tgt-20210818
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 18, 2021

Target Corporation
(Exact name of registrant as specified in its charter)
Minnesota 1-6049 41-0215170
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
1000 Nicollet Mall,Minneapolis,Minnesota55403
(Address of principal executive offices, including zip code)
(612)304-6073
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0833 per shareTGTNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 




Item 2.02.             Results of Operations and Financial Condition.
 
On August 18, 2021, Target Corporation issued a News Release containing its financial results for the three and six months ended July 31, 2021. The News Release is attached hereto as Exhibit 99.

Item 9.01.             Financial Statements and Exhibits.
 
(d)                                 Exhibits.
(99)
104Cover Page Interactive Data File (formatted as inline XBRL).

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 TARGET CORPORATION
  
Date: August 18, 2021/s/ Michael J. Fiddelke
 Michael J. Fiddelke
 Executive Vice President and Chief Financial Officer

2
Document

Exhibit (99)
https://cdn.kscope.io/de2a3f6999ebb35728a5326c46f6c470-releasebullseyeq419a.gif

FOR IMMEDIATE RELEASE
Contacts:John Hulbert, Investors, (612) 761-6627
 Erin Conroy, Media, (612) 761-5928
 Target Media Hotline, (612) 696-3400

Target Corporation Reports Second Quarter Earnings

Second quarter comparable sales grew 8.9 percent, on top of record growth of 24.3 percent last year.
Comparable sales growth was driven entirely by traffic.
Store comparable sales increased 8.7 percent, on top of 10.9 percent growth last year.
Digital comparable sales grew 10 percent, following growth of 195 percent last year.
Digital sales continue to be led by same-day services (Order Pickup, Drive Up and Shipt), which grew nearly 55 percent this year, on top of more than 270 percent last year.
More than 95 percent of Target’s second quarter sales were fulfilled by its stores.
All five core merchandise categories delivered positive comparable sales, on top of last year's historic sales performance.
Second quarter GAAP EPS of $3.65 was 8.9 percent higher than last year, and Adjusted EPS1 of $3.64 was 7.9 percent higher than last year. Second quarter GAAP and Adjusted EPS have doubled since Q2 2019.
Target's Board of Directors has approved a new, $15 billion share repurchase program.
For additional media materials, please visit:
https://corporate.target.com/article/2021/08/q2-2021-earnings

MINNEAPOLIS (August 18, 2021) – Target Corporation (NYSE: TGT) today announced its second quarter 2021 financial results, which reflected increases in both sales and profitability on top of record growth a year ago. The Company reported second quarter GAAP earnings per share (EPS) of $3.65, up 8.9 percent from $3.35 in 2020. Second quarter Adjusted EPS of $3.64 grew 7.9 percent compared with $3.38 in 2020. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.
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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 Reports Second Quarter Earnings — Page 2 of 12
Brian Cornell, chairman and CEO of Target Corporation, said, “In the second quarter, our business generated continued growth on top of record increases a year ago, reinforcing Target’s leadership position in retail. We’ve spent years building and investing in the durable model we have today, which is supported by a differentiated strategy and the best team in retail.
Even after unprecedented growth over the last two years, we see much more opportunity ahead of us, and we’re leaning into opportunities to invest in the long-term growth and resiliency of our business. Our team and operating model can seamlessly adapt to changes in the environment, and we’re well-positioned to deliver outstanding performance in the back half of the year.”

Fiscal 2021 Guidance
For the second half of 2021, the Company expects high single digit growth in comparable sales, near the high end of the previous guidance range.
The Company now expects its full year operating income margin rate will be 8 percent or higher.

Operating Results
Comparable sales grew 8.9 percent in the second quarter, reflecting comparable store sales growth of 8.7 percent and comparable digital sales growth of 10 percent. Total revenue of $25.2 billion grew 9.5 percent compared with last year, driven by total sales growth of 9.4 percent and a 20.0 percent increase in other revenue. Operating income was $2.5 billion in second quarter 2021, up 7.2 percent from $2.3 billion in 2020.
Second quarter operating income margin rate was 9.8 percent in 2021 compared with 10.0 percent in 2020. Second quarter gross margin rate was 30.4 percent, compared with 30.9 percent in 2020. This year's gross margin rate reflected pressure from higher merchandise and freight costs and the comparison over last year's change in the sales return reserve estimate. These pressures were partially offset by the benefit of low markdowns, favorable category mix, and a shift in fulfillment mix into lower-cost same-day fulfillment options. Second quarter SG&A expense rate was 19.3 percent in 2021, compared with 19.4 percent in 2020, reflecting the benefit of leverage from strong sales growth, partially offset by expense rate increases to normalized levels in various expense categories, such as marketing.
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Target Corporation Reports Second Quarter Earnings — Page 3 of 12
Interest Expense and Taxes
The Company’s second quarter 2021 net interest expense was $104 million, compared with $122 million last year. The decrease was primarily due to lower average debt balances.
Second quarter 2021 effective income tax rate was 23.4 percent, compared with 22.8 percent last year. The rate increase was driven by significantly higher earnings, which diluted the benefit of fixed and discrete tax items.

Capital Deployment and Return on Invested Capital
The Company paid dividends of $336 million in the second quarter, compared with $330 million last year, reflecting a 3.0 percent increase in the dividend per share, partially offset by a decline in average share count.
The Company repurchased $1.5 billion worth of its shares in second quarter 2021, retiring 6.6 million shares of common stock at an average price of $233.81. As of the end of the second quarter, the Company had approximately $1.8 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in September 2019.
In addition, the Company announced today that Target's Board of Directors has authorized a new, $15 billion share repurchase program. Repurchases under this program will begin upon completion of the 2019 program.
"For decades, Target's capital deployment priorities have remained the same: First, we fully invest in our business, in projects that meet our strategic and financial criteria. Then, we return capital to our shareholders through a thoughtful balance of dividends and share repurchases, within the limits of our middle-A debt ratings," said Michael Fiddelke, executive vice president and chief financial officer of Target Corporation. "Our continued strong operating performance and ability to generate cash have supported meaningful investments in our team and our business, along with the return of capital through both dividends and share repurchases. This new authorization reflects our confidence in the sustained, strong performance of our business, which will enable continued share repurchases in keeping with our long-standing capital deployment goals."
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Target Corporation Reports Second Quarter Earnings — Page 4 of 12
For the trailing twelve months through second quarter 2021, after-tax return on invested capital (ROIC) was 31.7 percent, compared with 17.2 percent for the trailing twelve months through second quarter 2020. The increase in ROIC was driven primarily by increased profitability. The tables in this release provide additional information about the Company’s ROIC calculation.

Webcast Details
Target will webcast its second quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Investors.Target.com (click on link under "Upcoming Events"). A replay of the webcast will be provided when available. The replay number is 1-800-925-2388.

Miscellaneous
Statements in this release regarding second half and full year comparable sales growth and operating margin rates 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 actions 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 January 30, 2021. 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 1,900 stores and at Target.com, with the purpose of helping all families discover the joy of everyday life. Since 1946, Target has given 5% of its profit to communities, which today equals millions of dollars a week. Additional company information can be found by visiting its corporate website and press center and by following @TargetNews.
For more on the Target Foundation, click here.
# # #


Target Corporation Reports Second Quarter Earnings — Page 5 of 12

TARGET CORPORATION
 
Consolidated Statements of Operations
 Three Months Ended Six Months Ended 
(millions, except per share data) (unaudited)July 31, 2021August 1, 2020ChangeJuly 31, 2021August 1, 2020Change
Sales $24,826 $22,696 9.4 %$48,705 $42,067 15.8 %
Other revenue334 279 20.0 652 523 24.8 
Total revenue25,160 22,975 9.5 49,357 42,590 15.9 
Cost of sales17,280 15,673 10.3 33,996 30,183 12.6 
Selling, general and administrative expenses
4,849 4,460 8.8 9,358 8,520 9.8 
Depreciation and amortization (exclusive of depreciation included in cost of sales)
564 542 4.0 1,162 1,119 3.9 
Operating income
2,467 2,300 7.2 4,841 2,768 74.9 
Net interest expense104 122 (15.5)212 239 (11.7)
Net other (income) / expense(7)(11)(31.3)(350)11 
NM(a)
Earnings before income taxes
2,370 2,189 8.3 4,979 2,518 97.7 
Provision for income taxes553 499 11.3 1,065 544 95.9 
Net earnings $1,817 $1,690 7.4 %$3,914 $1,974 98.2 %
Basic earnings per share
$3.68 $3.38 9.0 %$7.89 $3.94 100.1 %
Diluted earnings per share
$3.65 $3.35 8.9 %$7.82 $3.91 100.1 %
Weighted average common shares outstanding
  
Basic493.1 500.1 (1.4)%495.8 500.6 (0.9)%
Diluted497.5 504.4 (1.4)%500.4 505.1 (0.9)%
Antidilutive shares— — — — 
Dividends declared per share$0.90 $0.68 32.4 %$1.58 $1.34 17.9 %
(a)Not meaningful.


Target Corporation Reports Second Quarter Earnings — Page 6 of 12

TARGET CORPORATION
 
Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)July 31, 2021January 30, 2021August 1, 2020
Assets
Cash and cash equivalents$7,368 $8,511 $7,284 
Inventory11,259 10,653 8,876 
Other current assets1,604 1,592 1,463 
Total current assets20,231 20,756 17,623 
Property and equipment
Land6,148 6,141 6,027 
Buildings and improvements32,133 31,557 30,946 
Fixtures and equipment5,892 5,914 5,665 
Computer hardware and software2,260 2,765 2,631 
Construction-in-progress944 780 811 
Accumulated depreciation(20,133)(20,278)(19,341)
Property and equipment, net27,244 26,879 26,739 
Operating lease assets2,503 2,227 2,233 
Other noncurrent assets1,407 1,386 1,405 
Total assets$51,385 $51,248 $48,000 
Liabilities and shareholders’ investment
Accounts payable$12,632 $12,859 $10,726 
Accrued and other current liabilities5,600 6,122 5,057 
Current portion of long-term debt and other borrowings1,190 1,144 109 
Total current liabilities19,422 20,125 15,892 
Long-term debt and other borrowings11,589 11,536 14,188 
Noncurrent operating lease liabilities2,462 2,218 2,241 
Deferred income taxes1,146 990 1,121 
Other noncurrent liabilities1,906 1,939 1,980 
Total noncurrent liabilities17,103 16,683 19,530 
Shareholders’ investment
Common stock41 42 42 
Additional paid-in capital6,332 6,329 6,248 
Retained earnings9,200 8,825 7,121 
Accumulated other comprehensive loss(713)(756)(833)
Total shareholders’ investment14,860 14,440 12,578 
Total liabilities and shareholders’ investment$51,385 $51,248 $48,000 
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 489,651,196, 500,877,129 and 500,252,831 shares issued and outstanding as of July 31, 2021, January 30, 2021, and August 1, 2020, respectively.
 
Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.


Target Corporation Reports Second Quarter Earnings — Page 7 of 12

TARGET CORPORATION
 
Consolidated Statements of Cash Flows
 Six Months Ended
(millions) (unaudited)July 31, 2021August 1, 2020
Operating activities  
Net earnings $3,914 $1,974 
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization1,300 1,245 
Share-based compensation expense138 104 
Deferred income taxes143 (12)
Gain on Dermstore sale(335)— 
Noncash losses / (gains) and other, net 86 
Changes in operating accounts:  
Inventory(606)116 
Other assets(14)
Accounts payable(311)795 
Accrued and other liabilities(831)822 
Cash provided by operating activities3,422 5,116 
Investing activities  
Expenditures for property and equipment(1,338)(1,414)
Proceeds from disposal of property and equipment15 10 
Proceeds from Dermstore sale 356 — 
Other investments(5)
Cash required for investing activities(972)(1,402)
Financing activities  
Additions to long-term debt— 2,480 
Reductions of long-term debt(72)(126)
Dividends paid(676)(662)
Repurchase of stock(2,850)(706)
Stock option exercises
Cash (required for) / provided by financing activities(3,593)993 
Net (decrease) / increase in cash and cash equivalents(1,143)4,707 
Cash and cash equivalents at beginning of period8,511 2,577 
Cash and cash equivalents at end of period$7,368 $7,284 



Target Corporation Reports Second Quarter Earnings — Page 8 of 12

TARGET CORPORATION
 
Operating Results

Rate AnalysisThree Months EndedSix Months Ended
(unaudited)July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Gross margin rate30.4 %30.9 %30.2 %28.3 %
SG&A expense rate19.3 19.4 19.0 20.0 
Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate
2.2 2.4 2.4 2.6 
Operating income margin rate9.8 10.0 9.8 6.5 
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 $172 million and $343 million of profit-sharing income under our credit card program agreement for the three and six months ended July 31, 2021, respectively, and $158 million and $324 million for the three and six months ended August 1, 2020, respectively.

Comparable SalesThree Months EndedSix Months Ended
(unaudited)July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Comparable sales change8.9 %24.3 %15.3 %17.7 %
Drivers of change in comparable sales
Number of transactions12.7 4.6 14.8 1.6 
Average transaction amount(3.4)18.8 0.5 15.8 

Comparable Sales by ChannelThree Months EndedSix Months Ended
(unaudited)July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Stores originated comparable sales change8.7 %10.9 %13.0 %6.0 %
Digitally originated comparable sales change9.9 195.4 27.3 168.9 
 
Sales by ChannelThree Months EndedSix Months Ended
(unaudited)July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Stores originated83.0 %82.8 %82.3 %83.7 %
Digitally originated17.0 17.2 17.7 16.3 
Total100 %100 %100 %100 %

Sales by Fulfillment ChannelThree Months EndedSix Months Ended
(unaudited)July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Stores 96.6 %96.0 %96.4 %96.3 %
Other3.4 4.0 3.6 3.7 
Total100 %100 %100 %100 %
Note: Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Shipt.

RedCard PenetrationThree Months EndedSix Months Ended
(unaudited)July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Target Debit Card11.6 %11.8 %11.9 %12.2 %
Target Credit Cards8.7 8.7 8.6 9.2 
Total RedCard Penetration20.3 %20.5 %20.4 %21.4 %
Note: Amounts may not foot due to rounding.


Target Corporation Reports Second Quarter Earnings — Page 9 of 12

 
Number of Stores and Retail Square FeetNumber of Stores
Retail Square Feet (a)
(unaudited)July 31,
2021
January 30,
2021
August 1,
2020
July 31,
2021
January 30,
2021
August 1,
2020
170,000 or more sq. ft.273 273 272 48,798 48,798 48,613 
50,000 to 169,999 sq. ft.1,510 1,509 1,505 189,624 189,508 189,224 
49,999 or less sq. ft.126 115 94 3,709 3,342 2,745 
Total1,909 1,897 1,871 242,131 241,648 240,582 
(a)In thousands, reflects total square feet less office, distribution center, and vacant space.



Target Corporation Reports Second Quarter Earnings — Page 10 of 12

TARGET CORPORATION
 
Reconciliation of Non-GAAP Financial Measures
 
To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share (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 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. 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, limiting the usefulness of the measure for comparisons with other companies.
 
Reconciliation of Non-GAAP
Adjusted EPS
Three Months Ended
July 31, 2021August 1, 2020
(millions, except per share data) (unaudited)PretaxNet of TaxPer SharePretaxNet of TaxPer ShareChange
GAAP diluted earnings per share
$3.65 $3.35 8.9 %
Adjustments
Gain on investment (a)
$— $— $— $(9)$(6)$(0.01)
Other (b)
(5)(4)(0.01)25 18 0.04 
Adjusted diluted earnings per share
$3.64 $3.38 7.9 %

Reconciliation of Non-GAAP
Adjusted EPS
Six Months Ended
July 31, 2021August 1, 2020
(millions, except per share data) (unaudited)PretaxNet of TaxPer SharePretaxNet of TaxPer ShareChange
GAAP diluted earnings per share
$7.82 $3.91 100.1 %
Adjustments
Gain on Dermstore sale$(335)$(269)$(0.54)$— $— $— 
Loss on investment (a)
— — — 12 0.02 
Other (b)
36 27 0.05 25 18 0.04 
Adjusted diluted earnings per share
$7.34 $3.96 85.1 %
Note: Amounts may not foot due to rounding.
(a)Represented a (gain) / loss on our investment in Casper Sleep Inc., which was not core to our operations. We sold this investment during the fourth quarter of 2020.
(b)Includes civil unrest-related losses, net of associated insurance recoveries, and headquarters office space impairments, none of which were individually significant.




Target Corporation Reports Second Quarter Earnings — Page 11 of 12

Earnings before interest expense and income taxes (EBIT) and earnings 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 to, GAAP. The most comparable GAAP measure is net earnings. 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 EBITDAThree Months Ended Six Months Ended 
(dollars in millions) (unaudited)July 31, 2021August 1, 2020ChangeJuly 31, 2021August 1, 2020Change
Net earnings $1,817 $1,690 7.4 %$3,914 $1,974 98.2 %
 + Provision for income taxes553 499 11.3 1,065 544 95.9 
 + Net interest expense104 122 (15.5)212 239 (11.7)
EBIT
$2,474 $2,311 7.1 %$5,191 $2,757 88.2 %
 + Total depreciation and amortization (a)
633 604 4.9 1,300 1,245 4.5 
EBITDA
$3,107 $2,915 6.6 %$6,491 $4,002 62.2 %
(a)Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.


Target Corporation Reports Second Quarter Earnings — Page 12 of 12

We have also disclosed after-tax 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) (unaudited)
Trailing Twelve Months
Numerator
July 31, 2021August 1, 2020
Operating income
$8,611 $4,968 
 + Net other income / (expense)
346 (28)
EBIT
8,957 4,940 
 + Operating lease interest (a)
84 87 
  - Income taxes (b)
1,918 1,076 
Net operating profit after taxes$7,123 $3,951 

Denominator
July 31, 2021August 1, 2020August 3, 2019
Current portion of long-term debt and other borrowings$1,190 $109 $1,153 
 + Noncurrent portion of long-term debt11,589 14,188 10,365 
 + Shareholders' investment14,860 12,578 11,836 
 + Operating lease liabilities (c)
2,695 2,448 2,285 
  - Cash and cash equivalents
7,368 7,284 1,656 
Invested capital$22,966 $22,039 $23,983 
Average invested capital (d)
$22,502 $23,011 
After-tax return on invested capital
31.7 %17.2 %
(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, which were 21.2 percent and 21.4 percent for the trailing twelve months ended July 31, 2021, and August 1, 2020, respectively. For the twelve months ended July 31, 2021, and August 1, 2020, includes tax effect of $1.9 billion and $1.1 billion, respectively, related to EBIT, and $18 million and $19 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, respectively.
(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.