tgt-20220518
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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) May 18, 2022

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 May 18, 2022, Target Corporation issued a News Release containing its financial results for the three months ended April 30, 2022. 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: May 18, 2022/s/ Michael J. Fiddelke
 Michael J. Fiddelke
 Executive Vice President and Chief Financial Officer

2
Document

Exhibit (99)
https://cdn.kscope.io/f7d176b9dcb52e5619f55c947b20ea25-releasebullseyeq419a.gif

FOR IMMEDIATE RELEASE
Contacts:John Hulbert, Investors, (612) 761-6627
 
Joe Poulos, Media, (612) 761-0042
 Target Media Hotline, (612) 696-3400

Target Corporation Reports First Quarter Earnings

Comparable sales grew 3.3 percent, on top of 22.9 percent growth last year.
Comparable sales growth reflected traffic growth of 3.9 percent.
Store comparable sales increased 3.4 percent, on top of 18.0 percent growth last year.
Digital comparable sales grew 3.2 percent, following growth of 50.2 percent last year.
Same-day services (Order Pickup, Drive Up and Shipt) grew 8 percent this year, led by Drive Up, which grew in the mid-teens on top of more than 120 percent last year.
More than 95 percent of Target’s first quarter sales were fulfilled by its stores.
Sales growth was led by frequently-purchased categories, including Food & Beverage, Beauty, and Household Essentials.
Operating margin rate of 5.3 percent was well below expectations, driven primarily by gross margin pressure reflecting actions to reduce excess inventory as well as higher freight and transportation costs.

For additional media materials, please visit:
https://corporate.target.com/article/2022/05/q1-2022-earnings

MINNEAPOLIS (May 18, 2022) – Target Corporation (NYSE: TGT) today announced its first quarter 2022 financial results, which reflected continued topline growth on top of unprecedented increases over the last two years. The Company reported first quarter GAAP earnings per share (EPS) of $2.16, down 48.2 percent from $4.17 in 2021. First quarter Adjusted EPS1 of $2.19 decreased 40.7 percent compared with $3.69 in 2021. 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 First Quarter Earnings — Page 2 of 11
“Our first-quarter results mark Target’s 20th-consecutive quarter of sales growth, with comp sales growing more than 3 percent on top of a 23 percent increase one year ago," said Brian Cornell, chairman and chief executive officer of Target Corporation. "Guests continue to depend on Target for our broad and affordable product assortment, as reflected in Q1 guest traffic growth of nearly 4 percent. Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time. Despite these near-term challenges, our team remains passionately dedicated to our guests and serving their needs, giving us continued confidence in our long-term financial algorithm, which anticipates mid-single digit revenue growth, and an operating margin rate of 8 percent or higher over time.”

Fiscal 2022 Guidance
For second quarter 2022, the Company expects its operating income margin rate will be in a wide range centered around first quarter's operating margin rate of 5.3 percent.
For full-year 2022, the Company continues to expect low- to mid- single digit revenue growth. The Company now expects its full-year operating income margin rate will be in a range centered around 6 percent.

Operating Results
Comparable sales grew 3.3 percent in the first quarter, reflecting comparable store sales growth of 3.4 percent and comparable digital sales growth of 3.2 percent. Total revenue of $25.2 billion grew 4.0 percent compared with last year, reflecting total sales growth of 4.0 percent and a 6.7 percent increase in other revenue. Operating income was $1.3 billion in first quarter 2022, down 43.3 percent from $2.4 billion in 2021, driven primarily by a decline in the Company's gross margin rate.
First quarter operating income margin rate was 5.3 percent in 2022, compared with 9.8 percent in 2021. First quarter gross margin rate was 25.7 percent, compared with 30.0 percent in 2021. This year's gross margin rate reflected higher markdown rates, driven largely by inventory impairments and actions taken to address lower-than-expected sales in discretionary categories, as well as costs related to freight, supply chain disruptions, and increased compensation and headcount in our distribution centers. First quarter SG&A expense rate was 18.9 percent in 2022, compared with 18.6 percent in 2021, reflecting the net impact of cost increases across our business, including investments in hourly team member wages, partially offset by lower incentive compensation expense.

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Target Corporation Reports First Quarter Earnings — Page 3 of 11
Interest Expense and Taxes
The Company’s first quarter 2022 net interest expense was $112 million, in line with $108 million last year.
First quarter 2022 effective income tax rate was 19.2 percent, in line with the prior year rate of 19.6 percent.

Capital Deployment and Return on Invested Capital
The Company paid dividends of $424 million in the first quarter, compared with $340 million last year, reflecting a 32.4 percent increase in the dividend per share, partially offset by a decline in average share count.
During the first quarter of 2022, the Company entered into an Accelerated Share Repurchase (ASR) arrangement for up to $2.75 billion of common stock, with final settlement outstanding as of the end of the first quarter.
Additionally, the Company repurchased $10.0 million worth of its shares in first quarter 2022, retiring 0.1 million shares of common stock at an average price of $208.60. As of the end of the first quarter, excluding the outstanding ASR of $2.75 billion, the Company had approximately $12.3 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in August 2021.
For the trailing twelve months through first quarter 2022, after-tax return on invested capital (ROIC) was 25.3 percent, compared with 30.7 percent for the trailing twelve months through first quarter 2021. The decrease in ROIC was driven primarily by lower profitability in first quarter 2022. The tables in this release provide additional information about the Company’s ROIC calculation.
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Target Corporation Reports First Quarter Earnings — Page 4 of 11
Webcast Details
Target will webcast its first 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 1-800-391-9853.

Miscellaneous
Statements in this release regarding second quarter 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 29, 2022. 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 nearly 2,000 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. For the latest store count or more information, visit Target.com/Pressroom. For a behind-the-scenes look at Target, visit Target.com/abullseyeview or follow @TargetNews on Twitter.

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Target Corporation Reports First Quarter Earnings — Page 5 of 11

TARGET CORPORATION
 
Consolidated Statements of Operations
 Three Months Ended 
(millions, except per share data) (unaudited)April 30, 2022May 1, 2021Change
Sales $24,830 $23,879 4.0 %
Other revenue340 318 6.7 
Total revenue25,170 24,197 4.0 
Cost of sales18,461 16,716 10.4 
Selling, general and administrative expenses
4,762 4,509 5.6 
Depreciation and amortization (exclusive of depreciation included in cost of sales)
601 598 0.3 
Operating income
1,346 2,374 (43.3)
Net interest expense112 108 3.8 
Net other (income) / expense(15)(343)(95.7)
Earnings before income taxes
1,249 2,609 (52.1)
Provision for income taxes240 512 (53.1)
Net earnings $1,009 $2,097 (51.9)%
Basic earnings per share
$2.17 $4.20 (48.3)%
Diluted earnings per share
$2.16 $4.17 (48.2)%
Weighted average common shares outstanding
Basic464.0 498.6 (6.9)%
Diluted467.8 503.4 (7.1)%
Antidilutive shares— — 
Dividends declared per share$0.90 $0.68 32.4 %



Target Corporation Reports First Quarter Earnings — Page 6 of 11

TARGET CORPORATION
 
Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)April 30, 2022January 29, 2022May 1, 2021
Assets
Cash and cash equivalents$1,112 $5,911 $7,816 
Inventory15,083 13,902 10,539 
Other current assets1,758 1,760 1,576 
Total current assets17,953 21,573 19,931 
Property and equipment
Land6,164 6,164 6,146 
Buildings and improvements33,300 32,985 31,710 
Fixtures and equipment6,459 6,407 5,496 
Computer hardware and software2,588 2,505 2,256 
Construction-in-progress1,444 1,257 973 
Accumulated depreciation(21,285)(21,137)(19,777)
Property and equipment, net28,670 28,181 26,804 
Operating lease assets2,571 2,556 2,362 
Other noncurrent assets1,648 1,501 1,374 
Total assets$50,842 $53,811 $50,471 
Liabilities and shareholders’ investment
Accounts payable$14,053 $15,478 $11,637 
Accrued and other current liabilities5,582 6,098 5,788 
Current portion of long-term debt and other borrowings1,089 171 1,173 
Total current liabilities20,724 21,747 18,598 
Long-term debt and other borrowings13,379 13,549 11,509 
Noncurrent operating lease liabilities2,581 2,493 2,337 
Deferred income taxes1,752 1,566 1,169 
Other noncurrent liabilities1,632 1,629 1,899 
Total noncurrent liabilities19,344 19,237 16,914 
Shareholders’ investment
Common stock39 39 41 
Additional paid-in capital5,592 6,421 6,271 
Retained earnings5,495 6,920 9,372 
Accumulated other comprehensive loss(352)(553)(725)
Total shareholders’ investment10,774 12,827 14,959 
Total liabilities and shareholders’ investment$50,842 $53,811 $50,471 
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 463,683,711, 471,274,073 and 496,093,160 shares issued and outstanding as of April 30, 2022, January 29, 2022, and May 1, 2021, 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 First Quarter Earnings — Page 7 of 11

TARGET CORPORATION
 
Consolidated Statements of Cash Flows
 Three Months Ended
(millions) (unaudited)April 30, 2022May 1, 2021
Operating activities  
Net earnings $1,009 $2,097 
Adjustments to reconcile net earnings to cash (required for) provided by operating activities:
Depreciation and amortization679 667 
Share-based compensation expense83 79 
Deferred income taxes115 170 
Gain on Dermstore sale— (335)
Noncash losses / (gains) and other, net 52 (30)
Changes in operating accounts:  
Inventory(1,181)114 
Other assets(86)(5)
Accounts payable(1,560)(1,205)
Accrued and other liabilities(505)(413)
Cash (required for) provided by operating activities(1,394)1,139 
Investing activities  
Expenditures for property and equipment(952)(540)
Proceeds from disposal of property and equipment12 
Proceeds from Dermstore sale — 356 
Other investments
Cash required for investing activities(948)(165)
Financing activities  
Change in commercial paper, net945 — 
Reductions of long-term debt(48)(21)
Dividends paid(424)(340)
Repurchase of stock(181)(1,310)
Accelerated share repurchase pending final settlement(2,750)— 
Stock option exercises
Cash required for financing activities(2,457)(1,669)
Net decrease in cash and cash equivalents(4,799)(695)
Cash and cash equivalents at beginning of period5,911 8,511 
Cash and cash equivalents at end of period$1,112 $7,816 



Target Corporation Reports First Quarter Earnings — Page 8 of 11

TARGET CORPORATION
 
Operating Results

Rate AnalysisThree Months Ended
(unaudited)April 30, 2022May 1, 2021
Gross margin rate25.7 %30.0 %
SG&A expense rate18.9 18.6 
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)
2.4 2.5 
Operating income margin rate5.3 9.8 
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 $185 million and $171 million of profit-sharing income under our credit card program agreement for the three months ended April 30, 2022 and May 1, 2021, respectively.

Comparable SalesThree Months Ended
(unaudited)April 30, 2022May 1, 2021
Comparable sales change3.3 %22.9 %
Drivers of change in comparable sales
Number of transactions (traffic)3.9 17.1 
Average transaction amount(0.6)5.0 

Comparable Sales by ChannelThree Months Ended
(unaudited)April 30, 2022May 1, 2021
Stores originated comparable sales change3.4 %18.0 %
Digitally originated comparable sales change3.2 50.2 
 
Sales by ChannelThree Months Ended
(unaudited)April 30, 2022May 1, 2021
Stores originated81.8 %81.7 %
Digitally originated18.2 18.3 
Total100 %100 %

Sales by Fulfillment ChannelThree Months Ended
(unaudited)April 30, 2022May 1, 2021
Stores 96.5 %96.3 %
Other3.5 3.7 
Total100 %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 Ended
(unaudited)April 30, 2022May 1, 2021
Target Debit Card11.6 %12.1 %
Target Credit Cards8.7 8.4 
Total RedCard Penetration20.3 %20.5 %
Note: Amounts may not foot due to rounding.


Target Corporation Reports First Quarter Earnings — Page 9 of 11

 
Number of Stores and Retail Square FeetNumber of Stores
Retail Square Feet (a)
(unaudited)April 30,
2022
January 29,
2022
May 1,
2021
April 30,
2022
January 29,
2022
May 1,
2021
170,000 or more sq. ft.274 274 273 49,071 49,071 48,798 
50,000 to 169,999 sq. ft.1,519 1,516 1,510 190,461 190,205 189,618 
49,999 or less sq. ft.140 136 126 4,147 4,008 3,690 
Total1,933 1,926 1,909 243,679 243,284 242,106 
(a)In thousands; reflects total square feet less office, distribution center, and vacant space.



Target Corporation Reports First Quarter Earnings — Page 10 of 11

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, 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
April 30, 2022May 1, 2021
(millions, except per share data) (unaudited)PretaxNet of TaxPer SharePretaxNet of TaxPer ShareChange
GAAP diluted earnings per share
$2.16 $4.17 (48.2)%
Adjustments
Gain on Dermstore sale$— $— $— $(335)$(269)$(0.53)
Other (a)
20 15 0.03 41 30 0.06 
Adjusted diluted earnings per share
$2.19 $3.69 (40.7)%
Note: Amounts may not foot due to rounding.
(a)Other items unrelated to current period operations, none of which were individually significant.

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 
(dollars in millions) (unaudited)April 30, 2022May 1, 2021Change
Net earnings $1,009 $2,097 (51.9)%
 + Provision for income taxes240 512 (53.1)
 + Net interest expense112 108 3.8 
EBIT
$1,361 $2,717 (49.9)%
 + Total depreciation and amortization (a)
679 667 1.8 
EBITDA
$2,040 $3,384 (39.7)%
(a)Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.


Target Corporation Reports First Quarter Earnings — Page 11 of 11

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
April 30, 2022May 1, 2021
Operating income
$7,918 $8,444 
 + Net other income / (expense)
55 350 
EBIT
7,973 8,794 
 + Operating lease interest (a)
87 85 
  - Income taxes (b)
1,804 1,864 
Net operating profit after taxes$6,256 $7,015 

Denominator
April 30, 2022May 1, 2021May 2, 2020
Current portion of long-term debt and other borrowings$1,089 $1,173 $168 
 + Noncurrent portion of long-term debt13,379 11,509 14,073 
 + Shareholders' investment10,774 14,959 11,169 
 + Operating lease liabilities (c)
2,854 2,563 2,448 
  - Cash and cash equivalents
1,112 7,816 4,566 
Invested capital$26,984 $22,388 $23,292 
Average invested capital (d)
$24,686 $22,840 
After-tax return on invested capital
25.3 %30.7 %
(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, which were 22.4 percent and 21.0 percent for the trailing twelve months ended April 30, 2022, and May 1, 2021, respectively. For the twelve months ended April 30, 2022, and May 1, 2021, includes tax effect of $1.8 billion related to EBIT, and $19 million and $18 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.