Still, there are risks out there for Dayton Hudson. Over the next three years, the company will open 65 new Target stores each year, many of them in the highly competitive Northeast markets. So far, the stores have outperformed Target's expectations, as heavy customer traffic has more than offset higher real estate costs. The discount store industry has seen stable pricing over the last two years, but competitive flare-ups remain a risk, McCormack said. It's been the best of times for retailers, and slower economic growth could hurt the entire industry.
Analysts also see opportunities.
Meanwhile, Dayton Hudson is preparing for its longer-term futurel. But the improved profitability of Mervyn's and the department store division has taken the wind out of those who are calling for a breakup of the three divisions, Stinson said.