What changed in this filing

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Item 1. Business

2023-03-08 compared with 2022-03-09 · 80 added, 51 removed, 82 unchanged (62% of the section changed)

4 unchanged sentences

Since 1946, we have given 5 percent of our profit to communities.

Our team, technology, and operations enable us to meet our corporate purpose and offer a preferred shopping experience to our guests through a durable, growth-driving enterprise strategy that differentiates Target in the marketplace.

Our team, technology, and operations enable us to serve guests, fulfill our purpose, and drive business results through a durable, growth-focused enterprise strategy that differentiates Target in the marketplace.

The six pillars of our strategy are:

• Differentiating from our competition with our assortment of unique owned brands and curated leading national brands;

• Investing to create an engaging, convenient, safe, and differentiated shopping experience for our guests;

• Leveraging our stores as fulfillment hubs to efficiently meet our guests' needs, whether they purchase online or in-store;

• Engaging with our guests through programs like Target Circle and RedCard to maintain and enhance our relevancy;

• Delivering affordability to our guests;

• Differentiating from our competition with our owned brands and a curated assortment of leading national brands;

• Investing to create an engaging and differentiated shopping experience;

• Leveraging our stores-as-hubs to efficiently provide a convenient and safe experience for our guests whether they purchase online or physically in-store;

• Maintaining and enhancing our relevancy to deepen engagement with guests;

• Leveraging our size and scale to benefit people, the planet, and our business, primarily through Target Forward, the sustainability-focused component of our overall business strategy, announced in 2021.

As illustrated by the charts below, our strategy places stores at the center of our flexible fulfillment approach, with stores fulfilling over 95 percent of total sales.

• Leveraging our size and scale to benefit people, the planet, and our business, primarily through Target Forward, our enterprise sustainability strategy.

Our recent growth in sales demonstrates the strength and relevance of Target’s strategy.

Our strategy places stores at the center of our flexible fulfillment approach, with stores fulfilling more than 96 percent of total sales, which provides convenience for our guests at a reduced fulfillment cost.

TARGET CORPORATION

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A larger share of annual revenues traditionally occurs in the fourth quarter because it includes the November and December holiday sales period.

We sell a wide assortment of general merchandise and food.

The majority of our general merchandise stores offer an edited food assortment, including perishables, dry grocery, dairy, and frozen items.

Nearly all of our stores larger than 170,000 square feet offer a full line of food items comparable to traditional supermarkets.

Our small format stores, generally smaller than 50,000 square feet, offer curated general merchandise and food assortments.

Our digital channels include a wide merchandise assortment, including many items found in our stores, along with a complementary assortment sold by Target and third parties.

Sales by Product Category

The majority of our stores offer a wide assortment of general merchandise and food.

Nearly all of our stores larger than 170,000 square feet offer a variety of general merchandise and a full line of food items comparable to traditional supermarkets.

Our digital channels include a wide merchandise and food assortment, including many items found in our stores, along with a complementary assortment sold by Target and third parties.

We manage our business across the five core merchandise categories shown below.

Within categories, gross margins vary depending on the type of merchandise.

Sales by Merchandise Category

TARGET CORPORATION

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A significant portion of our sales is from national brand merchandise.

Approximately one-third of 2021 sales was related to our owned and exclusive brands, including, but not limited, to the following:

Approximately one-third of our sales come from our owned and exclusive brands, including, but not limited to, the brands listed below.

A New Day™ Goodfellow & Co™ Room Essentials™

All in Motion™ Hearth & Hand™ with Magnolia Shade & Shore™

Archer Farms™ Heyday™ Simply Balanced™

Art Class™ Hyde & EEK!

Boutique™ Smartly™

Auden™ JoyLab™ Smith & Hawken™

Ava & Viv™ Kindfull™ Sonia Kashuk™

Boots & Barkley™ Knox Rose™ Spritz™

Brightroom™ Kona Sol™ Stars Above™

Bullseye's Playground™ Made By Design™ Sun Squad™

Casaluna™ Market Pantry™ Threshold™

Cat & Jack™ Mondo Llama™ Universal Thread™

Cloud Island™ More Than Magic™ up & up™

Colsie™ Opalhouse™ Wild Fable™

Embark™ Open Story™ Wondershop™

Everspring™ Original Use™ Xhilaration™

Favorite Day™ Pillowfort™

Art Class™ Heyday™ Smartly™

Auden™ Hyde & EEK!

Boutique™ Smith & Hawken™

Ava & Viv™ JoyLab™ Sonia Kashuk™

Boots & Barkley™ Kindfull™ Spritz™

Brightroom™ Knox Rose™ Stars Above™

Bullseye's Playground™ Kona Sol™ Sun Squad™

Casaluna™ Made By Design™ Threshold™

Cat & Jack™ Market Pantry™ Universal Thread™

Cloud Island™ Mondo Llama™ up & up™

Colsie™ More Than Magic™ Wild Fable™

Embark™ Opalhouse™ Wondershop™

Everspring™ Open Story™ Xhilaration™

Favorite Day™ Original Use™

Future Collective™ Pillowfort™

Good & Gather™ Project 62™

Exclusive Adult Beverage Brands

California Roots™ Mystic Reef™ SunPop™

Headliner™ Photograph™ The Collection™

Jingle & Mingle™ Rosé Bae™ Wine Cube™

We also sell merchandise through periodic exclusive design and creative partnerships, and shop-in-shop experiences, with partners such as Apple, Disney, Levi's, and Ulta Beauty, and generate revenue from in-store amenities such as Target Café, Starbucks, and Target Optical.

California Roots™ Jingle & Mingle™ SunPop™

Casa Cantina™ Photograph™ The Collection™

Headliner™ Rosé Bae™ Wine Cube™

CVS Pharmacy, Inc.

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Customer Loyalty Programs

Our guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, Target Credit Card, or Target™ MasterCard ® (collectively, RedCards™).

Our guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, RedCard Reloadable Account, Target Credit Card, or Target MasterCard ® (collectively, RedCards™).

We also seek to drive customer loyalty and trip frequency through our Target Circle program, where members earn 1 percent rewards on nearly all non-RedCard purchases, among other benefits.

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Vendors or third-party distributors ship certain food items and other merchandise directly to our stores.

Merchandise sold through our digital channels is distributed to our guests via common carriers (from stores, distribution centers, vendors, and third-party distributors), delivery via our wholly owned subsidiary, Shipt, Inc.

(Shipt), and through guest pick-up at our stores.

Merchandise sold through our digital channels is distributed to our guests through guest pick-up at our stores, via common carriers (from stores, distribution centers, vendors, and third-party distributors), and delivery via our wholly owned subsidiary, Shipt, Inc.

Our stores fulfill the majority of the digitally originated sales, which allows improved product availability, faster fulfillment times, reduced shipping costs, and allows us to offer guests a suite of same-day fulfillment options such as Order Pickup, Drive Up, and Shipt.

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We monitor our team members’ perceptions of these commitments through a number of surveys and take steps to address areas needing improvement.

Diversity, Equity, and Inclusion

Diversity, Equity, and Inclusion (DE&I)

We embrace diversity and strive to give our team members equitable access to opportunities.

We champion workplace diversity and an inclusive work environment with a focus on attracting, engaging, developing and advancing diverse talent.

We monitor the representation of women and racially or ethnically diverse team members at different levels throughout the company and disclose the composition of our team in our annual Workforce Diversity Report (which includes demographic information using the categories disclosed in our EEO-1 report).

Developing teams where team members feel heard, respected, and included is a core Target value and is fundamental to creating an inclusive guest experience.

We champion workplace diversity and an inclusive work environment with a focus on attracting, engaging, developing, and advancing team members equitably in order to reflect the guests and communities we serve.

We set company-wide DE&I goals to drive progress in these areas.

Developing environments where all team members feel seen, heard, and welcome to belong is part of Target's core value of inclusivity and is fundamental to creating an inclusive guest experience.

Compensation and Benefits

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team members to confirm that we are doing so.

Our compensation packages include a starting wage of at least $15 per hour for U.S.

hourly team members (who comprise the vast majority of our team), a 401(k) plan with matching contributions up to five percent of eligible earnings, paid vacation and holidays, family leave, merchandise and other discounts, disability insurance, life insurance, healthcare and dependent care flexible spending accounts, debt-free education assistance and tuition reimbursement, free mental health services, an annual short-term incentive program, long-term equity awards, and health insurance benefits, including free virtual health care visits.

Our compensation packages include a starting wage range of $15 to $24 per hour for U.S.

hourly team members in our stores and supply chain facilities (who comprise the vast majority of our team), a 401(k) plan with dollar-for-dollar matching contributions up to five percent of eligible earnings, paid vacation and holidays, family leave, merchandise and other discounts, disability insurance, life insurance, healthcare and dependent care flexible spending accounts, debt-free education assistance and tuition reimbursement, free mental health services, an annual short-term incentive program, long-term equity awards, and health insurance benefits, including free virtual health care visits.

Eligibility for, and the level of, benefits vary depending on team members’ full-time or part-time status, work location, compensation level, and tenure.

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2022 Form 10-K 5

BUSINESS & RISK FACTORS Table of Contents

BUSINESS Table of Contents

Index to Financial Statements

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This includes administering a comprehensive occupational injury- and illness-prevention program and training for team members.

Since the start of the COVID-19 pandemic in 2020, we have continued to invest in the well-being, health, and safety of our team members and guests.

We extended certain benefits to our team members in light of the COVID-19 pandemic, including bonuses, fully-paid leaves for up to 30 days, free back-up dependent care, and a variety of mental, emotional, and physical wellness resources.

Throughout the COVID-19 pandemic, we continued to invest in the well-being, health, and safety of our team members with a variety of mental, emotional, and physical wellness resources.

We also enacted dozens of safety, social distancing, and cleaning measures designed to protect our team and guests during the COVID-19 pandemic.

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We achieve effective inventory management by staying in-stock in core product offerings, maintaining positive vendor relationships, and carefully planning inventory levels for seasonal and apparel items to minimize markdowns.

The Liquidity and Capital Resources section in MD&A provides additional details.

During 2022, rapid changes in consumer preferences and supply chain volatility resulted in increased working capital needs.

The Business Environment and Liquidity and Capital Resources sections in MD&A provide additional details.

We compete with traditional and internet retailers, including department stores, off-price general merchandise retailers, wholesale clubs, category-specific retailers, drug stores, supermarkets, direct-to-consumer brands, and other forms of retail commerce.

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Available Information

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at investors.target.com as soon as reasonably practicable after we file such material with, or furnish it to, the U.S.

Our internet website is corporate.target.com.

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are available free of charge on the Investors section of our website (corporate.target.com/investors) as soon as reasonably practicable after we file such material with, or furnish it to, the U.S.

Securities and Exchange Commission (SEC).

In addition, the SEC maintains a website (http://www.sec.gov) that contains information we electronically file with, or furnish to, the SEC.

Our Corporate Governance Guidelines, Code of Ethics, Corporate Responsibility Report, and the charters for the committees of our Board of Directors are also available free of charge in print upon request or at investors.target.com.

Information on our website is not part of this or any other report we file with, or furnish to, the SEC.

In addition, the SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Investors should note that we currently announce material information to our investors and others using filings with the SEC, press releases, public conference calls, webcasts, or our corporate website (corporate.target.com).

Information that we post on our corporate website could be deemed material to investors.

We encourage investors, the media, and others interested in us to review the information we post on these channels.

The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.

TARGET CORPORATION

2022 Form 10-K 6

RISK FACTORS Table of Contents

BUSINESS & RISK FACTORS Table of Contents

Index to Financial Statements

Information About Our Executive Officers

Executive officers are elected by, and serve at the pleasure of, the Board of Directors.

There are no family relationships between any of the officers named and any other executive officer or member of the Board of Directors, or any arrangement or understanding pursuant to which any person was selected as an officer.

Name Title and Recent Business Experience Age

Boylan Executive Vice President and Chief Communications Officer since February 2021.

Senior Vice President and Chief Communications Officer from January 2019 to February 2021.

Senior Vice President, Communications from June 2017 to January 2019.

Cornell Chair of the Board and Chief Executive Officer since August 2014.

Fiddelke Executive Vice President and Chief Financial Officer since November 2019.

Senior Vice President, Operations from August 2018 to October 2019.

Senior Vice President, Merchandising Capabilities from March 2017 to August 2018.

Christina Hennington

Executive Vice President and Chief Growth Officer since February 2021.

Executive Vice President and Chief Merchandising Officer, Hardlines, Essentials and Capabilities from January 2020 to February 2021.

Senior Vice President, Group Merchandise Manager, Essentials, Beauty, Hardlines and Services from January 2019 to January 2020.

Senior Vice President, Merchandising Essentials, Beauty and Wellness from April 2017 to January 2019.

Kremer Executive Vice President and Chief Human Resources Officer since January 2019.

Senior Vice President, Talent and Organizational Effectiveness from October 2017 to January 2019.

Liu Executive Vice President, Chief Legal & Risk Officer and Corporate Secretary since October 2017.

Mulligan Executive Vice President and Chief Operating Officer since September 2015.

Sylvester Executive Vice President and Chief Guest Experience Officer since May 2022.

Executive Vice President and Chief Marketing & Digital Officer from February 2021 to May 2022.

Senior Vice President, Home from March 2019 to February 2021.

Vice President, Beauty & Dermstore from June 2017 to March 2019.

Ward Executive Vice President and Chief External Engagement Officer since January 2017.

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-K

Item 1. Business