...Strong Competitive Position: The Issuer Default Rating reflects Target Corporation's (Target) strong competitive position in the discount retail sector and steady but recently softer performance from its U.S. business. Target's U.S. comparable store sales (comps) were down 0.4% in 2013 and down 0.2% in first-half 2014, reflecting the challenging environment facing low- and middle-income consumers, exacerbated by the data breach that was announced one week before Christmas. Margin Pressure: The consolidated EBITDA margin narrowed from 8.5% in 2013 to 7.8% in the LTM ended Aug. 2, 2014, due to an increase in promotions and lower credit card income following the sale of the receivables portfolio to TD Bank in March 2013. Fitch Ratings expects the challenging environment will likely continue to dampen sales growth in the near term, with U.S. comp sales flat to up 1% for 2014, leading to modestly lower domestic EBITDA. Difficult Entry into Canada: The significant shortfall in the Canadian segment...
