What changed in this filing

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Item 1. Financial Statements

2023-05-26 compared with 2022-11-23 · 70 added, 94 removed, 271 unchanged (38% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended Nine Months Ended

(millions, except per share data) (unaudited) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Three Months Ended

(millions, except per share data) (unaudited) April 29, 2023 April 30, 2022

Sales $ 24,948 $ 24,830

6 unchanged sentences

Net interest expense 147 112

Net other (income) / expense ( 12 ) ( 6 ) ( 35 ) ( 356 )

Net other income ( 23 ) ( 15 )

Earnings before income taxes 1,204 1,249

13 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended Nine Months Ended

(millions) (unaudited) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Three Months Ended

(millions) (unaudited) April 29, 2023 April 30, 2022

Net earnings $ 950 $ 1,009

10 unchanged sentences

Consolidated Statements of Financial Position

(millions, except footnotes) (unaudited) October 29,

(millions, except footnotes) (unaudited) April 29,

2023 January 28,

2022 October 30,

2023 April 30,

Cash and cash equivalents $ 1,321 $ 2,229 $ 1,112

31 unchanged sentences

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

460,297,654 , 471,274,073 and 480,905,493 shares issued and outstanding as of October 29, 2022, January 29, 2022, and October 30, 2021, respectively.

461,552,843 , 460,346,947 , and 463,683,711 shares issued and outstanding as of April 29, 2023, January 28, 2023, and April 30, 2022, respectively.

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

6 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

(millions) (unaudited) October 29, 2022 October 30, 2021

Three Months Ended

(millions) (unaudited) April 29, 2023 April 30, 2022

Operating activities

4 unchanged sentences

Deferred income taxes 95 115

Gain on Dermstore sale — ( 335 )

Noncash losses / (gains) and other, net

4 unchanged sentences

Accrued and other liabilities 67 ( 505 )

Cash provided by operating activities 552 5,597

Cash provided by (required for) operating activities 1,265 ( 1,394 )

Investing activities

1 unchanged sentence

Proceeds from disposal of property and equipment 2 2

Proceeds from Dermstore sale — 356

Other investments 1 2

2 unchanged sentences

Change in commercial paper, net 90 945

Additions to long-term debt 991 —

Reductions of long-term debt ( 46 ) ( 48 )

1 unchanged sentence

Repurchase of stock — ( 10 )

Accelerated share repurchase pending final settlement — ( 2,750 )

Shares withheld for taxes on share-based compensation ( 118 ) ( 171 )

Stock option exercises — 1

20 unchanged sentences

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 )

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

April 30, 2022 463.7 $ 39 $ 5,592 $ 5,495 $ ( 352 ) $ 10,774

Net earnings — — — 183 — 183

Other comprehensive income — — — — 12 12

Other comprehensive loss — — — — ( 17 ) ( 17 )

Dividends declared — — — ( 502 ) — ( 502 )

5 unchanged sentences

Dividends declared — — — ( 502 ) — ( 502 )

Repurchase of stock ( 8.8 ) ( 1 ) — ( 2,180 ) — ( 2,181 )

Stock options and awards 0.1 — 56 — — 56

1 unchanged sentence

Net earnings — — — 876 — 876

Other comprehensive income — — — — 134 134

Other comprehensive loss — — — — ( 211 ) ( 211 )

Dividends declared — — — ( 502 ) — ( 502 )

Repurchase of stock ( 9.8 ) ( 1 ) — ( 2,265 ) — ( 2,266 )

Stock options and awards — — 50 — — 50

10 unchanged sentences

Net earnings — — — 950 — 950

Other comprehensive income — — — — 201 201

Other comprehensive loss — — — — ( 3 ) ( 3 )

Dividends declared — — — ( 507 ) — ( 507 )

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 1.3 — ( 67 ) — — ( 67 )

April 29, 2023 461.6 $ 38 $ 6,541 $ 5,448 $ ( 422 ) $ 11,605

Net earnings — — — 183 — 183

Other comprehensive income — — — — ( 17 ) ( 17 )

Dividends declared — — — ( 502 ) — ( 502 )

Repurchase of stock ( 3.6 ) ( 1 ) 870 ( 755 ) — 114

Stock options and awards 0.1 — 40 — — 40

July 31, 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

We declared $ 1.08 and $ 0.90 dividends per share for the three months ended October 29, 2022, and October 30, 2021, and $ 3.38 per share for the fiscal year ended January 29, 2022.

We declared $ 1.08 and $ 0.90 dividends per share for the three months ended April 29, 2023, and April 30, 2022, and $ 4.14 per share for the fiscal year ended January 28, 2023.

See accompanying Notes to Consolidated Financial Statements .

6 unchanged sentences

Accounting Policies

Dermstore Sale

Fair Value Measurements

Property and Equipment

Supplier Finance Programs

Commercial Paper and Long-Term Debt

12 unchanged sentences

GAAP) for complete financial statements.

These condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in our 2021 Form 10-K.

These condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in our most recent Form 10-K.

We use the same accounting policies in preparing quarterly and annual financial statements.

3 unchanged sentences

Due to the seasonal nature of our business, quarterly revenues, expenses, earnings, and cash flows are not necessarily indicative of the results that may be expected for the full year.

Dermstore Sale

In February 2021, we sold our wholly owned subsidiary Dermstore LLC (Dermstore) for $ 356 million in cash and recognized a $ 335 million pretax gain, which is included in Net Other (Income) / Expense.

Dermstore represented less than 1 percent of our consolidated revenues, operating income and net assets.

TARGET CORPORATION

4 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 Nine Months Ended

(millions) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Apparel and accessories (a)

$ 4,367 $ 4,364 $ 13,223 $ 13,384

Beauty and household essentials (b)

7,465 6,980 21,726 20,070

Food and beverage (c)

Revenue Three Months Ended

(millions) April 29, 2023 April 30, 2022

Apparel & accessories (a)

$ 3,967 $ 4,239

Beauty & household essentials (b)

Food & beverage (c)

Hardlines (d)

3,665 3,841 11,244 11,654

Home furnishings and décor (e)

4,832 4,989 13,750 14,147

Other 45 42 141 123

Home furnishings & décor (e)

Sales 24,948 24,830

11 unchanged sentences

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

As of October 29, 2022, January 29, 2022, and October 30, 2021, the accrual for estimated returns was $ 209 million, $ 165 million, and $ 210 million, respectively.

As of April 29, 2023, January 28, 2023, and April 30, 2022, the accrual for estimated returns was $ 206 million, $ 174 million, and $ 204 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

2023 Gift Cards Issued During Current Period But Not Redeemed (b)

Revenue Recognized From Beginning Liability October 29,

Revenue Recognized From Beginning Liability April 29,

Gift card liability (a)

2 unchanged sentences

(b) Net of estimated breakage.

Other Revenue

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

5 unchanged sentences

NOTES Index to Notes

Other — Includes advertising, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellaneous revenues.

Other — Includes advertising revenue, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellaneous revenues.

Fair Value Measurements

1 unchanged sentence

Financial Instruments Measured On a Recurring Basis Fair Value

(millions) Classification Measurement Level October 29, 2022 January 29, 2022 October 30, 2021

(millions) Classification Measurement Level April 29, 2023 January 28, 2023 April 30, 2022

Short-term investments Cash and Cash Equivalents Level 1 $ 408 $ 1,343 $ 182

4 unchanged sentences

Significant Financial Instruments Not Measured at Fair Value (a)

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

Value Carrying

4 unchanged sentences

(b) The fair value of debt is generally measured using a discounted cash flow analysis based on current market interest rates for the same or similar types of financial instruments and would be classified as Level 2.

These amounts exclude commercial paper, unamortized swap valuation adjustments, and lease liabilities.

Property and Equipment

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 $ 5 million and $ 55 million for the three and nine months ended October 29, 2022, respectively.

We recognized impairment charges of $ 3 million and $ 84 million for the three and nine months ended October 30, 2021, respectively.

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

These amounts exclude commercial paper, fair value hedge adjustments, and lease liabilities.

Supplier Finance Programs

We have arrangements with several financial institutions to act as our paying agents to certain vendors.

The arrangements also permit the financial institutions to provide vendors with an option, at our vendors' sole discretion, to sell their receivables from Target to the financial institutions.

A vendor’s election to receive early payment at a discounted amount from the financial institutions does not change the amount that we must remit to the financial institutions or our payment date, which is up to 120 days from the invoice date.

We do not pay any fees or pledge any security to these financial institutions under these arrangements.

The arrangements can be terminated by either party with notice ranging up to 120 days.

Our outstanding vendor obligations eligible for early payment under these arrangements totaled $ 3.3 billion, $ 3.4 billion, and $ 4.4 billion as of April 29, 2023, January 28, 2023, and April 30, 2022, respectively, and are included within Accounts Payable on our Consolidated Statements of Financial Position.

Our outstanding vendor obligations do not represent actual receivables sold by our vendors to the financial institutions, which may be lower.

Commercial Paper and Long-Term Debt

In September 2022, we issued unsecured fixed rate debt of $ 1.0 billion at 4.5 percent that matures in September 2032.

In connection with this issuance, we terminated certain of our forward-starting interest rate swaps.

Note 7 provides additional information.

We obtain short-term financing from time to time under our commercial paper program.

For the nine months ended October 29, 2022, the maximum amount outstanding was $ 2.1 billion, and the average daily amount outstanding was $ 713 million, at a weighted average annual interest rate of 1.91 percent.

As of October 29, 2022, $ 2.1 billion was outstanding and is classified within Current Portion of Long-Term Debt and Other Borrowings on our Consolidated Statement of Financial Position.

No balances were outstanding at any time during 2021.

For the three months ended April 29, 2023 and April 30, 2022, the maximum amounts outstanding were $ 90 million and $ 1.1 billion, respectively, and the average daily amounts outstanding were $ 2 million and $ 291 million, respectively, at a weighted average annual interest rate of 4.8 percent and 0.4 percent, respectively.

As of April 29, 2023 and April 30, 2022, $ 90 million and $ 945 million, respectively, were outstanding and are classified within Current Portion of Long-Term Debt and Other Borrowings on our Consolidated Statements of Financial Position.

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Notes

In October 2022, we obtained a new committed $ 1.0 billion 364 -day unsecured revolving credit facility that will expire in October 2023.

We also extended our existing committed $ 3.0 billion unsecured revolving credit facility, which now expires in October 2027.

No balances were outstanding under either credit facility at any time during 2021 or 2022.

Derivative Financial Instruments

2 unchanged sentences

Note 3 to the Consolidated Financial Statements provides the fair value and classification of these instruments.

We were party to interest rate swaps with notional amounts totaling $ 2.45 billion as of October 29, 2022, and $ 1.50 billion as of January 29, 2022, and October 30, 2021.

We were party to interest rate swaps with notional amounts totaling $ 2.45 billion as of April 29, 2023 and January 28, 2023, and $ 1.50 billion as of April 30, 2022.

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 and nine months ended October 29, 2022, and October 30, 2021.

We were party to forward-starting interest rate swaps with notional amounts totaling $ 1.45 billion as of October 29, 2022, $ 2.15 billion as of January 29, 2022, and $ 1.25 billion as of October 30, 2021.

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 during the next two years .

In September 2022, we terminated forward-starting interest rate swap agreements that hedged $ 700 million of the $ 1.0 billion debt issuance described in Note 6 .

The resulting gain of $ 109 million was recorded in Accumulated Other Comprehensive Loss (AOCI) and will be recognized as a reduction to Net Interest Expense over the term of the debt.

Based on the fair value of our remaining forward-starting interest rate swaps as of October 29, 2022, AOCI included an unrealized gain of $ 394 million.

Any unrealized gain or loss at the time of debt issuance will be reclassified and impact Net Interest Expense as we record interest expense on the associated debt.

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 April 29, 2023 and April 30, 2022.

During the first quarter of 2023, we amended certain of our interest rate swaps, with notional amounts totaling $ 1.25 billion, to replace the London Interbank Offered Rate (LIBOR) with the daily Secured Overnight Financing Rate (SOFR) as part of our planned reference rate reform activities.

These amendments did not result in any change to our application of hedge accounting or any impact to our consolidated financial statements.

We were party to forward-starting interest rate swaps with notional amounts totaling $ 2.15 billion as of April 30, 2022.

During 2022, we terminated all remaining forward-starting interest rate swap agreements.

The resulting gains upon termination were recorded in Accumulated Other Comprehensive Loss and will be recognized as a reduction to Net Interest Expense over the respective term of the debt.

Effect of Hedges on Debt

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount ( 65 ) ( 74 ) ( 27 )

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

(millions) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Effect of Hedges on Net Interest Expense Three Months Ended

(millions) April 29, 2023 April 30, 2022

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

1 unchanged sentence

Hedged debt ( 9 ) 104

Gain on cash flow hedges recognized in Net Interest Expense 6 —

Total $ 6 $ —

5 unchanged sentences

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

We did not repurchase any of our shares during the three months ended October 29, 2022.

Share Repurchase Activity Three Months Ended Nine Months Ended

(millions, except per share data) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

We did not repurchase any of our shares during the three months ended April 29, 2023.

Share Repurchase Activity Three Months Ended

(millions, except per share data) April 29, 2023 April 30, 2022

Number of shares purchased — 0.1

1 unchanged sentence

Total investment $ — $ 10

This table excludes activity related to the ASR arrangement described below because final settlement had not occurred as of April 30, 2022.

During the first quarter of 2022, we entered into an ASR arrangement to repurchase up to $ 2.75 billion of our common stock.

Under the ASR arrangement, we repurchased 12.5 million shares for a total cash investment of $ 2.6 billion.

We did not enter into any other ASR arrangements during the periods presented.

Under the agreement, we paid $ 2.75 billion and received an initial delivery of 8.9 million shares, which were retired, resulting in a $ 2.0 billion reduction to Retained Earnings.

As of April 30, 2022, $ 751 million was included in the Consolidated Statement of Financial Position as a reduction to Additional Paid-in Capital.

Final settlement occurred during the second quarter of 2022.

In total, under the ASR arrangement, we repurchased 12.5 million shares for a total cash investment of $ 2.6 billion.

Pension Benefits

We provide pension plan benefits to eligible team members.

Net Pension Benefits Expense Three Months Ended Nine Months Ended

(millions) Classification October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Net Pension Benefits Expense Three Months Ended

(millions) Classification April 29, 2023 April 30, 2022

Service cost benefits earned SG&A $ 20 $ 23

Interest cost on projected benefit obligation Net Other (Income) / Expense 29 24 88 72

Expected return on assets Net Other (Income) / Expense ( 59 ) ( 60 ) ( 176 ) ( 178 )

Amortization of losses Net Other (Income) / Expense 16 28 46 85

Amortization of prior service cost Net Other (Income) / Expense — 2 10 1

Interest cost on projected benefit obligation Net Other Income 41 29

Expected return on assets Net Other Income ( 67 ) ( 59 )

Amortization of losses Net Other Income — 15

Prior service cost Net Other Income 3 —

Total $ ( 3 ) $ 8

4 unchanged sentences

Amounts reclassified from AOCI, net of tax ( 5 ) — 2 ( 3 )

October 29, 2022 $ 364 $ ( 22 ) $ ( 550 ) $ ( 208 )

April 29, 2023 $ 295 $ ( 23 ) $ ( 694 ) $ ( 422 )

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