What changed in this filing

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Item 1. Financial Statements

2023-08-25 compared with 2023-05-26 · 70 added, 52 removed, 289 unchanged (30% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended

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

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

22 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended

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

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

2 unchanged sentences

Cash flow hedges and currency translation adjustment ( 4 ) ( 28 ) ( 9 ) 162

Other comprehensive income ( 3 ) 201

Other comprehensive income (loss) ( 3 ) ( 17 ) ( 6 ) 184

Comprehensive income $ 832 $ 166 $ 1,779 $ 1,376

5 unchanged sentences

Consolidated Statements of Financial Position

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

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

2023 January 28,

2023 April 30,

2023 July 30,

Cash and cash equivalents $ 1,617 $ 2,229 $ 1,117

31 unchanged sentences

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

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.

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;

6 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

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

Six Months Ended

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

Operating activities

21 unchanged sentences

Repurchase of stock — ( 2,646 )

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

Shares withheld for taxes on share-based compensation ( 121 ) ( 175 )

54 unchanged sentences

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

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.

Net earnings — — — 835 — 835

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

Dividends declared — — — ( 516 ) — ( 516 )

Stock options and awards — — 69 — — 69

July 29, 2023 461.6 $ 38 $ 6,610 $ 5,767 $ ( 425 ) $ 11,990

We declared $ 1.10 and $ 1.08 dividends per share for the three months ended July 29, 2023 and July 30, 2022, respectively, and $ 4.14 per share for the fiscal year ended January 28, 2023.

See accompanying Notes to Consolidated Financial Statements .

8 unchanged sentences

Supplier Finance Programs

Property and Equipment

Commercial Paper and Long-Term Debt

24 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).

Revenue Three Months Ended

(millions) April 29, 2023 April 30, 2022

Revenue Three Months Ended Six Months Ended

(millions) July 29, 2023 July 30, 2022 July 29, 2023 July 30, 2022

Apparel & accessories (a)

1 unchanged sentence

Beauty & household essentials (b)

7,513 7,208 15,195 14,261

Food & beverage (c)

5,392 5,268 11,389 10,773

Hardlines (d)

3,383 3,866 6,774 7,579

Home furnishings & décor (e)

3,955 4,647 7,810 8,918

Other 40 47 96 96

Sales 24,384 25,653 49,332 50,483

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

As of July 29, 2023, January 28, 2023, and July 30, 2022, the accrual for estimated returns was $ 177 million, $ 174 million, and $ 175 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 April 29,

Revenue Recognized From Beginning Liability July 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.

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

Other Revenue

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.

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

2 unchanged sentences

Financial Instruments Measured On a Recurring Basis Fair Value

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

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

Short-term investments Cash and Cash Equivalents Level 1 $ 739 $ 1,343 $ 189

2 unchanged sentences

Interest rate swaps Other Noncurrent Assets Level 2 — 7 290

Interest rate swaps Other Current Liabilities Level 2 6 — —

Interest rate swaps Other Noncurrent Liabilities Level 2 130 81 6

Significant Financial Instruments Not Measured at Fair Value (a)

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

July 29, 2023 January 28, 2023 July 30, 2022

Value Carrying

11 unchanged sentences

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 eligible for early payment under these arrangements totaled $ 3.7 billion, $ 3.4 billion, and $ 4.6 billion as of July 29, 2023, January 28, 2023, and July 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

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

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

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 $ 33 million for the three and six months ended July 29, 2023.

We recognized impairment charges of $ 27 million and $ 50 million for the three and six months ended July 30, 2022, respectively.

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

Commercial Paper and Long-Term Debt

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

For the six months ended July 29, 2023 and July 30, 2022, the maximum amounts outstanding were $ 90 million and $ 1.5 billion, respectively, and the average daily amounts outstanding were $ 2 million and $ 538 million, respectively, at a weighted average annual interest rate of 4.9 percent and 1.1 percent, respectively.

No balances were outstanding as of July 29, 2023.

As of July 30, 2022, $ 1.5 billion was outstanding and is classified within Current Portion of Long-Term Debt and Other Borrowings on our Consolidated Statements of Financial Position.

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 April 29, 2023 and January 28, 2023, and $ 1.50 billion as of April 30, 2022.

We were party to interest rate swaps with notional amounts totaling $ 2.45 billion as of July 29, 2023 and January 28, 2023, and $ 2.25 billion as of July 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 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.

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 29, 2023 and July 30, 2022.

During 2023, we amended interest rate swaps with notional amounts totaling $ 1.5 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.

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

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

1 unchanged sentence

Effect of Hedges on Debt

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

July 29, 2023 January 28, 2023 July 30, 2022

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount ( 136 ) ( 74 ) 22

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

Interest rate swap designated as fair value hedges $ 9 $ ( 104 )

Hedged debt ( 9 ) 104

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

Total $ 6 $ —

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Notes

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

(millions) July 29, 2023 July 30, 2022 July 29, 2023 July 30, 2022

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

Interest rate swaps designated as fair value hedges $ ( 71 ) $ 49 $ ( 62 ) $ ( 55 )

Hedged debt 71 ( 49 ) 62 55

Gain on cash flow hedges recognized in Net Interest Expense 6 — 12 —

Total $ 6 $ — $ 12 $ —

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 (ASR) arrangements, and other privately negotiated transactions with financial institutions.

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

We did no t repurchase any of our shares during the six months ended July 29, 2023.

Share Repurchase Activity Three Months Ended Six Months Ended

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

July 29, 2023 July 30, 2022 (a)

Number of shares purchased — 12.5 — 12.5

1 unchanged sentence

Total investment $ — $ 2,636 $ — $ 2,646

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 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.

(a) Includes activity related to the ASR arrangement that we entered into during the first quarter of 2022 because final settlement occurred in the second quarter of 2022.

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

We did not enter into an ASR arrangement during any other periods presented.

Pension Benefits

We provide pension plan benefits to eligible team members.

Net Pension Benefits Expense Three Months Ended

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

Net Pension Benefits Expense Three Months Ended Six Months Ended

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

Service cost benefits earned SG&A $ 19 $ 23 $ 39 $ 46

4 unchanged sentences

Total $ 3 $ 20 $ — $ 28

TARGET CORPORATION

Q2 2023 Form 10-Q 12

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Notes

Accumulated Other Comprehensive Income (Loss)

1 unchanged sentence

January 28, 2023 $ 300 $ ( 23 ) $ ( 696 ) $ ( 419 )

Other comprehensive income (loss) before reclassifications, net of tax — — — —

Amounts reclassified from AOCI, net of tax ( 9 ) — 3 ( 6 )

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

July 29, 2023 $ 291 $ ( 23 ) $ ( 693 ) $ ( 425 )

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