 Dayton Hudson received the nation's highest honor for community service, the President's Service Award, for its Family Matters program. In June 1997 Dayton Hudson held a "Week of Giving," which involved thousands of volunteers committed to improving their communities. Dayton Hudson held the Week of Giving again in May 1998 and more than 10,000 youths were involved. Dayton Hudson's goal is to conduct a Week of Giving initiative in all of the markets it occupies. The company predicts as many as 1,000 of these projects may be completed.

Wherever Dayton Hudson opens a Target store, it establishes a Good Neighbor Volunteer Program, targeting the resolution of a specific community issue through volunteerism; over $1 million a week will be donated to the communities totaling over $57 million in grants in 1998. Target has given five percent of pretax dollars to communities having a Target store since its founding in 1962. In 1997 Dayton Hudson made over $46 million in donations to art, social, and education groups. It donated $2.8 million in corporate contributions to United Way organizations, and Dayton Hudson employees were responsible for an additional $10.2 million given to the United Way. Over $2.6 million in scholarships were provided by Dayton Hudson and over half a million dollars was raised for local schools by the Target Guest Card initiative; this program, called School Fundraising Made Simple, provided one percent of purchases made on Target Guest Cards to a school of the customer's choice.

Although Target makes the most donations and boasts the most revenue of the Dayton Hudson divisions, Mervyn's is also involved in community service. In 1997 its Childspree program provided 14,000 needy children with school supplies and clothes. Mervyn's also provides funding for workshops where parents learn to work with their children to help them succeed in school. Over 50,000 parents and children are involved in the program.

The Department Store Division initiated a fundraising effort for ten art and cultural groups through Hudson's, which provided a grant of $0.5 million, plus an additional $1 million to match community donations.

EMPLOYMENT

Dayton Hudson stresses a fast-paced environment in its recruitment efforts. It also holds numerous on-the-job training programs. Dayton Hudson had 230,000 employees as of the end of fiscal year 1997; of those, 166,000 were employed at Target, 29,000 at Mervyn's, and 35,000 in the Department Store Division.

CHRONOLOGY: Key Dates for Dayton HudsonCorporation

1881:

The J.L. Hudson Company is founded in Detroit, Michigan

1902:

The Dayton Company is founded in Minneapolis, Minnesota

1938:

Dayton's founder George Draper Dayton dies

1944:

Dayton becomes one of the first stores to offer its workers a retirement policy

1954:

Hudson opens the world's largest shopping center, Northland Center, in Detroit

1956:

Dayton opens Southdale, the world's first completely enclosed, two-tier shopping center

1962:

Dayton opens the first Target store

1967:

The Dayton Corporation goes public

1969:

Hudson and Dayton merge to become the Dayton Hudson Corporation

1978:

Dayton Hudson acquires Mervyn's

1987:

Dayton Hudson survives a hostile takeover attempt by Dart Group as well as a bogus counteroffer from an investor who, it was later revealed, had no financial backing

1997:

Dayton Hudson receives the President's Service Award for its community service programs

SOURCES OF INFORMATION

Bibliography

"company news on call." pr newswire, 13 july 1998. available at http://www.prnewswire.com/areports/342677.6.

"dayton hudson corp." yahoo! finance, 10 july 1998. available at http://biz.yahoo.com/p/d/dh.html.

dayton hudson home page, 13 july 1998. available at http://www.dhc.com.

"hoovers top employers." hoover's online, 10 july 1998. available at http://www.hoovers.com/browsetop/topd.html.

For an annual report:

on the internet at: http://www.prnewssire.com/areports/342677.6or write: dayton hudson corporation, investor relations, 777 nicollet mall, minneapolis, mn 55402-2055

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. dayton hudson's primary sic is:

5311 department stores