TARGET CORP
For the period ended Nov 2, 2024. Filed Nov 27, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 2, 2024 · Filed Nov 27, 2024
TGT$158.41+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-08-03; filed 2024-08-30.
0000027419-24-000152
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-11-02; filed 2024-11-27.
0000027419-24-000179
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 75 current paragraphs.
50 unchanged; 23 reworded; 2 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 36 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
•costs of managing elevated inventory levels during the third quarter, including the impact of receipt timing;
Current report
In September 2024, we issued $750 million of debt. Note 6 to the Financial Statements provides additional information.
Removed paragraphs (1)
Previous report
•favorable category mix;
Reworded paragraphs (23)
Previous wording
Second quarter 2024 included the following notable items:
Current wording
Third quarter 2024 included the following notable items:
Previous wording
•GAAP and adjusted diluted earnings per share (Adjusted EPS) were $2.57.
Current wording
•GAAP and adjusted diluted earnings per share (Adjusted EPS) were $1.85.
Previous wording
•Total revenue was $25.5 billion, an increase of 2.7 percent from the comparable prior-year period, reflecting a total sales increase of 2.6 percent and a 10.8 percent increase in other revenue.
Current wording
•Total revenue was $25.7 billion, an increase of 1.1 percent from the comparable prior-year period, reflecting a total sales increase of 0.9 percent and a 11.5 percent increase in other revenue.
Previous wording
•Comparable sales increased 2.0 percent, reflecting a 3.0 percent increase in traffic and a 0.9 percent decrease in average transaction amount.
Current wording
•Comparable sales increased 0.3 percent, reflecting a 2.4 percent increase in traffic and a 2.0 percent decrease in average transaction amount.
Previous wording
◦Comparable stores-originated sales grew 0.7 percent.
Current wording
◦Comparable stores-originated sales declined 1.9 percent.
Previous wording
◦Comparable digitally-originated sales increased 8.7 percent.
Current wording
◦Comparable digitally-originated sales increased 10.8 percent.
Previous wording
•Operating income of $1.6 billion was 36.6 percent higher than the comparable prior-year period.
Current wording
•Operating income of $1.2 billion was 11.2 percent lower than the comparable prior-year period.
Previous wording
We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital allocation effectiveness over time. For the trailing twelve months ended August 3, 2024, after-tax ROICwas 16.6 percent, compared with 13.7 percent for the trailing twelve months ended July 29, 2023. The calculation of ROIC isprovided on page 20.
Current wording
We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital allocation effectiveness over time. For the trailing twelve months ended November 2, 2024, after-tax ROICwas 15.9 percent, compared with 13.9 percent for the trailing twelve months ended October 28, 2023. The calculation of ROIC isprovided on page 20.
Previous wording
We monitor the percentage of purchases that are paid for using Target Circle Cards™ (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on Target Circle Cards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target. For the three months ended August 3, 2024 and July 29, 2023, total Target Circle Card Penetration was 17.7 percent and 18.6 percent, respectively. For the six months ended August 3, 2024 and July 29, 2023, total Target Circle Card Penetration was 17.9 percent and 18.8 percent, respectively.
Current wording
We monitor the percentage of purchases that are paid for using Target Circle Cards™ (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on Target Circle Cards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target. For the three months ended November 2, 2024 and October 28, 2023, total Target Circle Card Penetration was 17.7 percent and 18.3 percent, respectively. For the nine months ended November 2, 2024 and October 28, 2023, total Target Circle Card Penetration was 17.8 percent and 18.6 percent, respectively.
Previous wording
For the three months ended August 3, 2024, our gross margin rate was 28.9 percent compared with 27.0 percent in the comparable prior-year period. For the six months ended August 3, 2024, our gross margin rate was 28.3 percent compared with 26.7 percent in the comparable prior-year period. For both the three and six months ended August 3, 2024, the increase reflected the net impact of
Current wording
For the three months ended November 2, 2024, our gross margin rate was 27.2 percent compared with 27.4 percent in the comparable prior-year period. For the nine months ended November 2, 2024, our gross margin rate was 27.9 percent compared with 26.9 percent in the comparable prior-year period. For both the three and nine months ended November 2, 2024, the changes reflected the net impact of
Previous wording
•merchandising activities, including cost improvements which more than offset higher promotional markdown rates;
Current wording
•merchandising activities, including cost improvements which more than offset higher promotional and clearance markdown rates.
Previous wording
For the three months ended August 3, 2024, our SG&A expense rate was 21.2 percent compared with 20.9 percent for the comparable prior-year period. For the six months ended August 3, 2024, our SG&A expense rate was 21.1 percent compared with 20.4 percent for the comparable prior-year period. The increases reflected the net impact of cost increases across our business, including investments in team member pay and benefits, partially offset by the benefit of lower store remodel-related expenses.
Current wording
For the three months ended November 2, 2024, our SG&A expense rate was 21.4 percent compared with 20.9 percent for the comparable prior-year period. For the nine months ended November 2, 2024, our SG&A expense rate was 21.2 percent compared with 20.6 percent for the comparable prior-year period. The increases reflected the net impact of cost increases across our business, including higher team member pay and benefits and higher general liability expenses, partially offset by the benefit of lower store remodel-related expenses.
Previous wording
Net interest expense was $110 million and $216 million for the three and six months ended August 3, 2024, respectively, compared with $141 million and $288 million in the comparable prior-year periods. The decrease in net interest expense was primarily due to an increase in interest income.
Current wording
Net interest expense was $105 million and $321 million for the three and nine months ended November 2, 2024, respectively, compared with $107 million and $395 million in the comparable prior-year periods. The decrease in net interest expense was primarily due to an increase in interest income.
Previous wording
Our effective income tax rates for the three and six months ended August 3, 2024, were 22.9 percent and 22.8 percent, respectively, compared with 22.2 percent and 21.6 percent in the comparable prior-year periods. The increase in both periods reflects the impact of higher pretax earnings and lower discrete tax benefits compared to the prior-year.
Current wording
Our effective income tax rates for the three and nine months ended November 2, 2024, were 21.7 percent and 22.5 percent, respectively, compared with 21.3 percent and 21.5 percent in the comparable prior-year periods. The increase in both periods reflects the impact of lower discrete tax benefits compared to the prior-year.
Previous wording
(b)Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within SG&A Expenses. Operating lease interest is added back to operating income in the ROIC calculation to control for differences in capital structure between us and our competitors.
Current wording
(b)Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.
Previous wording
(c)Calculated using the effective tax rates, which were 22.4 percent and 20.2 percent for the trailing twelve months ended August 3, 2024 and July 29, 2023, respectively. For the trailing twelve months ended August 3, 2024 and July 29, 2023, includes tax effect of $1.4 billion and $1.0 billion, respectively, related to EBIT and $33 million and $20 million, respectively, related to operating lease interest.
Current wording
(c)Calculated using the effective tax rates, which were 22.5 percent and 20.3 percent for the trailing twelve months ended November 2, 2024 and October 28, 2023, respectively. For the trailing twelve months ended November 2, 2024 and October 28, 2023, includes tax effect of $1.4 billion and $1.0 billion, respectively, related to EBIT and $35 million and $22 million, respectively, related to operating lease interest.
Previous wording
Our cash and cash equivalents balance was $3.5 billion, $3.8 billion, and $1.6 billion as of August 3, 2024, February 3, 2024, and July 29, 2023, respectively. Our cash and cash equivalents balance includes short-term investments of $2.5 billion, $2.9 billion, and $739 million as of August 3, 2024, February 3, 2024, and July 29, 2023, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly-rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.
Current wording
Our cash and cash equivalents balance was $3.4 billion, $3.8 billion, and $1.9 billion as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively. Our cash and cash equivalents balance includes short-term investments of $2.5 billion, $2.9 billion, and $1.0 billion as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly-rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.
Previous wording
Cash flows provided by operating activities were $3.3 billion and $3.4 billion for the six months ended August 3, 2024, and July 29, 2023, respectively. The operating cash flow decrease is primarily due to higher income tax and incentive compensation payments, offset by higher net earnings and the combined impact of inventory and accounts payable activity.
Current wording
Cash flows provided by operating activities were $4.1 billion and $5.3 billion for the nine months ended November 2, 2024, and October 28, 2023, respectively. The operating cash flow decrease is primarily due to increased inventory levels and slightly lower accounts payable leverage, in addition to higher income tax and incentive compensation payments.
Previous wording
Inventory was $12.6 billion as of August 3, 2024, compared with $11.9 billion and $12.7 billion as of February 3, 2024, and July 29, 2023, respectively.
Current wording
Inventory was $15.2 billion as of November 2, 2024, compared with $11.9 billion and $14.7 billion as of February 3, 2024, and October 28, 2023, respectively. The increase from February 3, 2024, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period. The increase from October 28, 2023, primarily reflects the impact of lower-than-expected sales in certain discretionary categories during the three months ended November 2, 2024, as well as an improved in-stock position.
Previous wording
Cash required for investing activities decreased to $1.3 billion for the six months ended August 3, 2024, compared to $2.8 billion for the six months ended July 29, 2023, due to lower capital investments.
Current wording
Cash required for investing activities decreased to $1.9 billion for the nine months ended November 2, 2024, compared to $3.9 billion for the nine months ended October 28, 2023, due to lower capital investments.
Previous wording
We paid dividends totaling $509 million ($1.10 per share) and $1,017 million ($2.20 per share) for the three and six months ended August 3, 2024, respectively, and $499 million ($1.08 per share) and $996 million ($2.16 per share) for the three and six months ended July 29, 2023, respectively, a per share increase of 1.9 percent. We declared dividends totaling $527 million ($1.12 per share) during the second quarter of 2024 and $516 million ($1.10 per share) during the second quarter of 2023, a per share increase of 1.8 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.
Current wording
We paid dividends totaling $516 million ($1.12 per share) and $1.5 billion ($3.32 per share) for the three and nine months ended November 2, 2024, respectively, and $507 million ($1.10 per share) and $1.5 billion ($3.26 per share) for the three and nine months ended October 28, 2023, respectively, a per share increase of 1.8 percent. We declared dividends totaling $521 million ($1.12 per share) during the third quarter of 2024 and $513 million ($1.10 per share) during the third quarter of 2023, a per share increase of 1.8 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.
Previous wording
We returned $155 million to shareholders through share repurchase during the six months ended August 3, 2024. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 8 to the Financial Statements for more information.
Current wording
We deployed $509 million to repurchase shares during the nine months ended November 2, 2024. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 8 to the Financial Statements for more information.
Previous wording
We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. Our committed $1.0 billion 364-day and $3.0 billion unsecured revolving credit facilities that will expire in October 2024 and October 2028, respectively, backstop our commercial paper program. No balances were outstanding under either credit facility at any time during 2024 or 2023. There was no commercial paper outstanding as of either August 3, 2024 or July 29, 2023. Note 6 to the Financial Statements provides additional information.
Current wording
We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In October 2024, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2025 and terminated our prior 364-day credit facility. This credit facility and our $3.0 billion unsecured revolving credit facility that will expire in October 2028 backstop our commercial paper program. No balances were outstanding under either credit facility at any time during 2024 or 2023. There was no commercial paper outstanding as of either November 2, 2024 or October 28, 2023. Note 6 to the Financial Statements provides additional information.