tgt-20230729



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 29, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number 1-6049

TARGET CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of incorporation or organization)

1000 Nicollet Mall, Minneapolis, Minnesota

(Address of principal executive offices)

41-0215170

(I.R.S. Employer Identification No.)

55403

(Zip Code)

612-304-6073

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0833 per share

TGT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Total shares of common stock, par value $0.0833, outstanding at August 18, 2023, were 461,605,464.


						Table of Contents
						Index to Notes

TARGET CORPORATION

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Operations	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Financial Position	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of Shareholders’ Investment	5
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

Signatures		26


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Consolidated Statements of Operations
	Three Months Ended				Six Months Ended
(millions, except per share data) (unaudited)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Sales	$	24,384	$	25,653	$	49,332	$	50,483
Other revenue	389		384		763		724
Total revenue	24,773		26,037		50,095		51,207
Cost of sales	17,798		20,142		36,184		38,603
Selling, general and administrative expenses	5,184		5,002		10,209		9,764
Depreciation and amortization (exclusive of depreciation included in cost of sales)	594		572		1,177		1,173
Operating income	1,197		321		2,525		1,667
Net interest expense	141		112		288		224
Net other income	(16)		(8)		(39)		(23)
Earnings before income taxes	1,072		217		2,276		1,466
Provision for income taxes	237		34		491		274


Net earnings	$	835	$	183	$	1,785	$	1,192



Basic earnings per share	$	1.81	$	0.40	$	3.87	$	2.57



Diluted earnings per share	$	1.80	$	0.39	$	3.86	$	2.55
Weighted average common shares outstanding
Basic	461.6		461.5		461.3		463.8
Diluted	462.5		463.6		462.7		466.8
Antidilutive shares	2.9		1.3		2.4		1.0

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q2 2023 Form 10-Q			1


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Comprehensive Income
	Three Months Ended				Six Months Ended
(millions) (unaudited)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Net earnings	$	835	$	183	$	1,785	$	1,192
Other comprehensive income, net of tax
Pension benefit liabilities	1		11		3		22
Cash flow hedges and currency translation adjustment	(4)		(28)		(9)		162
Other comprehensive income (loss)	(3)		(17)		(6)		184
Comprehensive income	$	832	$	166	$	1,779	$	1,376

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q2 2023 Form 10-Q			2


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)	July 29, 2023		January 28, 2023		July 30, 2022
Assets
Cash and cash equivalents	$	1,617	$	2,229	$	1,117
Inventory	12,684		13,499		15,320
Other current assets	1,797		2,118		2,016
Total current assets	16,098		17,846		18,453
Property and equipment
Land	6,504		6,231		6,161
Buildings and improvements	35,889		34,746		33,694
Fixtures and equipment	7,936		7,439		6,744
Computer hardware and software	3,178		3,039		2,684
Construction-in-progress	2,641		2,688		2,245
Accumulated depreciation	(23,201)		(22,631)		(21,708)
Property and equipment, net	32,947		31,512		29,820
Operating lease assets	2,840		2,657		2,542
Other noncurrent assets	1,321		1,320		1,655
Total assets	$	53,206	$	53,335	$	52,470
Liabilities and shareholders’ investment
Accounts payable	$	12,278	$	13,487	$	14,891
Accrued and other current liabilities	5,948		5,883		5,905
Current portion of long-term debt and other borrowings	1,106		130		1,649
Total current liabilities	19,332		19,500		22,445
Long-term debt and other borrowings	14,926		16,009		13,453
Noncurrent operating lease liabilities	2,798		2,638		2,543
Deferred income taxes	2,334		2,196		1,862
Other noncurrent liabilities	1,826		1,760		1,575
Total noncurrent liabilities	21,884		22,603		19,433
Shareholders’ investment
Common stock	38		38		38
Additional paid-in capital	6,610		6,608		6,502
Retained earnings	5,767		5,005		4,421
Accumulated other comprehensive loss	(425)		(419)		(369)
Total shareholders’ investment	11,990		11,232		10,592
Total liabilities and shareholders’ investment	$	53,206	$	53,335	$	52,470

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 461,600,640, 460,346,947, and 460,236,393 shares issued and outstanding as of July 29, 2023, January 28, 2023, and July 30, 2022, respectively.

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q2 2023 Form 10-Q			3


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Cash Flows
	Six Months Ended
(millions) (unaudited)	July 29, 2023		July 30, 2022
Operating activities
Net earnings	$	1,785	$	1,192


Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization	1,350		1,329
Share-based compensation expense	107		122
Deferred income taxes	141		227

Noncash losses / (gains) and other, net	11		108
Changes in operating accounts:
Inventory	815		(1,418)
Other assets	62		(179)
Accounts payable	(1,137)		(784)
Accrued and other liabilities	264		(644)


Cash provided by (required for) operating activities	3,398		(47)
Investing activities
Expenditures for property and equipment	(2,825)		(2,523)
Proceeds from disposal of property and equipment	6		4
Other investments	(2)		1
Cash required for investing activities	(2,821)		(2,518)
Financing activities
Change in commercial paper, net	—		1,545

Reductions of long-term debt	(72)		(113)
Dividends paid	(996)		(842)
Repurchase of stock	—		(2,646)

Shares withheld for taxes on share-based compensation	(121)		(175)
Stock option exercises	—		2
Cash required for financing activities	(1,189)		(2,229)
Net decrease in cash and cash equivalents	(612)		(4,794)
Cash and cash equivalents at beginning of period	2,229		5,911
Cash and cash equivalents at end of period	$	1,617	$	1,117
Supplemental information
Leased assets obtained in exchange for new finance lease liabilities	$	20	$	107
Leased assets obtained in exchange for new operating lease liabilities	337		97

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q2 2023 Form 10-Q			4


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Shareholders’ Investment
	Common	Stock		Additional				Accumulated Other
	Stock	Par		Paid-in		Retained		Comprehensive
(millions) (unaudited)	Shares	Value		Capital		Earnings		(Loss) / Income		Total
January 29, 2022	471.3	$	39	$	6,421	$	6,920	$	(553)	$	12,827
Net earnings	—	—		—		1,009		—		1,009
Other comprehensive income	—	—		—		—		201		201
Dividends declared	—	—		—		(426)		—		(426)
Repurchase of stock	(0.1)	—		—		(10)		—		(10)
Accelerated share repurchase pending final settlement	(8.9)	(1)		(751)		(1,998)		—		(2,750)
Stock options and awards	1.4	1		(78)		—		—		(77)
April 30, 2022	463.7	$	39	$	5,592	$	5,495	$	(352)	$	10,774
Net earnings	—	—		—		183		—		183
Other comprehensive loss	—	—		—		—		(17)		(17)
Dividends declared	—	—		—		(502)		—		(502)
Repurchase of stock	(3.6)	(1)		870		(755)		—		114
Stock options and awards	0.1	—		40		—		—		40
July 30, 2022	460.2	$	38	$	6,502	$	4,421	$	(369)	$	10,592
Net earnings	—	—		—		712		—		712
Other comprehensive income	—	—		—		—		161		161
Dividends declared	—	—		—		(502)		—		(502)


Stock options and awards	0.1	—		56		—		—		56
October 29, 2022	460.3	$	38	$	6,558	$	4,631	$	(208)	$	11,019
Net earnings	—	—		—		876