TARGET CORP 10-Q

Item 1. Financial Statements Consolidated Statements of Operations Three Months Ended (millions, except per share data) (unaudited) May 2, 2026 May 3, 2025 Net sales $ 25,443 $ 23,846 Cost of sales 18,061 17,128 Selling, general, and administrative expenses 5,562 4,591 Depreciation and amortization (exclusive of depreciation included in cost of sales) 685 655 Operating income 1,135 1,472 Net interest expense 117 116 Net other income ( 15 ) ( 26 ) Earnings before income taxes 1,033 1,382 Provision for income taxes 252 346 Net earnings $ 781 $ 1,036 Basic earnings per share $ 1.72 $ 2.28 Diluted earnings per share $ 1.71 $ 2.27 Weighted average common shares outstanding Basic 453.8 455.0 Diluted 455.8 456.5 Antidilutive shares 1.0 2.4 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q1 2026 Form 10-Q 1 FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Comprehensive Income Three Months Ended (millions) (unaudited) May 2, 2026 May 3, 2025 Net earnings $ 781 $ 1,036 Other comprehensive income / (loss), net of tax Pension 7 — Cash flow hedges and currency translation adjustment ( 5 ) ( 4 ) Other comprehensive income / (loss) 2 ( 4 ) Comprehensive income $ 783 $ 1,032 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q1 2026 Form 10-Q 2 FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Financial Position (millions, except footnotes) (unaudited) May 2, 2026 January 31, 2026 May 3, 2025 Assets Cash and cash equivalents $ 3,534 $ 5,488 $ 2,887 Inventory 12,317 12,304 13,048 Other current assets 2,214 2,213 1,824 Total current assets 18,065 20,005 17,759 Property and equipment, net 34,175 33,749 33,182 Operating lease assets 3,652 3,703 3,739 Other noncurrent assets 2,118 2,033 1,505 Total assets $ 58,010 $ 59,490 $ 56,185 Liabilities and shareholders’ investment Accounts payable $ 12,188 $ 12,622 $ 11,823 Accrued and other current liabilities 6,063 6,478 6,029 Current portion of long-term debt and other borrowings 1,133 2,130 1,139 Total current liabilities 19,384 21,230 18,991 Long-term debt and other borrowings 14,282 14,326 14,334 Noncurrent operating lease liabilities 3,416 3,462 3,564 Deferred income taxes 2,438 2,265 2,338 Other noncurrent liabilities 2,095 2,042 2,011 Total noncurrent liabilities 22,231 22,095 22,247 Shareholders’ investment Common stock 38 38 38 Additional paid-in capital 7,220 7,247 7,011 Retained earnings 9,552 9,297 8,360 Accumulated other comprehensive loss ( 415 ) ( 417 ) ( 462 ) Total shareholders’ investment 16,395 16,165 14,947 Total liabilities and shareholders’ investment $ 58,010 $ 59,490 $ 56,185 Common Stock Authorized 6,000,000,000 shares, $ 0.0833 par value; 454,177,135 , 452,840,187 , and 454,364,799 shares issued and outstanding as of May 2, 2026, January 31, 2026, and May 3, 2025, 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 Q1 2026 Form 10-Q 3 FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Cash Flows Three Months Ended (millions) (unaudited) May 2, 2026 May 3, 2025 Operating activities Net earnings $ 781 $ 1,036 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 813 787 Share-based compensation expense 54 69 Deferred income taxes 173 36 Noncash (gains) / losses and other, net ( 42 ) ( 4 ) Changes in operating accounts: Inventory ( 13 ) ( 308 ) Other assets ( 85 ) 146 Accounts payable ( 557 ) ( 1,344 ) Accrued and other liabilities ( 408 ) ( 143 ) Cash provided by operating activities 716 275 Investing activities Expenditures for property and equipment ( 1,035 ) ( 790 ) Other 2 3 Cash used in investing activities ( 1,033 ) ( 787 ) Financing activities Additions to long-term debt — 991 Reductions of long-term debt ( 1,032 ) ( 1,534 ) Dividends paid ( 516 ) ( 510 ) Repurchase of stock — ( 250 ) Shares withheld for taxes on share-based compensation ( 89 ) ( 60 ) Cash used in financing activities ( 1,637 ) ( 1,363 ) Net decrease in cash and cash equivalents ( 1,954 ) ( 1,875 ) Cash and cash equivalents at beginning of period 5,488 4,762 Cash and cash equivalents at end of period $ 3,534 $ 2,887 Supplemental information Leased assets obtained in exchange for new finance lease liabilities $ — $ 17 Leased assets obtained in exchange for new operating lease liabilities 45 70 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q1 2026 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 Total February 1, 2025 455.6 $ 38 $ 6,996 $ 8,090 $ ( 458 ) $ 14,666 Net earnings — — — 1,036 — 1,036 Other comprehensive loss — — — — ( 4 ) ( 4 ) Dividends declared, $ 1.12 per share — — — ( 515 ) — ( 515 ) Repurchase of stock ( 2.2 ) — — ( 251 ) — ( 251 ) Share-based compensation 1.0 — 15 — — 15 May 3, 2025 454.4 $ 38 $ 7,011 $ 8,360 $ ( 462 ) $ 14,947 Net earnings — — — 935 — 935 Other comprehensive loss — — — — ( 6 ) ( 6 ) Dividends declared, $ 1.14 per share — — — ( 529 ) — ( 529 ) Share-based compensation — — 73 — — 73 August 2, 2025 454.4 $ 38 $ 7,084 $ 8,766 $ ( 468 ) $ 15,420 Net earnings — — — 689 — 689 Other comprehensive loss — — — — ( 3 ) ( 3 ) Dividends declared, $ 1.14 per share — — — ( 526 ) — ( 526 ) Repurchase of stock ( 1.7 ) — — ( 152 ) — ( 152 ) Share-based compensation 0.1 — 73 — — 73 November 1, 2025 452.8 $ 38 $ 7,157 $ 8,777 $ ( 471 ) $ 15,501 Net earnings — — — 1,046 — 1,046 Other comprehensive income — — — — 54 54 Dividends declared, $ 1.14 per share — — — ( 526 ) — ( 526 ) Share-based compensation — — 90 — — 90 January 31, 2026 452.8 $ 38 $ 7,247 $ 9,297 $ ( 417 ) $ 16,165 TARGET CORPORATION Q1 2026 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 Total January 31, 2026 452.8 $ 38 $ 7,247 $ 9,297 $ ( 417 ) $ 16,165 Net earnings — — — 781 — 781 Other comprehensive income — — — — 2 2 Dividends declared, $ 1.14 per share — — — ( 526 ) — ( 526 ) Share-based compensation 1.4 — ( 27 ) — — ( 27 ) May 2, 2026 454.2 $ 38 $ 7,220 $ 9,552 $ ( 415 ) $ 16,395 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q1 2026 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 Net Sales 9 Note 3 Interchange Fee Settlements 10 Note 4 Fair Value Measurements 10 Note 5 Supplier Finance Programs 11 Note 6 Long-Term Debt and Commercial Paper 11 Note 7 Derivative Financial Instruments 11 Note 8 Share Repurchase 12 Note 9 Pension Benefits 12 Note 10 Accumulated Other Comprehensive Loss 12 Note 11 Segment Reporting 13 TARGET CORPORATION Q1 2026 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 (U.S.) generally accepted accounting principles (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 includes all of our operations, which are 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 Q1 2026 Form 10-Q 8 FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 2. Net Sales Merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably advertising revenue and credit card profit-sharing income. Net Sales Three Months Ended (millions) May 2, 2026 May 3, 2025 Apparel & accessories (a) $ 3,846 $ 3,711 Beauty (b) 3,398 3,101 Food & beverage (c) 6,263 5,902 Hardlines (Fun 101) (d) 3,522 3,074 Home furnishings & décor (e) 3,239 3,220 Household essentials (f) 4,570 4,357 Other merchandise sales 56 40 Merchandise sales 24,894 23,405 Advertising revenue 246 163 Credit card profit sharing 130 141 Other 173 137 Net sales $ 25,443 $ 23,846 (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 , food service (primarily Starbucks), and floral in our stores. (d) Includes electronics, including video games and consoles, toys, trading cards, sporting goods and fan merchandise, pop culture and other 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 May 2, 2026, January 31, 2026, and May 3, 2025, the liability for estimated returns was $ 191 million, $ 155 million, and $ 186 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 January 31, 2026 Gift Cards Issued During Current Period But Not Redeemed (b) Revenue Recognized From Beginning Liability May 2, 2026 (millions) Gift card liability (a) $ 1,197 $ 238 $ ( 420 ) $ 1,015 (a) Included in Accrued and Other Current Liabilities. (b) Net of estimated breakage. Advertising revenue — Primarily represents revenue related to certain 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. TARGET CORPORATION Q1 2026 Form 10-Q 9 FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 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, Target Circle 360 membership revenue, Shipt membership and service revenues, rental income, and other miscellaneous revenues. 3. Interchange Fee Settlements In March 2025, we entered into settlement agreements to resolve credit card interchange fee litigation matters in which we were a plaintiff. As a result of these lump-sum settlements, during the first quarter of 2025, we recorded gains within SG&A Expenses of $ 593 million, net of legal fees. 4. 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 May 2, 2026 January 31, 2026 May 3, 2025 Assets Short-term investments Cash and Cash Equivalents Level 1 $ 2,544 $ 4,611 $ 1,975 Prepaid forward contracts Other Current Assets Level 1 22 18 17 Liabilities Interest rate swaps Other Current Liabilities Level 2 — 1 3 Interest rate swaps Other Noncurrent Liabilities Level 2 65 54 65 Significant Financial Instruments Not Measured at Fair Value (a) (millions) May 2, 2026 January 31, 2026 May 3, 2025 Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current portion (b) $ 13,402 $ 12,635 $ 14,398 $ 13,732 $ 13,398 $ 12,377 (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 long-term debt is estimated using Level 2 inputs based on quoted prices for the instruments. Where quoted prices are not available, fair value is estimated using discounted cash flows and market-based expectations for interest rates. These amounts exclude commercial paper, fair value hedge adjustments, and lease liabilities. TARGET CORPORATION Q1 2026 Form 10-Q 10 FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 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 elect to receive early payment of our payment obligations from the financial institutions at a discounted amount. A vendor’s election to receive early payment 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 $ 2.8 billion, $ 3.0 billion, and $ 3.3 billion as of May 2, 2026, January 31, 2026, and May 3, 2025, respectively, and are included within Accounts Payable on our Consolidated Statements of Financial Position. These outstanding vendor obligations do not represent actual early payments made under supplier finance programs, which have historically been lower. 6. Long-Term Debt and Commercial Paper Our unsecured long-term debt repayments during the three months ended May 2, 2026, were as follows: Debt Repayments (dollars in millions) Repayment Date Maturity Date Principal Amount Interest Rate (Fixed) April 2026 April 2026 $ 1,000 2.50 % 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 three months ended May 2, 2026, or May 3, 2025. 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 4 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 May 2, 2026, and $ 2.20 billion as of January 31, 2026, and May 3, 2025. 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 May 2, 2026, and May 3, 2025. Effect of Hedges on Debt (millions) May 2, 2026 January 31, 2026 May 3, 2025 Long-term debt and other borrowings Carrying amount of hedged debt $ 2,376 $ 2,139 $ 2,126 Cumulative hedging adjustments, included in carrying amount ( 65 ) ( 55 ) ( 68 ) Effect of Hedges on Net Interest Expense Three Months Ended (millions) May 2, 2026 May 3, 2025 Gain (loss) on fair value hedges recognized in Net Interest Expense Interest rate swaps designated as fair value hedges $ ( 10 ) $ 57 Hedged debt 10 ( 57 ) Gain on cash flow hedges recognized in Net Interest Expense 6 6 Total $ 6 $ 6 TARGET CORPORATION Q1 2026 Form 10-Q 11 FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 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 arrangements, and other privately negotiated transactions with financial institutions. Share Repurchase Activity Three Months Ended (millions, except per share data) May 2, 2026 May 3, 2025 Number of shares purchased — 2.2 Average price paid per share (a) $ — $ 114.60 Total investment (a) $ — $ 251 (a) Amounts include applicable excise tax and commissions. 9. Pension Benefits We provide pension plan benefits to eligible team members. Net Pension Benefits (Income) / Expense Three Months Ended (millions) Classification May 2, 2026 May 3, 2025 Service cost benefits earned Cost of Sales and SG&A Expenses $ 18 $ 17 Interest cost on projected benefit obligation Net Other Income 40 42 Expected return on assets Net Other Income ( 64 ) ( 67 ) Amortization of losses Net Other Income 9 — Total $ 3 $ ( 8 ) 10. Accumulated Other Comprehensive Loss Change in Accumulated Other Comprehensive Loss Cash Flow Hedges Currency Translation Adjustment Pension Total (millions) January 31, 2026 $ 248 $ ( 29 ) $ ( 636 ) $ ( 417 ) Other comprehensive loss before reclassifications — ( 1 ) — ( 1 ) Amounts reclassified ( 4 ) — 7 3 May 2, 2026 $ 244 $ ( 30 ) $ ( 629 ) $ ( 415 ) Note: Amounts are net of tax. TARGET CORPORATION Q1 2026 Form 10-Q 12 FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 11. Segment Reporting Our Chief Operating Decision Maker (CODM)—our Chief Executive Officer—monitors our consolidated net earnings and operating income to evaluate performance and make operating decisions including whether to invest profits into capital projects, make equity or other investments, or return capital to shareholders. Consolidated assets as presented on our Consolidated Statements of Financial Position is the only view of assets regularly reviewed by our CODM. 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 Three Months Ended (millions) May 2, 2026 May 3, 2025 Net sales $ 25,443 $ 23,846 Cost of sales Merchandising cost of sales 16,278 15,355 Supply chain and digital fulfillment costs 1,783 1,773 Total cost of sales 18,061 17,128 Selling, general and administrative expenses (a) 5,562 4,591 Depreciation and amortization (exclusive of depreciation included in cost of sales) 685 655 Operating income (a) 1,135 1,472 Net interest expense 117 116 Net other income ( 15 ) ( 26 ) Earnings before income taxes 1,033 1,382 Provision for income taxes 252 346 Net earnings $ 781 $ 1,036 (a) For the three months ended May 3, 2025, includes $ 593 million of pretax net gains related to settlements of credit card interchange fee litigation matters. Note 3 provides additional information. TARGET CORPORATION Q1 2026 Form 10-Q 13 MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents FINANCIAL SUMMARY Index to Notes