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Target Reports Fourth Quarter and Full-Year 2019 Earnings

03/03/20

MINNEAPOLIS, March 3, 2020 /PRNewswire/ --

  • Fourth quarter comparable sales grew 1.5 percent, reflecting comparable digital sales growth of 20 percent.
  • Same-day services (Order Pick Up, Drive Up and Shipt) accounted for more than 80 percent of Target's fourth-quarter comparable digital sales growth.
  • Fourth quarter GAAP EPS from continuing operations of $1.63 was 6.9 percent higher than last year. Adjusted EPS1 of $1.69 was 10.6 percent higher than last year.
  • Full-year comparable sales grew 3.4 percent, reflecting comparable digital sales growth of 29 percent.
    • 2019 marks the sixth consecutive year in which Target's comparable digital sales have grown more than 25 percent.
    • In 2019, Target's same-day services grew more than 90 percent, accounting for nearly three-quarters of the Company's comparable digital sales growth.
  • Full-year operating income dollars grew 13.3 percent compared with last year. The Company's full-year operating income margin rate of 6.0 percent was 50 bps higher than last year.
  • Full-year GAAP EPS from continuing operations grew 15.4 percent compared with last year, while full-year Adjusted EPS grew 18.4 percent. Both GAAP EPS from continuing operations and Adjusted EPS established new all-time highs.
  • For additional media materials, please visit: https://corporate.target.com/article/2020/03/q4-fy2019-earnings

Target Corporation (NYSE: TGT) today announced its fourth-quarter and full-year 2019 results.  The Company reported GAAP earnings per share (EPS) from continuing operations of $1.63 in fourth quarter and $6.34 for full-year 2019, compared with $1.52 and $5.50 in 2018, respectively.  Fourth quarter Adjusted EPS were $1.69 and full-year Adjusted EPS were $6.39, compared with $1.53 and $5.39 in 2018, respectively. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS. 

"With eleven consecutive quarters of positive comparable sales growth, driven by healthy performance in both our stores and digital channels, Target's results demonstrate that we've built a sustainable business model that drives strong topline growth and consistent bottom line performance," said Brian Cornell, Chairman and CEO of Target. "The strategic investments we've made over the past several years to elevate the shopping experience, curate our multi-category assortment at scale, and deliver ease and convenience through our fulfillment capabilities are deepening our relationship with our guest. As we look ahead to 2020 and beyond, we are well positioned to build on this strong foundation to further differentiate Target and drive long-term, profitable growth."

Fiscal 2020 Guidance

In first quarter 2020, Target expects a low-single digit increase in comparable sales and a mid-single digit increase in operating income. The Company expects both GAAP EPS from continuing operations and Adjusted EPS of $1.55 to $1.75.

For full-year 2020, Target expects a low-single digit increase in comparable sales and a mid-single digit increase in operating income. The Company expects both GAAP EPS from continuing operations and Adjusted EPS of $6.70 to $7.00.

First quarter and full-year 2020 GAAP EPS from continuing operations may include the impact of certain discrete items, which will be excluded in calculating Adjusted EPS. The Company is not currently aware of any such discrete items.

Operating Results

The Company's total comparable sales grew 1.5 percent in the fourth quarter, reflecting comparable digital sales growth of 20 percent. Total revenue of $23.4 billion grew 1.8 percent compared with last year, reflecting sales growth of 1.8 percent and a 9.3 percent increase in other revenue. Operating income was $1,198 million in fourth quarter 2019, up 7.3 percent from $1,117 million in 2018.

Fourth quarter operating income margin rate was 5.1 percent in 2019 compared with 4.9 percent in 2018. Fourth quarter gross margin rate was 26.3 percent, compared with 25.7 percent in 2018. This increase reflected the benefit of merchandising efforts to optimize costs, pricing, promotions and assortment, combined with the benefit of favorable category sales mix. Fourth quarter SG&A expense rate was 19.3 percent in 2019, compared with 19.0 percent in 2018. Fourth quarter SG&A results reflected higher marketing expenses compared with last year, partially offset by lower net compensation expenses, including lower incentive compensation in 2019.

Full-year sales increased 3.6 percent to $77.1 billion from $74.4 billion last year, reflecting a 3.4 percent increase in comparable sales combined with sales from non-mature stores. Full-year revenue of $78.1 billion grew 3.7 percent compared with last year, reflecting sales growth of 3.6 percent and a 6.3 percent increase in other revenue.

Full-year operating income was $4,658 million in 2019, an increase of 13.3 percent from $4,110 million last year. Full-year gross margin rate was 28.9 percent, compared with 28.4 percent in 2018. This increase reflects merchandising efforts to optimize costs, pricing, promotions and assortment, combined with the benefit of favorable category sales mix, partially offset by higher supply chain and fulfillment costs. Full-year SG&A expense rate was 20.8 percent in 2019, approximately flat to last year. Store labor productivity and lower incentive compensation in 2019 offset pressure from wage growth.

Interest Expense and Taxes from Continuing Operations

The Company's fourth quarter 2019 net interest expense was $118 million, compared with $110 million last year. Excluding the loss of $10 million related to the early retirement of debt in 2019, fourth quarter net interest expense was approximately flat to last year.

Full-year 2019 net interest expense was $477 million, compared with $461 million in 2018, driven primarily by the loss of $10 million related to the early retirement of debt in 2019.

Fourth quarter 2019 effective income tax rate from continuing operations was 20.7 percent, compared with 21.4 percent last year. The Company's full-year 2019 effective income tax rate from continuing operations was 22.0 percent compared with 20.3 percent in 2018, when results included discrete benefits related to the Tax Cuts and Jobs Act of 2017 and the resolution of certain income tax matters unrelated to 2018 operations.

Shareholder Returns

The Company returned $940 million to shareholders in fourth quarter 2019, including:

  • Dividends of $334 million, unchanged from $334 million in fourth quarter 2018, reflecting a decline in share count offset by a 3.1 percent increase in the dividend per share.
     
  • Share repurchases totaling $606 million that retired 5.1 million shares of common stock at an average price of $117.81.

At the end of the fourth quarter, the Company had approximately $0.1 billion of remaining capacity under the $5 billion share repurchase program approved in 2016. In September 2019, Target's Board of Directors authorized a new $5 billion share repurchase program. Repurchases through this program will begin upon completion of the 2016 program.

For the trailing twelve months through fourth quarter 2019, after-tax return on invested capital (ROIC) was 16.0 percent, compared with 14.7 percent for the twelve months through fourth quarter 2018. The tables of this release provide additional information about the Company's ROIC calculation.

Webcast Details

Target will webcast its financial community meeting, including a Q&A session, beginning at 8:00 a.m. CST today. Investors and the media are invited to listen to the meeting at Investors.Target.com (hover over "investors" then click on "events & presentations"). A replay of the webcast will be available within four hours of the meeting's conclusion.

Miscellaneous

Statements in this release regarding first quarter and full-year 2020 earnings per share, comparable sales guidance and operating income are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company's actual results to differ materially. The most important risks and uncertainties are described in Item 1A of the Company's Form 10-K for the fiscal year ended Feb. 2, 2019. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement.

About Target

Minneapolis-based Target Corporation (NYSE: TGT) serves guests at more than 1,800 stores and at Target.com. Since 1946, Target has given 5% of its profit to communities, which today equals millions of dollars a week. For the latest store count or for more information, visit Target.com/Pressroom. For a behind-the-scenes look at Target, visit Target.com/abullseyeview or follow @TargetNews on Twitter.

1Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items. See the tables of this release for additional information about the items that have been excluded from Adjusted EPS.  

TARGET CORPORATION

 

Consolidated Statements of Operations

   

Three Months Ended

     

Twelve Months Ended

   

(millions, except per share data) (unaudited)

 

February 1,
2020

 

February 2,
2019

 

Change

 

February 1,
2020

 

February 2,
2019

 

Change

Sales

 

$

23,133

   

$

22,734

   

1.8

%

 

$

77,130

   

$

74,433

   

3.6

%

Other revenue

 

265

   

243

   

9.3

   

982

   

923

   

6.3

 

Total revenue

 

23,398

   

22,977

   

1.8

   

78,112

   

75,356

   

3.7

 

Cost of sales

 

17,056

   

16,900

   

0.9

   

54,864

   

53,299

   

2.9

 

Selling, general and administrative expenses

 

4,504

   

4,376

   

2.9

   

16,233

   

15,723

   

3.2

 
                                     

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

 

640

   

584

   

9.4

   

2,357

   

2,224

   

6.0

 

Operating income

 

1,198

   

1,117

   

7.3

   

4,658

   

4,110

   

13.3

 

Net interest expense

 

118

   

110

   

7.2

   

477

   

461

   

3.3

 

Net other (income) / expense

 

29

   

(7)

   

(516.2)

   

(9)

   

(27)

   

(71.4)

 

Earnings from continuing operations before income taxes

 

1,051

   

1,014

   

3.6

   

4,190

   

3,676

   

14.0

 

Provision for income taxes

 

218

   

216

   

0.5

   

921

   

746

   

23.4

 

Net earnings from continuing operations

 

833

   

798

   

4.4

   

3,269

   

2,930

   

11.6

 

Discontinued operations, net of tax

 

1

   

1

       

12

   

7

     

Net earnings

 

$

834

   

$

799

   

4.4

%

 

$

3,281

   

$

2,937

   

11.7

%

Basic earnings per share

                       

Continuing operations

 

$

1.64

   

$

1.53

   

7.2

%

 

$

6.39

   

$

5.54

   

15.4

%

Discontinued operations

 

   

       

0.02

   

0.01

     

Net earnings per share

 

$

1.65

   

$

1.54

   

7.2

%

 

$

6.42

   

$

5.55

   

15.6

%

Diluted earnings per share

                       

Continuing operations

 

$

1.63

   

$

1.52

   

6.9

%

 

$

6.34

   

$

5.50

   

15.4

%

Discontinued operations

 

   

       

0.02

   

0.01

     

Net earnings per share

 

$

1.63

   

$

1.52

   

6.9

%

 

$

6.36

   

$

5.51

   

15.5

%

Weighted average common shares outstanding

                       

Basic

 

506.2

   

519.9

   

(2.6)

%

 

510.9

   

528.6

   

(3.3)

%

Diluted

 

511.9

   

524.3

   

(2.4)

%

 

515.6

   

533.2

   

(3.3)

%

Antidilutive shares

 

   

0.2

       

   

     

Dividends declared per share

 

$

0.66

   

$

0.64

   

3.1

%

 

$

2.62

   

$

2.54

   

3.1

%

 

Note:  Per share amounts may not foot due to rounding.

 

TARGET CORPORATION

 

Consolidated Statements of Financial Position

(millions, except footnotes) (unaudited)

 

February 1,
2020

 

February 2,
2019

Assets

       

Cash and cash equivalents

 

$

2,577

   

$

1,556

 

Inventory

 

8,992

   

9,497

 

Other current assets

 

1,333

   

1,466

 

Total current assets

 

12,902

   

12,519

 

Property and equipment

       

Land

 

6,036

   

6,064

 

Buildings and improvements

 

30,603

   

29,240

 

Fixtures and equipment

 

6,083

   

5,912

 

Computer hardware and software

 

2,692

   

2,544

 

Construction-in-progress

 

533

   

460

 

Accumulated depreciation

 

(19,664)

   

(18,687)

 

Property and equipment, net

 

26,283

   

25,533

 

Operating lease assets

 

2,236

   

1,965

 

Other noncurrent assets

 

1,358

   

1,273

 

Total assets

 

$

42,779

   

$

41,290

 

Liabilities and shareholders' investment

       

Accounts payable

 

$

9,920

   

$

9,761

 

Accrued and other current liabilities

 

4,406

   

4,201

 

Current portion of long-term debt and other borrowings

 

161

   

1,052

 

Total current liabilities

 

14,487

   

15,014

 

Long-term debt and other borrowings

 

11,338

   

10,223

 

Noncurrent operating lease liabilities

 

2,275

   

2,004

 

Deferred income taxes

 

1,122

   

972

 

Other noncurrent liabilities

 

1,724

   

1,780

 

Total noncurrent liabilities

 

16,459

   

14,979

 

Shareholders' investment

       

Common stock

 

42

   

43

 

Additional paid-in capital

 

6,226

   

6,042

 

Retained earnings

 

6,433

   

6,017

 

Accumulated other comprehensive loss

 

(868)

   

(805)

 

Total shareholders' investment

 

11,833

   

11,297

 

Total liabilities and shareholders' investment

 

$

42,779

   

$

41,290

 
 

Common Stock  Authorized 6,000,000,000 shares, $0.0833 par value; 504,198,962 and 517,761,600 shares issued and outstanding as of February 1, 2020, and February 2, 2019, respectively.

 

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.

 

TARGET CORPORATION

 

Consolidated Statements of Cash Flows

   

Twelve Months Ended

(millions) (unaudited)

 

February 1,

2020

 

February 2,

2019

Operating activities

       

Net earnings

 

$

3,281

   

$

2,937

 

Earnings from discontinued operations, net of tax

 

12

   

7

 

Net earnings from continuing operations

 

3,269

   

2,930

 

Adjustments to reconcile net earnings to cash provided by operations:

       

Depreciation and amortization

 

2,604

   

2,474

 

Share-based compensation expense

 

147

   

132

 

Deferred income taxes

 

178

   

322

 

Loss on debt extinguishment

 

10

   

 

Noncash losses / (gains) and other, net

 

29

   

95

 

Changes in operating accounts:

       

Inventory

 

505

   

(900)

 

Other assets

 

18

   

(299)

 

Accounts payable

 

140

   

1,127

 

Accrued and other liabilities

 

199

   

89

 

Cash provided by operating activities—continuing operations

 

7,099

   

5,970

 

Cash provided by operating activities—discontinued operations

 

18

   

3

 

Cash provided by operations

 

7,117

   

5,973

 

Investing activities

       

Expenditures for property and equipment

 

(3,027)

   

(3,516)

 

Proceeds from disposal of property and equipment

 

63

   

85

 

Other investments

 

20

   

15

 

Cash required for investing activities

 

(2,944)

   

(3,416)

 

Financing activities

       

Additions to long-term debt

 

1,739

   

 

Reductions of long-term debt

 

(2,069)

   

(281)

 

Dividends paid

 

(1,330)

   

(1,335)

 

Repurchase of stock

 

(1,565)

   

(2,124)

 

Stock option exercises

 

73

   

96

 

Cash required for financing activities

 

(3,152)

   

(3,644)

 

Net increase / (decrease) in cash and cash equivalents

 

1,021

   

(1,087)

 

Cash and cash equivalents at beginning of period

 

1,556

   

2,643

 

Cash and cash equivalents at end of period

 

$

2,577

   

$

1,556

 

 

TARGET CORPORATION

 

Operating Results

 

Rate Analysis

 

Three Months Ended

 

Twelve Months Ended

(unaudited)

 

February 1,

2020

 

February 2,

2019

 

February 1,

2020

 

February 2,

2019

Gross margin rate

 

26.3

%

 

25.7

%

 

28.9

%

 

28.4

%

SG&A expense rate

 

19.3

   

19.0

   

20.8

   

20.9

 
                         

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

 

2.7

   

2.5

   

3.0

   

3.0

 

Operating income margin rate

 

5.1

   

4.9

   

6.0

   

5.5

 
 

Note:  Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales. All other rates are calculated by dividing the applicable amount by total revenue. Other revenue includes $176 million and $680 million of profit-sharing income under our credit card program agreement for the three and twelve months ended February 1, 2020, respectively, and $170 million and $673 million for the three and twelve months ended February 2, 2019, respectively.

 

Comparable Sales

 

Three Months Ended

 

Twelve Months Ended

(unaudited)

 

February 1,

2020

 

February 2,

2019

 

February 1,

2020

 

February 2,

2019

Comparable sales change

 

1.5

%

 

5.3

%

 

3.4

%

 

5.0

%

Drivers of change in comparable sales:

               

Number of transactions

 

1.3

   

4.5

   

2.7

   

5.0

 

Average transaction amount

 

0.2

   

0.8

   

0.7

   

0.1

 
 

Note: Amounts may not foot due to rounding.

 

Contribution to Comparable Sales Change

 

Three Months Ended

 

Twelve Months Ended

(unaudited)

 

February 1,

2020

 

February 2,

2019

 

February 1,

2020

 

February 2,

2019

Stores channel comparable sales change

 

(0.7)

%

 

2.9

%

 

1.4

%

 

3.2

%

Contribution from digitally originated sales to comparable sales change

 

2.2

   

2.4

   

1.9

   

1.8

 

Total comparable sales change

 

1.5

%

 

5.3

%

 

3.4

%

 

5.0

%

 

Note: Amounts may not foot due to rounding.

 

Sales by Channel

 

Three Months Ended

 

Twelve Months Ended

(unaudited)

 

February 1,

2020

 

February 2,

2019

 

February 1,

2020

 

February 2,

2019

Stores originated

 

87.7

%

 

89.6

%

 

91.2

%

 

92.9

%

Digitally originated

 

12.3

   

10.4

   

8.8

   

7.1

 

Total

 

100

%

 

100

%

 

100

%

 

100

%

         

RedCard Penetration

 

Three Months Ended

 

Twelve Months Ended

(unaudited)

 

February 1,

2020

 

February 2,

2019

 

February 1,

2020

 

February 2,

2019

Target Debit Card

 

12.4

%

 

12.6

%

 

12.6

%

 

13.0

%

Target Credit Cards

 

10.9

   

11.0

   

10.7

   

10.9

 

Total RedCard Penetration

 

23.3

%

 

23.6

%

 

23.3

%

 

23.8

%

 

Note: Amounts may not foot due to rounding.

 

Number of Stores and Retail Square Feet

 

Number of Stores

 

Retail Square Feet (a)

(unaudited)

 

February 1,

2020

 

February 2,

2019

 

February 1,

2020

 

February 2,

2019

170,000 or more sq. ft.

 

272

   

272

   

48,619

   

48,604

 

50,000 to 169,999 sq. ft.

 

1,505

   

1,501

   

189,227

   

188,900

 

49,999 or less sq. ft.

 

91

   

71

   

2,670

   

2,077

 

Total

 

1,868

   

1,844

   

240,516

   

239,581

 
   

(a)

In thousands, reflects total square feet less office, distribution center, and vacant space.

 

TARGET CORPORATION

 

Reconciliation of Non-GAAP Financial Measures

 

To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share from continuing operations (Adjusted EPS). This metric excludes certain items presented below. We believe this information is useful in providing period-to-period comparisons of the results of our continuing operations. This measure is not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). The most comparable GAAP measure is diluted earnings per share from continuing operations. Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate Adjusted EPS differently than we do, limiting the usefulness of the measure for comparisons with other companies.

 

Reconciliation of Non-GAAP

Adjusted EPS

 

Three Months Ended

   
 

February 1, 2020

 

February 2, 2019

   

(millions, except per share data) (unaudited)

 

Pretax

 

Net of Tax

 

Per Share

 

Pretax

 

Net of Tax

 

Per Share

 

Change

GAAP diluted earnings per share from continuing operations

         

$

1.63

           

$

1.52

   

6.9

%

Adjustments

                           

Loss on investment (a)

 

$

41

   

$

31

   

$

0.06

   

$

   

$

   

$

     

Tax Act (b)

 

   

   

   

   

3

   

0.01

     

Loss on debt extinguishment

 

10

   

8

   

0.02

   

   

   

     

Other (c)

 

(9)

   

(6)

   

(0.01)

   

   

   

     

Adjusted diluted earnings per share from continuing operations

         

$

1.69

           

$

1.53

   

10.6

%

 

Note: Amounts may not foot due to rounding.

 

Reconciliation of Non-GAAP

Adjusted EPS

 

Twelve Months Ended

   
 

February 1, 2020

 

February 2, 2019

   

(millions, except per share data) (unaudited)

 

Pretax

 

Net of Tax

 

Per Share

 

Pretax

 

Net of Tax

 

Per Share

 

Change

GAAP diluted earnings per share from continuing operations

         

$

6.34

           

$

5.50

   

15.4

%

Adjustments

                           

Loss on investment (a)

 

$

41

   

$

31

   

$

0.06

   

$

   

$

   

$

     

Tax Act (b)

 

   

   

   

   

(36)

   

(0.07)

     

Loss on debt extinguishment

 

10

   

8

   

0.01

   

   

   

     

Other (c)

 

(17)

   

(13)

   

(0.02)

   

   

   

     

Other income tax matters (d)

 

   

   

   

   

(18)

   

(0.03)

     

Adjusted diluted earnings per share from continuing operations

         

$

6.39

           

$

5.39

   

18.4

%

 
 

Note: Amounts may not foot due to rounding.

 

(a)

Represents an unrealized loss on our investment in Casper Sleep, Inc., which is not core to our continuing operations.

(b)

Represents discrete items related to the Tax Cuts and Job Act of 2017 (Tax Act).

(c)

Represents insurance recoveries related to the 2013 data breach.

(d)

Represents benefits from the resolution of certain income tax matters unrelated to current period operations.

 

Earnings from continuing operations before interest expense and income taxes (EBIT) and earnings from continuing operations before interest expense, income taxes, depreciation and amortization (EBITDA) are non-GAAP financial measures. We believe these measures provide meaningful information about our operational efficiency compared with our competitors by excluding the impact of differences in tax jurisdictions and structures, debt levels, and, for EBITDA, capital investment. These measures are not in accordance with, or an alternative for, GAAP. The most comparable GAAP measure is net earnings from continuing operations. EBIT and EBITDA should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate EBIT and EBITDA differently, limiting the usefulness of the measures for comparisons with other companies.

 

EBIT and EBITDA

 

Three Months Ended

     

Twelve Months Ended

   

(dollars in millions) (unaudited)

 

February 1,
2020

 

February 2,
2019

 

Change

 

February 1,
2020

 

February 2,
2019

 

Change

Net earnings from continuing operations

 

$

833

   

$

798

   

4.4

%

 

$

3,269

   

$

2,930

   

11.6

%

 + Provision for income taxes

 

218

   

216

   

0.5

   

921

   

746

   

23.4

 

 + Net interest expense

 

118

   

110

   

7.2

   

477

   

461

   

3.3

 

EBIT

 

$

1,169

   

$

1,124

   

3.9

%

 

$

4,667

   

$

4,137

   

12.8

%

 + Total depreciation and amortization (a)

 

699

   

647

   

8.1

   

2,604

   

2,474

   

5.3

 

EBITDA

 

$

1,868

   

$

1,771

   

5.5

%

 

$

7,271

   

$

6,611

   

10.0

%

   

(a)

Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales on our Consolidated Statements of Operations.

We have also disclosed after-tax return on invested capital from continuing operations (ROIC), which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies.

After-Tax Return on Invested Capital

   

(dollars in millions)

       
   

Trailing Twelve Months

   

Numerator

 

February 1,

2020

 

February 2,

2019

   

Operating income

 

$

4,658

   

$

4,110

     

 + Net other income / (expense)

 

9

   

27

     

EBIT

 

4,667

   

4,137

     

 + Operating lease interest (a)

 

86

   

83

     

 - Income taxes (b)

 

1,045

   

856

     

Net operating profit after taxes

 

$

3,708

   

$

3,364

     
                     

Denominator

 

February 1,

2020

 

February 2,

2019

 

February 3,

2018

Current portion of long-term debt and other borrowings

 

$

161

   

$

1,052

   

$

281

 

 + Noncurrent portion of long-term debt

 

11,338

   

10,223

   

11,117

 

 + Shareholders' investment

 

11,833

   

11,297

   

11,651

 

 + Operating lease liabilities (c)

 

2,475

   

2,170

   

2,072

 

 - Cash and cash equivalents

 

2,577

   

1,556

   

2,643

 

Invested capital

 

$

23,230

   

$

23,186

   

$

22,478

 

Average invested capital (d)

 

$

23,208

   

$

22,832

     
                 

After-tax return on invested capital

 

16.0

%

 

14.7

%

   
   

(a)

Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within SG&A. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.

(b)

Calculated using the effective tax rates for continuing operations, which were 22.0 percent and 20.3 percent for the trailing twelve months ended February 1, 2020, and February 2, 2019, respectively. For the twelve months ended February 1, 2020, and February 2, 2019, includes tax effect of $1,026 million and $839 million, respectively, related to EBIT and $19 million and $17 million, respectively, related to operating lease interest.

(c)

Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities on the Consolidated Statements of Financial Position.

(d)

Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period.

 

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SOURCE Target Corporation

John Hulbert, Investors, (612) 761-6627, or Erin Conroy, Media, (612) 761-5928, or Target Media Hotline, (612) 696-3400

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