What changed in this filing

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Item 1. Financial Statements

2021-08-27 compared with 2021-05-28 · 51 added, 37 removed, 298 unchanged (23% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended

(millions, except per share data) (unaudited) May 1, 2021 May 2, 2020

Three Months Ended Six Months Ended

(millions, except per share data) (unaudited) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Sales $ 24,826 $ 22,696 $ 48,705 $ 42,067

23 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended

(millions) (unaudited) May 1, 2021 May 2, 2020

Three Months Ended Six Months Ended

(millions) (unaudited) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Net earnings $ 1,817 $ 1,690 $ 3,914 $ 1,974

10 unchanged sentences

Consolidated Statements of Financial Position

(millions, except footnotes) (unaudited) May 1,

(millions, except footnotes) (unaudited) July 31,

2021 January 30,

2021 August 1,

Cash and cash equivalents $ 7,368 $ 8,511 $ 7,284

31 unchanged sentences

Common Stock Authorized 6,000,000,000 shares, $ 0.0833 par value;

496,093,160 , 500,877,129 and 499,919,691 shares issued and outstanding as of May 1, 2021, January 30, 2021, and May 2, 2020, respectively.

489,651,196 , 500,877,129 and 500,252,831 shares issued and outstanding as of July 31, 2021, January 30, 2021, and August 1, 2020, respectively.

Preferred Stock Authorized 5,000,000 shares, $ 0.01 par value;

6 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

(millions) (unaudited) May 1, 2021 May 2, 2020

Six Months Ended

(millions) (unaudited) July 31, 2021 August 1, 2020

Operating activities

77 unchanged sentences

May 1, 2021 496.1 $ 41 $ 6,271 $ 9,372 $ ( 725 ) $ 14,959

We declared $ 0.68 and $ 0.66 dividends per share for the three months ended May 1, 2021, and May 2, 2020, respectively, and $ 2.70 per share for the fiscal year ended January 30, 2021.

Net earnings — — — 1,817 — 1,817

Other comprehensive income — — — — 12 12

Dividends declared — — — ( 445 ) — ( 445 )

Repurchase of stock ( 6.6 ) — — ( 1,544 ) — ( 1,544 )

Stock options and awards 0.2 — 61 — — 61

July 31, 2021 489.7 $ 41 $ 6,332 $ 9,200 $ ( 713 ) $ 14,860

We declared $ 0.90 and $ 0.68 dividends per share for the three months ended July 31, 2021, and August 1, 2020, respectively, and $ 2.70 per share for the fiscal year ended January 30, 2021.

See accompanying Notes to Consolidated Financial Statements .

33 unchanged sentences

To date, virtually all of our stores, digital channels, and distribution centers have remained open.

As the COVID-19 pandemic has evolved, we have experienced significant volatility in our sales category mix.

Since the onset of the COVID-19 pandemic, we have experienced strong comparable sales growth and significant volatility in our sales category and channel mix, including same-day fulfillment options.

Note 4 presents sales by category.

Since the pandemic started in March 2020, we took various actions, including accelerating purchases of certain merchandise in our core categories and slowing or canceling purchase orders, primarily for Apparel and Accessories.

We have taken various actions, including accelerating purchases of certain merchandise in our core categories and slowing or canceling purchase orders, primarily for Apparel and Accessories.

As a result, during the quarter ended May 2, 2020, we recorded $ 216 million of purchase order cancellation fees in Cost of Sales.

8 unchanged sentences

We also earn revenues from a variety of other sources, most notably credit card profit-sharing income from our arrangement with TD Bank Group (TD).

Revenues Three Months Ended

(millions) May 1, 2021 May 2, 2020

Revenues Three Months Ended Six Months Ended

(millions) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Apparel and accessories (a)

1 unchanged sentence

Beauty and household essentials (b)

6,726 6,158 13,090 12,069

Food and beverage (c)

4,687 4,186 9,543 8,761

Hardlines (d)

3,867 3,608 7,813 6,582

Home furnishings and décor (e)

4,748 4,625 9,158 7,889

Other 47 35 81 63

Sales 24,826 22,696 48,705 42,067

Credit card profit sharing 172 158 343 324

Other 162 121 309 199

Other revenue 334 279 652 523

8 unchanged sentences

Sales are recognized net of expected returns, which we estimate using historical return patterns.

As of May 1, 2021, January 30, 2021, and May 2, 2020, the accrual for estimated returns was $ 196 million, $ 139 million, and $ 398 million, respectively.

The accrual as of May 2, 2020, reflects the impact of the suspension of in-store merchandise returns and exchanges from March 26, 2020, to April 26, 2020, due to the COVID-19 pandemic.

As of July 31, 2021, January 30, 2021, and August 1, 2020, the accrual for estimated returns was $ 176 million, $ 139 million, and $ 201 million, respectively.

Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance.

1 unchanged sentence

2021 Gift Cards Issued During Current Period But Not Redeemed (b)

Revenue Recognized From Beginning Liability May 1,

Revenue Recognized From Beginning Liability July 31,

Gift card liability (a)

2 unchanged sentences

(b) Net of estimated breakage.

Credit card profit sharing — We receive payments under a credit card program agreement with TD.

Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions.

TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance.

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Notes

Credit card profit sharing — We receive payments under a credit card program agreement with TD.

TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance.

Fair Value Measurements

1 unchanged sentence

Financial Instruments Measured On a Recurring Basis Fair Value

(millions) Classification Pricing Category May 1, 2021 January 30, 2021 May 2, 2020

(millions) Classification Pricing Category July 31, 2021 January 30, 2021 August 1, 2020

Short-term investments Cash and Cash Equivalents Level 1 $ 6,439 $ 7,644 $ 6,370

4 unchanged sentences

Significant Financial Instruments Not Measured at Fair Value (a)

May 1, 2021 January 30, 2021 May 2, 2020

July 31, 2021 January 30, 2021 August 1, 2020

Value Carrying

7 unchanged sentences

We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable.

We recognized impairment charges of $ 41 million and $ 35 million during the three months ended May 1, 2021, and May 2, 2020, respectively.

We recognized impairment charges of $ 39 million and $ 81 million during the three and six months ended July 31, 2021, respectively.

We recognized impairment charges of $ 25 million and $ 60 million during the three and six months ended August 1, 2020, respectively.

These impairment charges are included in Selling, General and Administrative Expenses (SG&A).

3 unchanged sentences

Note 5 to the Consolidated Financial Statements provides the fair value and classification of these instruments.

As of May 1, 2021, January 30, 2021, and May 2, 2020, we were party to interest rate swaps with notional amounts totaling $ 1.5 billion.

As of July 31, 2021, January 30, 2021, and August 1, 2020, we were party to interest rate swaps with notional amounts totaling $ 1.5 billion.

We pay a floating rate and receive a fixed rate under each of these agreements.

All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three months ended May 1, 2021, and May 2, 2020.

All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three and six months ended July 31, 2021, and August 1, 2020.

As of July 31, 2021, January 30, 2021, and August 1, 2020, we were party to forward-starting interest rate swaps with notional amounts totaling $ 250 million.

We use these derivative financial instruments, which have been designated as cash flow hedges, to hedge the interest rate exposure of anticipated future debt issuances.

As of July 31, 2021, Accumulated Other Comprehensive Loss (AOCI) included $ 6 million that will be reclassified and reduce Net Interest Expense when the forecasted transaction affects earnings.

During August 2021, we entered into additional forward-starting interest rate swaps with notional amounts totaling $ 675 million.

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Notes

As of May 1, 2021, January 30, 2021, and May 2, 2020, we were party to forward-starting interest rate swaps with notional amounts totaling $ 250 million.

We use these derivative financial instruments, which have been designated as cash flow hedges, to hedge the interest rate exposure of anticipated future debt issuances.

As of May 1, 2021, Accumulated Other Comprehensive Loss (AOCI) included $ 17 million that will be reclassified and reduce Net Interest Expense when the forecasted transaction affects earnings.

Effect of Hedges on Debt

May 1, 2021 January 30, 2021 May 2, 2020

July 31, 2021 January 30, 2021 August 1, 2020

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount 154 183 239

Effect of Hedges on Net Interest Expense Three Months Ended

(millions) May 1, 2021 May 2, 2020

Effect of Hedges on Net Interest Expense Three Months Ended Six Months Ended

(millions) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Gain (loss) on fair value hedges recognized in Net Interest Expense

2 unchanged sentences

Total $ — $ — $ — $ —

For the three months ended May 1, 2021, our effective tax rate was 19.6 percent compared with 13.9 percent for the three months ended May 2, 2020, as higher pretax earnings diluted the tax-rate benefit from fixed and discrete items, such as employee share-based compensation and the sale of Dermstore.

Additionally, the favorable resolution of certain income tax matters resulted in a $ 44 million discrete tax benefit.

For the three and six months ended July 31, 2021, our effective tax rate was 23.4 percent and 21.4 percent, respectively, compared with 22.8 percent and 21.6 percent for the three and six months ended August 1, 2020, as higher pretax earnings diluted the tax-rate benefit from fixed and discrete items, such as employee share-based compensation and the Dermstore sale.

A dditionally, for the six months ended July 31, 2021, the favorable resolution of certain income tax matters resulted in a $ 44 million discrete tax benefit.

Share Repurchase

We periodically repurchase shares of our common stock under a board-authorized repurchase program through a combination of open market transactions, accelerated share repurchase arrangements, and other privately negotiated transactions with financial institutions.

Share Repurchase Activity Three Months Ended

(millions, except per share data) May 1, 2021 May 2, 2020

Share Repurchase Activity Three Months Ended Six Months Ended

(millions, except per share data) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Number of shares purchased 6.6 — 12.7 5.7

7 unchanged sentences

We provide pension plan benefits to eligible team members.

Net Pension Benefits Expense Three Months Ended

(millions) Classification May 1, 2021 May 2, 2020

Net Pension Benefits Expense Three Months Ended Six Months Ended

(millions) Classification July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Service cost benefits earned SG&A $ 24 $ 25 $ 48 $ 51

10 unchanged sentences

Amounts reclassified from AOCI, net of tax — — 42 42

May 1, 2021 $ 6 $ ( 18 ) $ ( 713 ) $ ( 725 )

July 31, 2021 $ ( 2 ) $ ( 18 ) $ ( 693 ) $ ( 713 )

TARGET CORPORATION

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements