TARGET CORP
For the period ended Nov 1, 2025. Filed Nov 26, 2025.
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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 1, 2025 · Filed Nov 26, 2025
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 2025-08-02; filed 2025-08-29.
0000027419-25-000118
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsGross Margin RateCurrent report: 10-Q
Period ended 2025-11-01; filed 2025-11-26.
0000027419-25-000126
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 88 previous paragraphs and 92 current paragraphs.
52 unchanged; 30 reworded; 10 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 39 previous and 39 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 (10)
Current report
Note: Amounts may not foot due to rounding.
Current report
Business Transformation Initiatives
Current report
In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. The three months ended November 1, 2025, included costs and charges related to our business transformation initiatives, including a reduction in our headquarters workforce. Note 4 to the Financial Statements provides additional information.
Current report
We may incur additional business transformation costs and charges in future periods, which may adversely affect our results of operations and financial condition; however, we cannot reasonably estimate the amount of such costs and charges at this time.
Current report
(b)SG&A Expenses and Operating Income for the three and nine months ended November 1, 2025, include certain business transformation costs described in Note 4 to the Financial Statements. For the nine months ended November 1, 2025, SG&A Expenses and Operating Income also include gains related to interchange fee settlements described in Note 3. These discretely managed items resulted in a net impact to the SG&A Expense Rate of 0.6 and (0.6) percentage points for the three and nine months ended November 1, 2025, respectively, with an inverse impact on the Operating Income Margin Rate in the respective periods. The Reconciliation of Non-GAAP Adjusted EPS tables provide additional information.
Current report
•lower inventory shrink; and
Current report
•lower supply chain and digital fulfillment costs, reflecting the comparison over costs in 2024 related to timing of receipts and elevated inventory, combined with the benefit of productivity improvements at supply chain facilities and in digital fulfillment, partially offset by the deleveraging impact of lower sales.
Current report
Interchange fee settlements and business transformation costs are further described in Notes 3 and 4, respectively, to the Financial Statements.
Current report
Note: Amounts may not foot due to rounding.
Current report
(b)Note 3 to the Financial Statements provides additional information.
Removed paragraphs (6)
Previous report
We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed, including, but not limited to, vendor negotiations, assortment changes, movements in country of production, adjustments in order unit quantities and timing, and pricing strategies. The Gross Margin Rate section below provides additional information about the impact of such actions.
Previous report
1 The Business Environment section provides additional information.
Previous report
On July 4, 2025, the U.S. enacted new legislation that includes several U.S. corporate tax provisions, including restoring immediate deductibility of certain capital expenditures, restoring full expensing of domestic research and development costs, and changes in the computations of U.S. taxation on international earnings. We expect the provisions of the legislation to result in a favorable timing shift in our U.S. cash tax payments, with no material impact on our income tax expense.
Reworded paragraphs (30)
Previous wording
Second quarter 2025 included the following notable items:
Current wording
Third quarter 2025 included the following notable items:
Previous wording
•GAAP diluted earnings per share and Adjusted EPS 1 were $2.05.
Current wording
•GAAP diluted earnings per share were $1.51 and Adjusted EPS 1 were $1.78.
Previous wording
•Net Sales were $25.2 billion, a decrease of 0.9 percent from the comparable prior-year period.
Current wording
•Net Sales were $25.3 billion, a decrease of 1.5 percent from the comparable prior-year period.
Previous wording
•Comparable sales decreased 1.9 percent, reflecting a 1.3 percent decrease in traffic and a 0.6 percent decrease in average transaction amount.
Current wording
•Comparable sales decreased 2.7 percent, reflecting a 2.2 percent decrease in traffic and a 0.5 percent decrease in average transaction amount.
Previous wording
◦Comparable stores-originated sales declined 3.2 percent.
Current wording
◦Comparable stores-originated sales declined 3.8 percent.
Previous wording
◦Comparable digitally-originated sales increased 4.3 percent.
Current wording
◦Comparable digitally-originated sales increased 2.4 percent.
Previous wording
•Operating income of $1.3 billion was 19.4 percent lower than the comparable prior-year period.
Current wording
•Operating income of $0.9 billion was 18.9 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 2, 2025, after-tax ROICwas 14.3 percent, compared with 16.6 percent for the trailing twelve months ended August 3, 2024. The calculation of ROIC isprovided on page 22.
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 1, 2025, after-tax ROICwas 13.4 percent, compared with 15.9 percent for the trailing twelve months ended November 2, 2024. The calculation of ROIC isprovided on page 23.
Previous wording
In April 2025, the U.S. imposed a range of tariffs on the vast majority of products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs, and indicated that the U.S. is actively negotiating country-specific agreements that it expects will result in changes to imposed tariff rates. Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or indirectly, with China as our single largest source of merchandise we import.
Current wording
In April 2025, the U.S. imposed a range of tariffs on the vast majority of products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs. The U.S. has indicated that it is actively negotiating or expects to negotiate country-specific agreements that it expects will result in changes to imposed tariff rates. Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or through our vendors, with China as the single largest source of merchandise we import.
Previous wording
Additionally, we are working closely with industry associations and government leaders, all with a goal to continue delivering the products our guests expect and minimizing the impact of tariffs on our guests. The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods.
Current wording
We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed. The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods.
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 our 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 2, 2025, and August 3, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively. For the six months ended August 2, 2025, and August 3, 2024, total Target Circle Card Penetration was 17.1 percent and 17.9 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 our 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 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively. For the nine months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 17.0 percent and 17.8 percent, respectively.
Previous wording
For the three months ended August 2, 2025, our gross margin rate was 29.0 percent compared with 30.0 percent in the comparable prior-year period. The decrease reflected the net impact of
Current wording
For the three months ended November 1, 2025, our gross margin rate was 28.2 percent compared with 28.3 percent in the comparable prior-year period. The decrease reflected the net impact of
Previous wording
•merchandising, including higher markdown rates and purchase order cancellation costs 1, partially offset by growth in advertising and other revenues;
Current wording
•merchandising, primarily due to higher markdown rates partially offset by growth in advertising and other revenues;
Previous wording
For the six months ended August 2, 2025, our gross margin rate was 28.6 percent compared with 29.4 percent in the comparable prior-year period. The decrease reflected the net impact of
Current wording
For the nine months ended November 1, 2025, our gross margin rate was 28.5 percent compared with 29.0 percent in the comparable prior-year period. The decrease reflected the net impact of
Previous wording
•merchandising activities, including higher markdown rates and purchase order cancellation costs 1, partially offset by growth in advertising and other revenues;
Current wording
•merchandising activities, including higher markdown rates and purchase order cancellation costs, partially offset by growth in advertising and other revenues;
Previous wording
•higher supply chain and digital fulfillment costs, partially due to to new supply chain facilities;
Current wording
•higher supply chain and digital fulfillment costs, partially due to the combined impact of investments in new supply chain facilities and the deleveraging impact of lower sales; and
Previous wording
For the three months ended August 2, 2025, our SG&A expense rate was 21.3 percent compared with 21.1 percent for the comparable prior-year period, reflecting the deleveraging impact of lower Net Sales. Higher remodel-related expenses during the three months ended August 2, 2025, were offset by the net impact of cost savings.
Current wording
For the three months ended November 1, 2025, our SG&A expense rate was 21.9 percent compared with 21.3 percent for the comparable prior-year period. The increase reflected business transformation costs of approximately 0.6 percentage points. The deleveraging impact of lower Net Sales was offset by a reduction in other costs, including lower incentive compensation expense.
Previous wording
For the six months ended August 2, 2025, our SG&A expense rate was 20.3 percent compared with 21.0 percent for the comparable prior-year period. The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 1.2 percentage points, as further described in Note 3, partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs.
Current wording
For the nine months ended November 1, 2025, our SG&A expense rate was 20.8 percent compared with 21.1 percent for the comparable prior-year period. The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 0.8 percentage points. This rate benefit was partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs, including 0.2 percentage points related to business transformation costs.
Previous wording
Net interest expense was$116 million and $232 million for the three and six months ended August 2, 2025, respectively, compared with $110 million and $216 million in the comparable prior-year periods. The increase was primarily due to higher average debt levels.
Current wording
Net interest expense was$115 million and $346 million for the three and nine months ended November 1, 2025, respectively, compared with $105 million and $321 million in the comparable prior-year periods. The increase was primarily due to higher average debt levels.
Previous wording
Our effective income tax rates for the three and six months ended August 2, 2025, were 23.2 percent and 24.2 percent, respectively, compared with 22.9 percent and 22.8 percent in the comparable prior-year periods. For the three month period, the increase is driven by the impact of Pillar Two global minimum taxes. For the six month period, the increase reflects discrete tax expense in the current year, primarily related to share-based compensation, and the impact of Pillar Two global minimum taxes.
Current wording
Our effective income tax rates for the three and nine months ended November 1, 2025, were 19.8 percent and 23.1 percent, respectively, compared with 21.7 percent and 22.5 percent in the comparable prior-year periods. For the three month period, the decrease primarily reflects benefits from tax credits in the current year. For the nine month period, the increase reflects discrete tax expense in the current year related to share-based compensation and global minimum taxes, partially offset by benefits from tax credits.
Previous wording
(c)Calculated using the effective tax rates, which were 22.9 percent and 22.4 percent for the trailing twelve months ended August 2, 2025, and August 3, 2024, respectively. For the trailing twelve months ended August 2, 2025, and August 3, 2024, includes tax effect of $1.3 billion and $1.4 billion, respectively, related to EBIT and $38 million and $33 million, respectively, related to operating lease interest.
Current wording
(c)Calculated using the effective tax rates, which were 22.6 percent and 22.5 percent for the trailing twelve months ended November 1, 2025, and November 2, 2024, respectively. For the trailing twelve months ended November 1, 2025, and November 2, 2024, includes tax effect of $1.2 billion and $1.4 billion, respectively, related to EBIT and $38 million and $35 million, respectively, related to operating lease interest.
Previous wording
(f)For the trailing twelve months ended August 2, 2025, includes the impact of after-tax net gains on interchange fee settlements, which increased after-tax ROIC by 1.4 percentage points. Note 3 to the Financial Statements provides additional information.
Current wording
(f)For the trailing twelve months ended November 1, 2025, includes the impact of after-tax net gains on interchange fee settlements and business transformation costs, which had a net impact on after-tax ROIC of 1.0 percentage point. Notes 3 and 4 to the Financial Statements provide additional information.
Previous wording
Our cash and cash equivalents balance was $4.3 billion, $4.8 billion, and $3.5 billion as of August 2, 2025, February 1, 2025, and August 3, 2024, respectively. Our cash and cash equivalents balance includes short-term investments of $3.3 billion, $3.9 billion, and $2.5 billion as of August 2, 2025, February 1, 2025, and August 3, 2024, 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 $3.8 billion, $4.8 billion, and $3.4 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. Our cash and cash equivalents balance includes short-term investments of $2.9 billion, $3.9 billion, and $2.5 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, 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 $2.4 billion and $3.3 billion for the six months ended August 2, 2025, and August 3, 2024, respectively. The decrease reflects lower accounts payable leverage and the net earnings impact of lower sales, partially offset by gains on interchange fee settlements discussed in Note 3 to the Financial Statements.
Current wording
Cash flows provided by operating activities were $3.5 billion and $4.1 billion for the nine months ended November 1, 2025, and November 2, 2024, respectively. The decrease reflects lower net earnings, as well as the net impact of lower accounts payable leverage and inventory purchases in the current year.
Previous wording
Inventory was $12.9 billion as of August 2, 2025, compared with $12.7 billion and $12.6 billion as of February 1, 2025, and August 3, 2024, respectively. The increase compared to August 3, 2024, reflects higher merchandise costs and continued investment in frequency categories.
Current wording
Inventory was $14.9 billion as of November 1, 2025, compared with $12.7 billion and $15.2 billion as of February 1, 2025, and November 2, 2024, respectively. The increase from February 1, 2025, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period. The decrease compared to November 2, 2024, reflects alignment of inventory with sales trends, partially offset by higher merchandise costs.
Previous wording
Cash required for investing activities increased to $1.9 billion for the six months ended August 2, 2025, compared to $1.3 billion for the six months ended August 3, 2024, due to higher capital expenditures.
Current wording
Cash required for investing activities increased to $2.8 billion for the nine months ended November 1, 2025, compared to $1.9 billion for the nine months ended November 2, 2024, due to higher capital expenditures.
Previous wording
We paid dividends totaling $509 million ($1.12 per share) and $1,019 million ($2.24 per share) for the three and six months ended August 2, 2025, respectively, and $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, a per share increase of 1.8 percent. We declared dividends totaling $529 million ($1.14 per share) during the second quarter of 2025 and $527 million ($1.12 per share) during the second quarter of 2024, 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 $518 million ($1.14 per share) and $1.5 billion ($3.38 per share) for the three and nine months ended November 1, 2025, respectively, and $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, a per share increase of 1.8 percent. We declared dividends totaling $526 million ($1.14 per share) during the third quarter of 2025 and $521 million ($1.12 per share) during the third quarter of 2024, 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 deployed $251 million to repurchase shares during the six months ended August 2, 2025. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 9 to the Financial Statements for more information.
Current wording
We deployed $403 million to repurchase shares during the nine months ended November 1, 2025. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 10 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 2025 and October 2028, respectively, provide a liquidity backstop to our commercial paper program. No balances were outstanding under either credit facility at any time during 2025 or 2024. There was no commercial paper outstanding as of either August 2, 2025, or August 3, 2024. Note 7 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 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 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 provide a liquidity backstop to our commercial paper program. No balances were outstanding under either credit facility at any time during 2025 or 2024. There was no commercial paper outstanding as of either November 1, 2025, or November 2, 2024. Note 8 to the Financial Statements provides additional information.
Previous wording
This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "anticipate," "believe," "could," “expect,” “may,” “might,” “seek,” "will," “would,” or similar words. The principal forward-looking statements in this report include statements regarding: our future financial and operational performance, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.
Current wording
This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "anticipate," "believe," "could," “expect,” “may,” “might,” “seek,” "will," “would,” or similar words. The principal forward-looking statements in this report include statements regarding: our future financial and operational performance, changes in the consumer landscape, evolution in tariffs and global trade policy, the impacts of business transformation efforts, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.