What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-12 compared with 2024-03-13 · 207 added, 201 removed, 854 unchanged (32% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Reports of Management and Independent Registered Public Accounting Firm

Consolidated Statements of Operations

5 unchanged sentences

Summary of Accounting Policies

Dermstore Sale

Cost of Sales and Selling, General, and Administrative Expenses

6 unchanged sentences

Other Noncurrent Assets

S upplier Finance Programs

Supplier Finance Programs

Accrued and Other Current Liabilities

8 unchanged sentences

Accumulated Other Comprehensive Loss

Segment Reporting

TARGET CORPORATION

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In addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public accounting firm, whose report also appears on this page.

Cornell /s/ Michael J.

Cornell /s/ Jim Lee

Chair of the Board and Chief Executive Officer

March 12, 2025

Executive Vice President and

and Chief Operating Officer and Chief Financial Officer

Executive Vice President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Target Corporation

To the Shareholders and the Board of Directors of Target Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Target Corporation (the Corporation) as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended February 3, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation at February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with U.S.

We have audited the accompanying consolidated statements of financial position of Target Corporation (the Corporation) as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation at February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with U.S.

generally accepted accounting principles.

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As a result of the high volume of transactions processed by the Corporation and used in estimating these inputs, auditing the vendor income receivable requires extensive audit effort to address the completeness and accuracy of the information used in the receivable model.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Corporation’s vendor income receivable process, including controls over management’s review of the inputs described above.

To test the estimated vendor income receivable, we performed audit procedures that included, among others, testing the completeness and accuracy of inputs used in the receivable model by verifying for a sample of the vendor-sponsored programs, the nature and source of the inputs used and the terms of the contractual agreements.

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Our internal control over financial reporting as of February 1, 2025, has been audited by Ernst & Young LLP, the independent registered public accounting firm who has also audited our consolidated financial statements, as stated in their report which appears on this page.

Cornell /s/ Michael J.

Cornell /s/ Jim Lee

Chair of the Board and Chief Executive Officer

March 12, 2025

Executive Vice President and

Chief Operating Officer and Chief Financial Officer

Executive Vice President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Target Corporation

To the Shareholders and the Board of Directors of Target Corporation

Opinion on Internal Control Over Financial Reporting

1 unchanged sentence

In our opinion, Target Corporation (the Corporation) maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Corporation as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended February 3, 2024, and the related notes and our report dated March 13, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Corporation as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended February 1, 2025, and the related notes and our report dated March 12, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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(millions, except per share data) 2024 2023 2022

Sales $ 105,803 $ 107,588 $ 104,611

Other revenue 1,609 1,532 1,394

Total revenue 107,412 109,120 106,005

$ 106,566 $ 107,412 $ 109,120

Cost of sales 76,502 77,828 82,306

Selling, general, and administrative expenses

21,969 21,462 20,581

Depreciation and amortization (exclusive of depreciation included in cost of sales)

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Net earnings $ 4,091 $ 4,138 $ 2,780

Other comprehensive (loss) / income, net of tax

Other comprehensive income / (loss), net of tax

Pension benefit liabilities

2 unchanged sentences

( 20 ) ( 18 ) 247

Other comprehensive (loss) / income

( 41 ) 134 203

Other comprehensive income / (loss)

Comprehensive income

7 unchanged sentences

Consolidated Statements of Financial Position

(millions, except footnotes) February 3, 2024 January 28, 2023

(millions, except footnotes) February 1, 2025 February 3, 2024

Cash and cash equivalents $ 4,762 $ 3,805

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455,566,995 shares issued and outstanding as of February 1, 2025;

460,346,947 shares issued and outstanding as of January 28, 2023.

461,675,441 shares issued and outstanding as of February 3, 2024.

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

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Deferred income taxes ( 180 ) 298 582

Gain on Dermstore sale — — ( 335 )

Noncash losses / (gains) and other, net

8 unchanged sentences

Proceeds from disposal of property and equipment 3 24 8

Proceeds from Dermstore sale — — 356

Other investments 28 22 16

30 unchanged sentences

Comprehensive

(Loss) / Income

January 29, 2022 471.3 $ 39 $ 6,421 $ 6,920 $ ( 553 ) $ 12,827

3 unchanged sentences

Repurchase of stock ( 12.5 ) ( 1 ) 119 ( 2,764 ) — ( 2,646 )

Stock options and awards 1.7 — 92 — — 92

Share-based compensation

1.5 — 68 — — 68

January 28, 2023 460.3 $ 38 $ 6,608 $ 5,005 $ ( 419 ) $ 11,232

Net earnings — — — 4,138 — 4,138

Other comprehensive loss

— — — — ( 41 ) ( 41 )

Dividends declared — — — ( 2,050 ) — ( 2,050 )

Share-based compensation

1.4 — 153 — — 153

February 3, 2024 461.7 $ 38 $ 6,761 $ 7,093 $ ( 460 ) $ 13,432

Net earnings — — — 4,091 — 4,091

Other comprehensive income

1 unchanged sentence

Repurchase of stock ( 7.2 ) ( 1 ) — ( 1,014 ) — ( 1,015 )

Stock options and awards 1.5 — 68 — — 68

January 28, 2023 460.3 $ 38 $ 6,608 $ 5,005 $ ( 419 ) $ 11,232

Net earnings — — — 4,138 — 4,138

Other comprehensive loss

Share-based compensation

1.1 1 235 — — 236

Dividends declared — — — ( 2,050 ) — ( 2,050 )

Stock options and awards 1.4 — 153 — — 153

February 1, 2025 455.6 $ 38 $ 6,996 $ 8,090 $ ( 458 ) $ 14,666

We declared $ 4.38 , $ 4.14 , and $ 3.38 dividends per share for the twelve months ended February 3, 2024, January 28, 2023, and January 29, 2022, respectively.

We declared $ 4.46 , $ 4.38 , and $ 4.14 dividends per share for the twelve months ended February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

See accompanying Notes to Consolidated Financial Statements .

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The vast majority of our long-lived assets are located within the U.S.

Consolidation - The consolidated financial statements include the balances of Target and its subsidiaries after elimination of intercompany balances and transactions.

Consolidation - The consolidated financial statements include the balances of Target Corporation and its subsidiaries after elimination of intercompany balances and transactions.

All subsidiaries are wholly owned.

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Fiscal 2024 ended February 1, 2025, and consisted of 52 weeks.

Fiscal 2022 and 2021 ended January 28, 2023, and January 29, 2022, respectively, and consisted of 52 weeks.

Fiscal 2024 will end February 1, 2025, and will consist of 52 weeks.

Fiscal 2023 ended February 3, 2024, and consisted of 53 weeks.

Fiscal 2022 ended January 28, 2023, and consisted of 52 weeks.

Fiscal 2025 will end January 31, 2026, and will consist of 52 weeks.

Accounting policies - Our accounting policies are disclosed in the applicable Notes to the Consolidated Financial Statements.

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.

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

TARGET CORPORATION

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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).

We also earn revenues from a variety of other sources, most notably advertising revenue and credit card profit-sharing income.

2024 2023 2022

1 unchanged sentence

$ 16,505 $ 16,485 $ 17,646

Beauty and household essentials (b)

13,173 12,538 11,092

5 unchanged sentences

16,699 17,760 19,463

Other 213 247 237

Sales 105,803 107,588 104,611

Household essentials (f)

18,614 18,746 18,483

Other merchandise sales 217 213 247

Merchandise sales 104,820 105,803 107,588

Advertising revenue

Credit card profit sharing 576 667 734

Other 521 420 394

Other revenue 1,609 1,532 1,394

Total revenue $ 107,412 $ 109,120 $ 106,005

(a) Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as jewelry, accessories, and shoes.

(b) Includes beauty and personal care, baby gear, cleaning, paper products, and pet supplies.

(c) Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and food service in our stores.

(d) Includes electronics (including video game hardware and software), toys, entertainment, sporting goods, and luggage.

(e) Includes furniture, lighting, storage, kitchenware, small appliances, home décor, bed and bath, home improvement, school/office supplies, greeting cards and party supplies, and other seasonal merchandise.

$ 106,566 $ 107,412 $ 109,120

(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.

Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes.

Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive brands within one year of purchase.

Merchandise sales do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes.

Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive brand merchandise within one year of purchase.

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

As of February 3, 2024, and January 28, 2023, the liability for estimated returns was $ 170 million and $ 174 million, respectively.

As of February 1, 2025, and February 3, 2024, the liability for estimated returns was $ 172 million and $ 170 million, respectively.

We routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until the merchandise is ultimately sold to a guest.

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Gift Card Liability Activity

January 28, 2023 Gift Cards

February 3, 2024 Gift Cards

Issued During

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(b) Net of estimated breakage.

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).

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, Target MasterCard or Target Circle Card Reloadable Account (collectively, Target Circle Cards).

Target Circle program members earn Target Circle Rewards on various transactions.

As of February 3, 2024, and January 28, 2023, deferred revenue of $ 117 million and $ 112 million, respectively, related to our Target Circle program was included in Accrued and Other Current Liabilities.

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.

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

As of February 1, 2025, and February 3, 2024, deferred revenue of $ 19 million and $ 117 million, respectively, related to our Target Circle program was included in Accrued and Other Current Liabilities.

Advertising revenue – Primarily represents revenue related to advertising services provided via our Roundel digital advertising business offering.

Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement.

Notes 3 and 5 provide additional information about items included in Cost of Sales and SG&A Expenses.

Credit card profit sharing – We receive payments under a credit card program agreement with TD Bank Group (TD).

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

TD underwrites, funds, and owns Target Circle credit card receivables, controls risk management policies, and oversees regulatory compliance.

Other – Includes commissions earned on third-party sales through our Target Plus third-party digital marketplace, Shipt membership and service revenues, rental income, Target Circle 360 membership revenue, and other miscellaneous revenues.

Cost of Sales and Selling, General, and Administrative Expenses

1 unchanged sentence

Cost of Sales Selling, General, and Administrative Expenses

Total cost of products sold including

Merchandising cost of sales, including

• Merchandise costs

• Payment term cash discounts

• Import costs

• Freight expenses associated with moving

4 unchanged sentences

• Inventory shrink

Outbound shipping and handling expenses

associated with sales to our guests

Payment term cash discounts

Distribution center costs, including compensation

and benefits costs and depreciation

Supply chain and digital fulfillment costs, including

• Compensation and benefits costs associated with

operating our supply chain facilities

• Outbound shipping expenses associated with sales to

• Compensation and benefit costs associated with

shipment of merchandise from stores

Import costs Compensation and benefit costs for stores and

• Depreciation associated with supply chain facilities

Compensation and benefit costs for stores and

headquarters, except ship from store costs classified

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NOTES Index to Financial Statements

In 2024, we reclassified certain expenses related to our advertising and third-party digital marketplace business offerings to conform to the current year presentation.

The reclassifications increased Cost of Sales by $ 92 million and $ 77 million for 2023 and 2022, respectively, with equal and offsetting decreases to SG&A Expenses.

These reclassifications had no impact on Net Sales, Operating Income, Net Earnings, or Earnings Per Share.

Consideration Received from Vendors

We receive consideration for a variety of vendor-sponsored programs—such as volume rebates, markdown allowances, promotions, certain advertising activities, and for our compliance programs—referred to as "vendor income." Additionally, under our compliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations), such as late or incomplete shipments.

Substantially all vendor income is recorded as a reduction of Cost of Sales.

We receive consideration for a variety of vendor-sponsored programs—such as volume rebates, promotions, certain advertising activities, markdown allowances, and for our compliance programs—referred to as "vendor income." Additionally, under our compliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations), such as late or incomplete shipments.

Vendor income is recorded as a reduction of Cost of Sales except in arrangements where the payment is a reimbursement of specific, incremental, and identifiable costs and recorded as an offset to those costs within SG&A Expenses.

We establish a receivable for vendor income that is earned but not yet received.

Based on historical trending and data, this receivable is computed by forecasting vendor income collections and estimating the amount earned.

The majority of the year-end vendor income receivables are collected within the following fiscal quarter, and we do not believe there is a reasonable likelihood that the assumptions used in our estimate will change significantly.

The majority of year-end vendor income receivables are collected within the following fiscal quarter, and we do not believe there is a reasonable likelihood that the assumptions used in our estimate will change significantly.

Note 9 provides additional information.

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Digital advertising costs are generally expensed as incurred when the consumer engages with the advertisement through clicks or views, while media broadcast costs are generally expensed at first showing or distribution of the advertisement.

Reimbursements from vendors that are for specific, incremental, and identifiable advertising costs are recognized as offsets of these advertising costs within Selling, General and Administrative Expenses (SG&A Expenses).

Net advertising costs were $ 1.4 billion in 2023 and $ 1.5 billion in 2022 and 2021.

Advertising costs, net of vendor reimbursements, are recorded in SG&A Expenses and were $ 1.5 billion in 2024, $ 1.4 billion in 2023, and $ 1.5 billion in 2022.

Fair Value Measurements

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Fair Value as of

(millions) Classification Measurement Level February 3, 2024 January 28, 2023

(millions) Classification Measurement Level February 1, 2025 February 3, 2024

Short-term investments (a)

3 unchanged sentences

Interest rate swaps (c)

Other Noncurrent Assets Level 2 — 7

Interest rate swaps (c)

Other Current Liabilities Level 2 — 3

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Significant Financial Instruments Not Measured at Fair Value (a)

As of February 3, 2024 As of January 28, 2023

As of February 1, 2025 As of February 3, 2024

(millions) Carrying

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Cash and Cash Equivalents

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Cash $ 276 $ 288

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(a) We have access to these funds without any significant restrictions, taxes, or penalties.

As of February 3, 2024, and January 28, 2023, we reclassified book overdrafts of $ 173 million and $ 248 million, respectively, to Accounts Payable and $ 10 million and $ 14 million, respectively, to Accrued and Other Current Liabilities.

As of February 1, 2025, and February 3, 2024, we included book overdrafts of $ 157 million and $ 173 million, respectively, in Accounts Payable and $ 8 million and $ 10 million, respectively, in Accrued and Other Current Liabilities.

The vast majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method.

1 unchanged sentence

Inventory cost includes the amount we pay to our suppliers to acquire inventory, freight costs incurred to deliver product to our distribution centers and stores, and import costs, reduced by vendor income and cash discounts.

Distribution center operating costs, including compensation and benefits, are expensed in the period incurred.

Supply chain operating costs, including compensation and benefits, are expensed in the period incurred.

Inventory is also reduced for estimated losses related to shrink and markdowns.

The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices, and was $ 153 million and $ 132 million as of February 3, 2024, and January 28, 2023, respectively.

The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices, and was $ 183 million and $ 153 million as of February 1, 2025, and February 3, 2024, respectively.

Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the inventory retail value.

7 unchanged sentences

Other Current Assets

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Accounts and other receivables $ 998 $ 891

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Other Noncurrent Assets

February 3, 2024 January 28, 2023

Goodwill and intangible assets (a)

February 1, 2025 February 3, 2024

Company-owned life insurance investments, net of loans (b)

2 unchanged sentences

Other Noncurrent Assets $ 1,530 $ 1,400

(a) Goodwill totaled $ 631 million as of both February 3, 2024, and January 28, 2023.

No impairments were recorded in 2023, 2022, or 2021 as a result of the annual goodwill impairment tests performed.

(a) No impairments were recorded in 2024, 2023, or 2022 as a result of the annual goodwill impairment tests performed.

(b) Note 22 provides more information on company-owned life insurance investments.

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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 $ 3.4 billion as of February 3, 2024, and January 28, 2023, 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.

Our outstanding vendor obligations eligible for early payment, which are included within Accounts Payable on our Consolidated Statements of Financial Position, do not represent actual receivables sold by our vendors to the financial institutions, which have historically been lower.

Confirmed Obligations Outstanding

February 3, 2024 Invoices Confirmed During the Year

Confirmed Invoices Paid During the Year

February 1, 2025

Vendor obligations eligible for early payment

$ 3,398 $ 13,806 $ ( 13,538 ) $ 3,666

Accrued and Other Current Liabilities

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Wages and benefits $ 1,597 $ 1,535

3 unchanged sentences

Current portion of operating lease liabilities 353 329

Income tax payable 334 113

Workers' compensation and general liability (a)

6 unchanged sentences

Note 19 provides the noncurrent balance of these liabilities.

TARGET CORPORATION

2024 Form 10-K 53

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Commitments and Contingencies

8 unchanged sentences

We do not believe that any of these identified claims or litigation will be material to our results of operations, cash flows, or financial condition.

TARGET CORPORATION

2023 Form 10-K 51

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Purchase obligations, which include all legally binding contracts such as merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments, firm minimum commitments for inventory purchases, and service contracts, were $ 0.9 billion and $ 1.0 billion as of February 3, 2024, and January 28, 2023, respectively.

These purchase obligations are primarily due within three years and recorded as liabilities when goods are received or services are rendered.

Real estate obligations, which include legally binding minimum lease payments for leases signed but not yet commenced, and commitments for the purchase, construction, or remodeling of real estate and facilities, were $ 2.7 billion and $ 5.3 billion as of February 3, 2024, and January 28, 2023, respectively.

Approximately half of these real estate obligations are due within one year , a portion of which are recorded as liabilities.

These real estate obligations are primarily due within one year , a portion of which are recorded as liabilities.

We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancellable by their terms.

2 unchanged sentences

We also issue letters of credit and surety bonds in the ordinary course of business.

Trade letters of credit totaled $ 1.6 billion as of February 3, 2024, and January 28, 2023, a portion of which are reflected in Accounts Payable.

Standby letters of credit and surety bonds, primarily related to insurance and regulatory requirements, totaled $ 529 million and $ 519 million as of February 3, 2024, and January 28, 2023, respectively.

Trade letters of credit totaled $ 1.5 billion as of February 1, 2025, a portion of which are reflected in Accounts Payable.

Standby letters of credit and surety bonds, primarily related to insurance and regulatory requirements, totaled $ 509 million as of February 1, 2025.

TARGET CORPORATION

2024 Form 10-K 54

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Commercial Paper and Long-Term Debt

Debt Maturities

(dollars in millions) Weighted-Average Interest Rate at February 3, 2024 February 3, 2024 January 28, 2023

(dollars in millions) Weighted-Average Interest Rate at February 1, 2025

February 1, 2025 February 3, 2024

Due 2024 — % $ — $ 1,000

4 unchanged sentences

Due 2045-2049 3.8 1,120 1,119

Due 2050-2054 3.9 2,121 2,120

Total notes and debentures 13,904 14,151

6 unchanged sentences

Total required principal payments $ 1,500 $ 2,000 $ 97 $ 81 $ 1,000 $ 9,324

In January 2023, we issued unsecured fixed rate debt of $ 1.15 billion at 4.8 percent that matures in January 2053 and $ 500 million at 4.4 percent that matures in January 2033.

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

Note 17 provides additional information.

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 17 provides additional information.

In January 2022, we issued unsecured fixed rate debt of $ 1.0 billion at 1.95 percent that matures in January 2027 and $ 1.0 billion at 2.95 percent that matures in January 2052.

Furthermore, we repaid $ 1.0 billion of 2.9 percent unsecured fixed rate debt at maturity.

TARGET CORPORATION

2023 Form 10-K 52

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

In September 2024, we issued $ 750 million of unsecured debt with a fixed rate of 4.5 percent that matures in September 2034.

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

For the years ended February 3, 2024, and January 28, 2023, the maximum amounts outstanding were $ 90 million and $ 2.3 billion, respectively, and the average daily amounts outstanding were $ 1 million and $ 709 million, respectively, at a weighted average annual interest rate of 4.8 percent and 2.4 percent, respectively.

As of February 3, 2024, and January 28, 2023, there was no commercial paper outstanding.

In October 2023, we obtained a new committed $ 1.0 billion 364 -day unsecured revolving credit facility that will expire in October 2024 and terminated our prior 364 -day credit facility.

We also exercised our option to extend our existing five-year unsecured revolving credit facility, which has a maximum committed capacity of $ 3.0 billion and now expires in October 2028.

No balances were outstanding under either facility at any time during 2023 or 2022.

There was no commercial paper outstanding at any time during the year ended February 1, 2025, or as of February 3, 2024.

During the year ended February 3, 2024, the maximum amount outstanding was $ 90 million, and the average daily amount outstanding was $ 1 million, at a weighted average annual interest rate of 4.8 percent.

In October 2024, we obtained a new committed $ 1.0 billion 364 -day unsecured revolving credit facility that will expire in October 2025 and terminated our prior 364 -day facility.

We also have a committed $ 3.0 billion unsecured revolving credit facility that will expire in October 2028.

No balances were outstanding under our credit facilities at any time during 2024 or 2023.

Substantially all of our outstanding borrowings are senior, unsecured obligations.

6 unchanged sentences

Note 6 provides the fair value and classification of these instruments.

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.

Under our swap agreements, we pay a floating rate equal to the daily SOFR compounded over six months and receive a weighted average fixed rate of 2.8 percent.

Under our swap agreements, we pay a floating rate equal to the daily Secured Overnight Financing Rate (SOFR) compounded over six months and receive a weighted average fixed rate of 2.8 percent.

The agreements have a weighted average remaining maturity of 4.5 years.

As of February 3, 2024, and January 28, 2023, interest rate swaps with notional amounts totaling $ 2.45 billion were designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during 2023 and 2022.

During 2022, we terminated forward-starting interest rate swap agreements designated as cash flow hedges that hedged $ 2.15 billion of the $ 2.65 billion 2022 debt issuances described in Note 16 .

The resulting gains upon termination of these swap agreements totaling $ 419 million were recorded in Accumulated Comprehensive Loss (AOCI) and are recognized as a reduction to Net Interest Expense over the respective term of the debt.

The cash flows related to forward-starting interest rate swaps are included within operating activities in the Consolidated Statements of Cash Flows.

As of February 1, 2025, and February 3, 2024, interest rate swaps with notional amounts totaling $ 2.20 billion and $ 2.45 billion were designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during 2024 and 2023.

TARGET CORPORATION

2024 Form 10-K 55

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Effect of Hedges on Debt

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Long-term debt and other borrowings

9 unchanged sentences

Total $ 23 $ 24 $ 4

TARGET CORPORATION

2023 Form 10-K 53

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

We lease certain retail stores, supply chain facilities, office space, land, and equipment.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

Leases with an initial term of 12 months or less are not recorded on the Consolidated Statements of Financial Position;

we recognize lease expense for these leases on a straight-line basis over the lease term.

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(CVS) for space within our stores.

Classification February 3, 2024 January 28, 2023

TARGET CORPORATION

2024 Form 10-K 56

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Classification February 1, 2025 February 3, 2024

Operating Operating Lease Assets $ 3,763 $ 3,362

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Total lease liabilities $ 6,096 $ 5,621

(a) Finance lease assets are recorded net of accumulated amortization of $ 743 million and $ 623 million as of February 3, 2024, and January 28, 2023, respectively.

(a) Finance lease assets are recorded net of accumulated amortization of $ 857 million and $ 743 million as of February 1, 2025, and February 3, 2024, respectively.

Classification 2024 2023 2022

Operating lease cost (a)

SG&A Expenses $ 550 $ 467 $ 387

SG&A Expenses (b)

$ 641 $ 550 $ 467

Finance lease cost

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Sublease income (c)

Other Revenue ( 20 ) ( 19 ) ( 18 )

( 15 ) ( 20 ) ( 19 )

Net lease cost $ 849 $ 737 $ 649

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(b) Supply chain-related amounts are included in Cost of Sales.

(c) Sublease income excludes rental income from owned properties of $ 49 million for each of 2023 and 2022, and $ 48 million in 2021, which is included in Other Revenue.

(c) Sublease income excludes rental income from owned properties of $ 48 million in 2024, and $ 49 million for each of 2023 and 2022, which is also included in Net Sales.

TARGET CORPORATION

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(b) Finance lease payments include $ 245 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $ 128 million of legally binding minimum lease payments for leases signed but not yet commenced.

Lease Term and Discount Rate February 3, 2024 January 28, 2023

Lease Term and Discount Rate February 1, 2025 February 3, 2024

Weighted average remaining lease term (years)

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NOTES Index to Financial Statements

Earnings before income taxes were $ 5.3 billion, $ 3.4 billion, and $ 8.9 billion during 2023, 2022, and 2021, respectively, including $ 1.2 billion, $ 1.3 billion, and $ 896 million earned by our foreign entities subject to tax outside of the U.S.

Earnings before income taxes were $ 5.3 billion, $ 5.3 billion, and $ 3.4 billion during 2024, 2023, and 2022, respectively, including $ 1.1 billion, $ 1.2 billion, and $ 1.3 billion earned by our foreign entities subject to tax outside of the U.S.

Tax Rate Reconciliation 2024 2023 2022

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Net Deferred Tax Asset / (Liability)

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Gross deferred tax assets:

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$ ( 2,293 ) $ ( 2,472 )

(a) $ 8 million and $ 6 million of the balances as of February 3, 2024, and January 28, 2023, respectively, is included in Other Noncurrent Assets.

(a) $ 10 million and $ 8 million of the balances as of February 1, 2025, and February 3, 2024, respectively, is included in Other Noncurrent Assets.

We file a U.S.

federal income tax return and income tax returns in various states and foreign jurisdictions.

Internal Revenue Service (IRS) has completed exams on the U.S.

federal income tax returns for years 2020 and prior.

Internal Revenue Service (IRS) is currently auditing certain aspects of the U.S.

federal income tax returns for years 2021 through 2023 and has completed exams for years 2020 and prior.

With few exceptions, we are no longer subject to state and local or non-U.S.

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Balance at end of period $ 433 $ 352 $ 233

If we were to prevail on all unrecognized tax benefits recorded, the amount that would benefit the effective tax rate was $ 161 million, $ 107 million, and $ 67 million as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively.

If we were to prevail on all unrecognized tax benefits recorded, the amount that would benefit the effective tax rate was $ 206 million, $ 161 million, and $ 107 million as of February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate.

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During 2024, 2023, and 2022, we recorded an expense / (benefit) from accrued interest and penalties of $ 13 million, $ 6 million, and $( 4 ) million, respectively.

As of February 3, 2024, January 28, 2023, and January 29, 2022, total accrued interest and penalties were $ 14 million, $ 7 million, and $ 13 million, respectively.

As of February 1, 2025, February 3, 2024, and January 28, 2023, total accrued interest and penalties were $ 21 million, $ 14 million, and $ 7 million, respectively.

It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized tax positions will increase or decrease during the next twelve months;

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Other Noncurrent Liabilities

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Deferred compensation $ 628 $ 576

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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.

We did no t repurchase any of our shares during 2023.

Share Repurchase Activity

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Total number of shares purchased 7.2 — 12.5

Average price paid per share $ — $ 211.57 $ 230.07

Total investment $ — $ 2,646 $ 7,190

Average price paid per share (a)

$ 141.72 $ — $ 211.57

Total investment (a)

$ 1,015 $ — $ 2,646

(a) Amounts include applicable excise tax and commissions.

Share-Based Compensation

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The final number of shares issued under performance-based restricted stock units is based on our total shareholder return relative to a retail peer group over a 3-year performance period.

We also regularly issue restricted stock units to our Board of Directors, which vest quarterly over a 1-year period and are settled in shares of Target common stock upon departure from the Board.

We also regularly issue restricted stock units to our Board of Directors, which vest quarterly in the year they are granted and are settled in shares of Target common stock upon departure from the Board.

The fair value for restricted stock units is calculated based on our stock price on the date of grant, incorporating an analysis of the total shareholder return performance measure where applicable.

The weighted average grant date fair value for restricted stock units was $ 160.91 , $ 208.80 , and $ 186.98 in 2023, 2022, and 2021, respectively.

The weighted average grant date fair value of restricted stock units was $ 165.21 , $ 160.91 , and $ 208.80 in 2024, 2023, and 2022, respectively.

Restricted Stock Unit Activity Total Nonvested Units

Fair Value (b)

January 28, 2023 3,321 $ 167.25

February 3, 2024 3,796 $ 171.61

Granted 2,477 165.21

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The fair value of performance share units is calculated based on our stock price on the date of grant.

The weighted average grant date fair value for performance share units was $ 162.54 , $ 216.63 , and $ 179.58 in 2023, 2022, and 2021, respectively.

The weighted average grant date fair value of performance share units was $ 164.92 , $ 162.54 , and $ 216.63 in 2024, 2023, and 2022, respectively.

Performance Share Unit Activity Total Nonvested Units

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Fair Value (b)

January 28, 2023 1,887 $ 152.26

February 3, 2024 1,494 $ 182.98

Granted 753 164.92

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The fair value of performance share units vested and converted to shares of Target common stock was $ 46 million, $ 127 million, and $ 178 million in 2024, 2023, and 2022, respectively.

Stock Options

In the past, we granted stock options to certain team members.

All outstanding stock options are vested and currently exercisable.

Stock Option Activity Stock Options

Total Outstanding & Exercisable

January 28, 2023 122 $ 56.07 $ 14

February 3, 2024 55 $ 55.60 $ 5

(a) In thousands.

(b) Weighted average per share.

Stock Option Exercises

2023 2022 2021

Cash received for exercise price $ — $ 4 $ 8

Intrinsic value 5 11 45

Income tax benefit 1 2 11

As of February 3, 2024, there was no unrecognized compensation expense related to stock options.

The weighted average remaining life of exercisable and outstanding options is 0.2 years.

Defined Contribution Plans

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These team members choose from a menu of crediting rate alternatives that are generally the same as the investment choices in our 401(k) plan, but also includes a fund based on Target common stock.

We credit an additional 2 percent per year to the accounts of all active participants, excluding members of our executive leadership team, in part to recognize the risks inherent to their participation in this plan.

We credit an additional 2 percent per year to the accounts of all active participants, excluding executive officers, in part to recognize the risks inherent to their participation in this plan.

We also maintain a frozen, unfunded, nonqualified deferred compensation plan covering less than 50 participants.

Our total liability under these plans was $ 627 million and $ 600 million as of February 3, 2024, and January 28, 2023, respectively.

Our total liability under these plans was $ 684 million and $ 627 million as of February 1, 2025, and February 3, 2024, respectively.

We mitigate our risk of offering the nonqualified plans through investing in company-owned life insurance and prepaid forward contracts that substantially offset our economic exposure to the returns of these plans.

These investments are general corporate assets and are marked to market with the related gains and losses recognized in the Consolidated Statements of Operations in the period they occur.

TARGET CORPORATION

2023 Form 10-K 60

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Plan Expenses

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$ 121 $ 57 $ ( 39 ) $ ( 39 )

TARGET CORPORATION

2024 Form 10-K 63

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Contributions and Estimated Future Benefit Payments

Our obligations to plan participants can be met over time through a combination of company contributions to these plans and earnings on plan assets.

In 2023, we made no contributions to our qualified defined benefit pension plan, and in 2022 we made a discretionary contribution of $ 150 million.

Our pension obligations can be met over time through a combination of company contributions to these plans and earnings on plan assets.

In 2024 and 2023, we made no contributions to our qualified defined benefit pension plan.

We are not required to make any contributions to our qualified defined benefit pension plan in 2025.

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2030 - 2034 1,321

TARGET CORPORATION

2023 Form 10-K 61

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Cost of Plans

Net Pension Benefits Expense

Net Pension Benefits (Income) / Expense

(millions) Classification 2024 2023 2022

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Historical differences between expected and actual returns are deferred and recognized in the market-related value over a 5-year period from the year in which they occur.

We review the expected long-term rate of return annually and revise it as appropriate.

Additionally, we monitor the mix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and reduce volatility in our assets.

Our 2023 expected annualized long-term rate of return assumptions were 7.5 percent for domestic equity securities, 8.0 percent for international equity securities, 5.5 percent for long-duration debt securities, 9.0 percent for diversified funds, and 8.0 percent for other investments.

These estimates are a judgmental matter in which we consider the composition of our asset portfolio, our historical long-term investment performance, and current market conditions.

TARGET CORPORATION

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NOTES Index to Financial Statements

We review the expected long-term rate of return annually and revise it as appropriate.

Additionally, we monitor the mix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and reduce volatility in our assets.

Our 2024 expected annualized long-term rate of return assumptions were 7.0 percent for domestic equity securities, 7.0 percent for international equity securities, 6.0 percent for long-duration debt securities, 9.0 percent for balanced funds, and 8.0 percent for other investments.

These estimates are a judgmental matter in which we consider the composition of our asset portfolio, our historical long-term investment performance, and current market conditions.

Benefit Obligation

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(b) Accumulated benefit obligation—the present value of benefits earned to date assuming no future salary growth—is materially consistent with the projected benefit obligation in each period presented.

TARGET CORPORATION

2024 Form 10-K 65

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Change in Plan Assets Qualified Plan Nonqualified and International Plans

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Debt securities 50 50 52

Diversified funds 25 24 23

Balanced funds

Total 100 % 100 % 100 %

(a) Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets in both periods presented.

(b) Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds, derivative instruments, and real estate.

(b) Other assets include private equity, high-yield debt, natural resources and timberland funds, derivative instruments, and real estate.

TARGET CORPORATION

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Common collective trusts 539 623

Diversified funds 825 844

Balanced funds

Total plan assets $ 3,371 $ 3,514

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Amounts Included in Shareholders' Investment

Actuarial gains and losses are recorded in AOCI and amortized using the corridor approach.

As of February 3, 2024, and January 28, 2023, pretax net actuarial losses recorded in AOCI totaled $ 969 million and $ 937 million, respectively.

TARGET CORPORATION

2023 Form 10-K 64

FINANCIAL STATEMENTS & SUPPLEMENTAL INFORMATION Table of Contents

NOTES Index to Financial Statements

Actuarial gains and losses are recorded in Accumulated Other Comprehensive Loss (AOCI) and amortized using the corridor approach.

As of February 1, 2025, and February 3, 2024, pretax net actuarial losses recorded in AOCI totaled $ 939 million and $ 969 million, respectively.

Accumulated Other Comprehensive Loss

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Adjustment Pension Total

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

Other comprehensive loss before reclassifications, net of tax

February 3, 2024 $ 283 $ ( 24 ) $ ( 719 ) $ ( 460 )

Other comprehensive (loss) / income before reclassifications

— ( 3 ) 22 19

Amounts reclassified from AOCI, net of tax ( 17 ) (a)

Amounts reclassified

February 1, 2025 $ 266 $ ( 27 ) $ ( 697 ) $ ( 458 )

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(a) Represents amortization of gains and losses on cash flow hedges, net of $ 6 million of taxes, which is recorded in Net Interest Expense.

(b) Represents amortization of pension gains and losses, net of tax, which is recorded in Net Other Income.

See Note 24 for additional information.

TARGET CORPORATION

2024 Form 10-K 67

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Segment Reporting

Our Chief Operating Decision Maker—our Chief Executive Officer—monitors our consolidated operating income and net earnings to evaluate performance and make operating decisions.

We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels.

Virtually all of our consolidated revenues are generated in the United States.

The vast majority of our properties and equipment are located within the United States.

Business Segment Results

2024 2023 2022

$ 106,566 $ 107,412 $ 109,120

Cost of sales

Merchandising cost of sales (a)

68,884 70,652 74,436

Supply chain and digital fulfillment costs (a)

7,618 7,176 7,870

Total cost of sales 76,502 77,828 82,306

Selling, general and administrative expenses 21,969 21,462 20,581

Depreciation and amortization (exclusive of depreciation included in cost of sales)

2,529 2,415 2,385

Operating income $ 5,566 $ 5,707 $ 3,848

Net interest expense 411 502 478

Net other income ( 106 ) ( 92 ) ( 48 )

Earnings before income taxes 5,261 5,297 3,418

Provision for income taxes 1,170 1,159 638

Net earnings $ 4,091 $ 4,138 $ 2,780

(a) N ote 3 provides a description of Merchandising Cost of Sales and Supply Chain and Digital Fulfillment Costs.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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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 8. Financial Statements and Supplementary Data