Item 1. Financial Statements
Item 1. Financial Statements
Consolidated Statements of Operations
Three Months Ended Six Months Ended
(millions, except per share data) (unaudited) August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
Sales $ 25,021 $ 24,384 $ 49,164 $ 49,332
Other revenue 431 389 819 763
Total revenue 25,452 24,773 49,983 50,095
Cost of sales 17,799 17,798 35,248 36,184
Selling, general and administrative expenses 5,392 5,184 10,560 10,209
Depreciation and amortization (exclusive of depreciation included in cost of sales) 626 594 1,244 1,177
Operating income 1,635 1,197 2,931 2,525
Net interest expense 110 141 216 288
Net other income ( 20 ) ( 16 ) ( 49 ) ( 39 )
Earnings before income taxes 1,545 1,072 2,764 2,276
Provision for income taxes 353 237 630 491
Net earnings $ 1,192 $ 835 $ 2,134 $ 1,785
Basic earnings per share $ 2.58 $ 1.81 $ 4.62 $ 3.87
Diluted earnings per share $ 2.57 $ 1.80 $ 4.60 $ 3.86
Weighted average common shares outstanding
Basic 462.5 461.6 462.4 461.3
Diluted 463.5 462.5 463.7 462.7
Antidilutive shares 2.3 2.9 1.8 2.4
See accompanying Notes to Consolidated Financial Statements .
TARGET CORPORATION
Q2 2024 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) August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
Net earnings $ 1,192 $ 835 $ 2,134 $ 1,785
Other comprehensive (loss) / income, net of tax
Pension benefit liabilities — 1 — 3
Cash flow hedges and currency translation adjustment ( 5 ) ( 4 ) ( 10 ) ( 9 )
Other comprehensive loss ( 5 ) ( 3 ) ( 10 ) ( 6 )
Comprehensive income $ 1,187 $ 832 $ 2,124 $ 1,779
See accompanying Notes to Consolidated Financial Statements .
TARGET CORPORATION
Q2 2024 Form 10-Q 2
FINANCIAL STATEMENTS Table of Contents
Index to Notes
Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited) August 3,
2024 February 3,
2024 July 29,
2023
Assets
Cash and cash equivalents $ 3,497 $ 3,805 $ 1,617
Inventory 12,604 11,886 12,684
Other current assets 1,817 1,807 1,797
Total current assets 17,918 17,498 16,098
Property and equipment
Land 6,645 6,547 6,504
Buildings and improvements 38,324 37,066 35,889
Fixtures and equipment 8,690 8,765 7,936
Computer hardware and software 3,437 3,428 3,178
Construction-in-progress 830 1,703 2,641
Accumulated depreciation ( 24,851 ) ( 24,413 ) ( 23,201 )
Property and equipment, net 33,075 33,096 32,947
Operating lease assets 3,545 3,362 2,840
Other noncurrent assets 1,457 1,400 1,321
Total assets $ 55,995 $ 55,356 $ 53,206
Liabilities and shareholders’ investment
Accounts payable $ 12,595 $ 12,098 $ 12,278
Accrued and other current liabilities 5,749 6,090 5,948
Current portion of long-term debt and other borrowings 1,640 1,116 1,106
Total current liabilities 19,984 19,304 19,332
Long-term debt and other borrowings 13,654 14,922 14,926
Noncurrent operating lease liabilities 3,444 3,279 2,798
Deferred income taxes 2,495 2,480 2,334
Other noncurrent liabilities 1,989 1,939 1,826
Total noncurrent liabilities 21,582 22,620 21,884
Shareholders’ investment
Common stock 38 38 38
Additional paid-in capital 6,831 6,761 6,610
Retained earnings 8,030 7,093 5,767
Accumulated other comprehensive loss ( 470 ) ( 460 ) ( 425 )
Total shareholders’ investment 14,429 13,432 11,990
Total liabilities and shareholders’ investment $ 55,995 $ 55,356 $ 53,206
Common Stock Authorized 6,000,000,000 shares, $ 0.0833 par value; 461,600,215 , 461,675,441 , and 461,600,640 shares issued and outstanding as of August 3, 2024, February 3, 2024, and July 29, 2023, 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 2024 Form 10-Q 3
FINANCIAL STATEMENTS Table of Contents
Index to Notes
Consolidated Statements of Cash Flows
Six Months Ended
(millions) (unaudited) August 3, 2024 July 29, 2023
Operating activities
Net earnings $ 2,134 $ 1,785
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization 1,461 1,350
Share-based compensation expense 149 107
Deferred income taxes 16 141
Noncash losses / (gains) and other, net 22 11
Changes in operating accounts:
Inventory ( 718 ) 815
Other assets ( 53 ) 62
Accounts payable 522 ( 1,137 )
Accrued and other liabilities ( 194 ) 264
Cash provided by operating activities
3,339 3,398
Investing activities
Expenditures for property and equipment ( 1,313 ) ( 2,825 )
Proceeds from disposal of property and equipment 2 6
Other investments 6 ( 2 )
Cash required for investing activities ( 1,305 ) ( 2,821 )
Financing activities
Reductions of long-term debt ( 1,076 ) ( 72 )
Dividends paid ( 1,017 ) ( 996 )
Repurchase of stock ( 155 ) —
Shares withheld for taxes on share-based compensation ( 94 ) ( 121 )
Cash required for financing activities ( 2,342 ) ( 1,189 )
Net decrease in cash and cash equivalents ( 308 ) ( 612 )
Cash and cash equivalents at beginning of period 3,805 2,229
Cash and cash equivalents at end of period $ 3,497 $ 1,617
Supplemental information
Leased assets obtained in exchange for new finance lease liabilities $ 304 $ 20
Leased assets obtained in exchange for new operating lease liabilities 362 337
See accompanying Notes to Consolidated Financial Statements .
TARGET CORPORATION
Q2 2024 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 28, 2023 460.3 $ 38 $ 6,608 $ 5,005 $ ( 419 ) $ 11,232
Net earnings — — — 950 — 950
Other comprehensive loss — — — — ( 3 ) ( 3 )
Dividends declared — — — ( 507 ) — ( 507 )
Stock options and awards 1.3 — ( 67 ) — — ( 67 )
April 29, 2023 461.6 $ 38 $ 6,541 $ 5,448 $ ( 422 ) $ 11,605
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
Net earnings — — — 971 — 971
Other comprehensive loss — — — — ( 5 ) ( 5 )
Dividends declared — — — ( 513 ) — ( 513 )
Stock options and awards 0.1 — 71 — — 71
October 28, 2023 461.7 $ 38 $ 6,681 $ 6,225 $ ( 430 ) $ 12,514
Net earnings — — — 1,382 — 1,382
Other comprehensive loss — — — — ( 30 ) ( 30 )
Dividends declared — — — ( 514 ) — ( 514 )
Stock options and awards — — 80 — — 80
February 3, 2024 461.7 $ 38 $ 6,761 $ 7,093 $ ( 460 ) $ 13,432
TARGET CORPORATION
Q2 2024 Form 10-Q 5
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
February 3, 2024 461.7 $ 38 $ 6,761 $ 7,093 $ ( 460 ) $ 13,432
Net earnings — — — 942 — 942
Other comprehensive loss — — — — ( 5 ) ( 5 )
Dividends declared — — — ( 516 ) — ( 516 )
Stock options and awards 0.9 1 ( 14 ) — — ( 13 )
May 4, 2024 462.6 $ 39 $ 6,747 $ 7,519 $ ( 465 ) $ 13,840
Net earnings — — — 1,192 — 1,192
Other comprehensive loss — — — — ( 5 ) ( 5 )
Dividends declared — — — ( 527 ) — ( 527 )
Repurchase of stock ( 1.1 ) ( 1 ) — ( 154 ) — ( 155 )
Stock options and awards 0.1 — 84 — — 84
August 3, 2024 461.6 $ 38 $ 6,831 $ 8,030 $ ( 470 ) $ 14,429
We declared $ 1.12 and $ 1.10 dividends per share for the three months ended August 3, 2024, and July 29, 2023, respectively, and $ 4.38 per share for the fiscal year ended February 3, 2024.
See accompanying Notes to Consolidated Financial Statements .
TARGET CORPORATION
Q2 2024 Form 10-Q 6
FINANCIAL STATEMENTS Table of Contents
INDEX Index to Notes
INDEX TO NOTES
Notes to Consolidated Financial Statements
8
Note 1
Accounting Policies
8
Note 2
Revenue
9
Note 3
Fair Value Measurements
10
Note 4
Property and Equipment
11
Note 5
Supplier Finance Programs
11
Note 6
Commercial Paper and Long-Term Debt
11
Note 7
Derivative Financial Instruments
11
Note 8
Share Repurchase
12
Note 9
Pension Benefits
12
Note 10
Accumulated Other Comprehensive Income (Loss)
12
TARGET CORPORATION
Q2 2024 Form 10-Q 7
FINANCIAL STATEMENTS Table of Contents
NOTES Index to Notes
Notes to Consolidated Financial Statements (unaudited)
1. Accounting Policies
These unaudited condensed consolidated financial statements are prepared in accordance with the rules and regulations of the Securities and Exchange Commission applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States generally accepted accounting principles (U.S. GAAP) for complete financial statements. 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.
We operate as a single segment that is designed to enable guests to purchase products seamlessly in stores or through our digital channels. Nearly all of our revenues are generated in the U.S. The vast majority of our long-lived assets are located within the U.S.
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.
TARGET CORPORATION
Q2 2024 Form 10-Q 8
FINANCIAL STATEMENTS Table of Contents
NOTES Index to Notes
2. Revenue
Merchandise sales represent the vast majority of our revenues. 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 Six Months Ended
(millions) August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
Apparel & accessories (a)
$ 4,261 $ 4,101 $ 8,158 $ 8,068
Beauty (b)
3,384 3,085 6,503 6,101
Food & beverage (c)
5,538 5,392 11,391 11,389
Hardlines (d)
3,322 3,383 6,482 6,774
Home furnishings & décor (e)
3,908 3,955 7,427 7,810
Household essentials (f)
4,564 4,428 9,113 9,094
Other 44 40 90 96
Sales 25,021 24,384 49,164 49,332
Credit card profit sharing 144 169 286 343
Other 287 220 533 420
Other revenue 431 389 819 763
Total revenue $ 25,452 $ 24,773 $ 49,983 $ 50,095
(a) Includes apparel for women, men, young adults, kids, toddlers, and babies, as well as jewelry, accessories, and shoes.
(b) Includes skin and bath care, cosmetics, hair care, oral care, deodorant, and shaving products.
(c) Includes dry and perishable grocery, including snacks, candy, beverages, deli, bakery, meat, produce and food service (primarily Starbucks) in our stores.
(d) Includes electronics, including video games and consoles, toys, sporting goods, entertainment, and luggage.
(e) Includes bed and bath, home décor, school/office supplies, storage, small appliances, kitchenware, greeting cards, party supplies, furniture, lighting, home improvement, and seasonal merchandise.
(f) Includes household cleaning, paper products, over-the-counter healthcare, vitamins and supplements, baby gear, and pet supplies.
Merchandise sales — We record almost all retail store revenues at the point of sale. Digitally originated sales may include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. Sales are recognized net of expected returns, which we estimate using historical return patterns and our expectation of future returns. As of August 3, 2024, February 3, 2024, and July 29, 2023, the accrual for estimated returns was $ 193 million, $ 170 million, and $ 177 million, respectively.
Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance.
Gift Card Liability Activity February 3,
2024 Gift Cards Issued During Current Period But Not Redeemed (b)
Revenue Recognized From Beginning Liability August 3,
2024
(millions)
Gift card liability (a)
$ 1,162 $ 431 $ ( 601 ) $ 992
(a) Included in Accrued and Other Current Liabilities.
(b) Net of estimated breakage.
TARGET CORPORATION
Q2 2024 Form 10-Q 9
FINANCIAL STATEMENTS Table of Contents
NOTES Index to Notes
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 Circle Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Circle Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance.
Other — Includes advertising revenue, commissions earned on third-party sales through Target.com, Shipt membership and service revenues, rental income, and other miscellaneous revenues.
3. Fair Value Measurements
Fair value measurements are reported in one of three levels reflecting the significant inputs used to determine fair value.
Financial Instruments Measured On a Recurring Basis Fair Value
(millions) Classification Measurement Level August 3, 2024 February 3, 2024 July 29, 2023
Assets
Short-term investments Cash and Cash Equivalents Level 1 $ 2,465 $ 2,897 $ 739
Prepaid forward contracts Other Current Assets Level 1 24 25 23
Interest rate swaps Other Noncurrent Assets Level 2 3 — —
Liabilities
Interest rate swaps Other Current Liabilities Level 2 — 3 6
Interest rate swaps Other Noncurrent Liabilities Level 2 82 123 130
Significant Financial Instruments Not Measured at Fair Value (a)
(millions)
August 3, 2024 February 3, 2024 July 29, 2023
Carrying
Amount Fair
Value Carrying
Amount Fair
Value Carrying
Amount Fair
Value
Long-term debt, including current portion (b)
$ 13,157 $ 12,578 $ 14,151 $ 13,467 $ 14,147 $ 13,344
(a) The carrying amounts of certain other current assets, commercial paper, accounts payable, and certain accrued and other current liabilities approximate fair value due to their short-term nature.
(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, fair value hedge adjustments, and lease liabilities.
TARGET CORPORATION
Q2 2024 Form 10-Q 10
FINANCIAL STATEMENTS Table of Contents
NOTES Index to Notes
4. 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 $ 36 million for the three and six months ended August 3, 2024, and $ 33 million for the three and six months ended July 29, 2023. These impairment charges are included in Selling, General and Administrative (SG&A) Expenses.
5. 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 $ 3.7 billion, $ 3.4 billion, and $ 3.7 billion as of August 3, 2024, February 3, 2024, and July 29, 2023, 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 have historically been lower.
6. Commercial Paper and Long-Term Debt
In July 2024, we repaid $ 1.0 billion of 3.5 percent unsecured fixed rate debt at maturity.
We obtain short-term financing from time to time under our commercial paper program. There was no commercial paper outstanding at any time during the six months ended August 3, 2024. For the six months ended July 29, 2023, the maximum amount outstanding was $ 90 million, and the average daily amount outstanding was $ 2 million, at a weighted average annual interest rate of 4.9 percent. No balances were outstanding as of July 29, 2023.
7. Derivative Financial Instruments
Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk. As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis. Note 3 to the Consolidated Financial Statements provides the fair value and classification of these instruments.
In July 2024, an interest rate swap with a notional amount of $ 250 million matured.
We were party to interest rate swaps with notional amounts totaling $ 2.20 billion as of August 3, 2024, and $ 2.45 billion as of both February 3, 2024, and July 29, 2023. 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 six months ended August 3, 2024, and July 29, 2023.
Effect of Hedges on Debt
(millions)
August 3, 2024 February 3, 2024 July 29, 2023
Long-term debt and other borrowings
Carrying amount of hedged debt $ 2,113 $ 2,316 $ 2,305
Cumulative hedging adjustments, included in carrying amount ( 79 ) ( 126 ) ( 136 )
TARGET CORPORATION
Q2 2024 Form 10-Q 11
FINANCIAL STATEMENTS Table of Contents
NOTES Index to Notes
Effect of Hedges on Net Interest Expense Three Months Ended Six Months Ended
(millions) August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swaps designated as fair value hedges $ 78 $ ( 71 ) $ 47 $ ( 62 )
Hedged debt ( 78 ) 71 ( 47 ) 62
Gain on cash flow hedges recognized in Net Interest Expense 6 6 12 12
Total $ 6 $ 6 $ 12 $ 12
8. 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.
Share Repurchase Activity Three Months Ended Six Months Ended
(millions, except per share data) August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
Number of shares purchased 1.1 — 1.1 —
Average price paid per share $ 145.94 $ — $ 145.94 $ —
Total investment $ 155 $ — $ 155 $ —
9. Pension Benefits
We provide pension plan benefits to eligible team members.
Net Pension Benefits Expense Three Months Ended Six Months Ended
(millions) Classification August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
Service cost benefits earned SG&A Expenses $ 19 $ 19 $ 39 $ 39
Interest cost on projected benefit obligation Net Other Income 42 42 83 83
Expected return on assets Net Other Income ( 70 ) ( 67 ) ( 140 ) ( 134 )
Amortization of losses Net Other Income — 1 — 1
Prior service cost Net Other Income 8 8 8 11
Total $ ( 1 ) $ 3 $ ( 10 ) $ —
10. Accumulated Other Comprehensive Income (Loss)
Change in Accumulated Other Comprehensive Income (Loss) Cash Flow Hedges Currency Translation Adjustment Pension Total
(millions)
February 3, 2024 $ 283 $ ( 24 ) $ ( 719 ) $ ( 460 )
Other comprehensive income (loss) before reclassifications, net of tax — ( 1 ) — ( 1 )
Amounts reclassified from AOCI, net of tax ( 9 ) — — ( 9 )
August 3, 2024 $ 274 $ ( 25 ) $ ( 719 ) $ ( 470 )
TARGET CORPORATION
Q2 2024 Form 10-Q 12
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
FINANCIAL SUMMARY Index to Notes
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.