Enhanced Investments - Financial Portal

Published: 2023-11-22 00:00:00 ET

tgt-20231028



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 28, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number 1-6049

TARGET CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of incorporation or organization)

1000 Nicollet Mall, Minneapolis, Minnesota

(Address of principal executive offices)

41-0215170

(I.R.S. Employer Identification No.)

55403

(Zip Code)

612-304-6073

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0833 per share

TGT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Total shares of common stock, par value $0.0833, outstanding at November 17, 2023, were 461,661,800.


						Table of Contents
						Index to Notes

TARGET CORPORATION

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Operations	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Financial Position	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of Shareholders’ Investment	5
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

Signatures		26


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Consolidated Statements of Operations
	Three Months Ended				Nine Months Ended
(millions, except per share data) (unaudited)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Sales	$	25,004	$	26,122	$	74,336	$	76,605
Other revenue	394		396		1,157		1,120
Total revenue	25,398		26,518		75,493		77,725
Cost of sales	18,149		19,680		54,333		58,283
Selling, general and administrative expenses	5,316		5,219		15,525		14,983
Depreciation and amortization (exclusive of depreciation included in cost of sales)	616		597		1,793		1,770
Operating income	1,317		1,022		3,842		2,689
Net interest expense	107		125		395		349
Net other income	(25)		(12)		(64)		(35)
Earnings before income taxes	1,235		909		3,511		2,375
Provision for income taxes	264		197		755		471


Net earnings	$	971	$	712	$	2,756	$	1,904



Basic earnings per share	$	2.10	$	1.55	$	5.97	$	4.11



Diluted earnings per share	$	2.10	$	1.54	$	5.96	$	4.09
Weighted average common shares outstanding
Basic	461.6		460.3		461.4		462.6
Diluted	462.6		462.5		462.7		465.3
Antidilutive shares	3.0		1.3		2.6		1.1

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q3 2023 Form 10-Q			1


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Comprehensive Income
	Three Months Ended				Nine Months Ended
(millions) (unaudited)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net earnings	$	971	$	712	$	2,756	$	1,904
Other comprehensive income, net of tax
Pension benefit liabilities	—		11		3		33
Cash flow hedges and currency translation adjustment	(5)		150		(14)		312
Other comprehensive income (loss)	(5)		161		(11)		345
Comprehensive income	$	966	$	873	$	2,745	$	2,249

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q3 2023 Form 10-Q			2


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)	October 28, 2023		January 28, 2023		October 29, 2022
Assets
Cash and cash equivalents	$	1,910	$	2,229	$	954
Inventory	14,731		13,499		17,117
Other current assets	1,958		2,118		2,322
Total current assets	18,599		17,846		20,393
Property and equipment
Land	6,520		6,231		6,214
Buildings and improvements	36,627		34,746		34,279
Fixtures and equipment	8,490		7,439		7,184
Computer hardware and software	3,312		3,039		2,899
Construction-in-progress	2,000		2,688		2,358
Accumulated depreciation	(23,781)		(22,631)		(22,013)
Property and equipment, net	33,168		31,512		30,921
Operating lease assets	3,086		2,657		2,596
Other noncurrent assets	1,376		1,320		1,705
Total assets	$	56,229	$	53,335	$	55,615
Liabilities and shareholders’ investment
Accounts payable	$	14,291	$	13,487	$	15,438
Accrued and other current liabilities	6,099		5,883		6,138
Current portion of long-term debt and other borrowings	1,112		130		2,207
Total current liabilities	21,502		19,500		23,783
Long-term debt and other borrowings	14,883		16,009		14,237
Noncurrent operating lease liabilities	3,031		2,638		2,590
Deferred income taxes	2,447		2,196		2,240
Other noncurrent liabilities	1,852		1,760		1,746
Total noncurrent liabilities	22,213		22,603		20,813
Shareholders’ investment
Common stock	38		38		38
Additional paid-in capital	6,681		6,608		6,558
Retained earnings	6,225		5,005		4,631
Accumulated other comprehensive loss	(430)		(419)		(208)
Total shareholders’ investment	12,514		11,232		11,019
Total liabilities and shareholders’ investment	$	56,229	$	53,335	$	55,615

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 461,651,176, 460,346,947, and 460,297,654 shares issued and outstanding as of October 28, 2023, January 28, 2023, and October 29, 2022, 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						Q3 2023 Form 10-Q			3


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Cash Flows
	Nine Months Ended
(millions) (unaudited)	October 28, 2023		October 29, 2022
Operating activities
Net earnings	$	2,756	$	1,904


Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization	2,072		2,004
Share-based compensation expense	176		177
Deferred income taxes	252		548

Noncash losses / (gains) and other, net	101		141
Changes in operating accounts:
Inventory	(1,232)		(3,215)
Other assets	(208)		(205)
Accounts payable	887		(224)
Accrued and other liabilities	528		(578)


Cash provided by operating activities	5,332		552
Investing activities
Expenditures for property and equipment	(3,952)		(4,323)
Proceeds from disposal of property and equipment	24		4
Other investments	18		16
Cash required for investing activities	(3,910)		(4,303)
Financing activities
Change in commercial paper, net	—		2,104
Additions to long-term debt	—		991
Reductions of long-term debt	(114)		(139)
Dividends paid	(1,503)		(1,339)
Repurchase of stock	—		(2,646)

Shares withheld for taxes on share-based compensation	(124)		(179)
Stock option exercises	—		2
Cash required for financing activities	(1,741)		(1,206)
Net decrease in cash and cash equivalents	(319)		(4,957)
Cash and cash equivalents at beginning of period	2,229		5,911
Cash and cash equivalents at end of period	$	1,910	$	954
Supplemental information
Leased assets obtained in exchange for new finance lease liabilities	$	86	$	116
Leased assets obtained in exchange for new operating lease liabilities	679		203

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q3 2023 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) / Income		Total
January 29, 2022	471.3	$	39	$	6,421	$	6,920	$	(553)	$	12,827
Net earnings	—	—		—		1,009		—		1,009
Other comprehensive income	—	—		—		—		201		201
Dividends declared	—	—		—		(426)		—		(426)
Repurchase of stock	(0.1)	—		—		(10)		—		(10)
Accelerated share repurchase pending final settlement	(8.9)	(1)		(751)		(1,998)		—		(2,750)
Stock options and awards	1.4	1		(78)		—		—		(77)
April 30, 2022	463.7	$	39	$	5,592	$	5,495	$	(352)	$	10,774
Net earnings	—	—		—		183		—		183
Other comprehensive loss	—	—		—		—		(17)		(17)
Dividends declared	—	—		—		(502)		—		(502)
Repurchase of stock	(3.6)	(1)		870		(755)		—		114
Stock options and awards	0.1	—		40		—		—		40
July 30, 2022	460.2	$	38	$	6,502	$	4,421	$	(369)	$	10,592
Net earnings	—	—		—		712		—		712
Other comprehensive income	—	—		—		—		161		161
Dividends declared	—	—		—		(502)		—		(502)


Stock options and awards	0.1	—		56		—		—		56
October 29, 2022	460.3	$	38	$	6,558	$	4,631	$	(208)	$	11,019
Net earnings	—	—		—		876		—		876
Other comprehensive loss	—	—		—		—		(211)		(211)
Dividends declared	—	—		—		(502)		—		(502)

Stock options and awards	—	—		50		—		—		50
January 28, 2023	460.3	$	38	$	6,608	$	5,005	$	(419)	$	11,232


TARGET CORPORATION						Q3 2023 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) / Income		Total
January 28, 2023	460.3	$	38	$	6,608	$	5,005	$	(419)	$	11,232
Net earnings	—	—		—		950		—		950
Other comprehensive loss	—	—		—		—		(3)		(3)
Dividends declared	—	—		—		(507)		—		(507)


Stock options and awards	1.3	—		(67)		—		—		(67)
April 29, 2023	461.6	$	38	$	6,541	$	5,448	$	(422)	$	11,605
Net earnings	—	—		—		835		—		835
Other comprehensive loss	—	—		—		—		(3)		(3)
Dividends declared	—	—		—		(516)		—		(516)

Stock options and awards	—	—		69		—		—		69
July 29, 2023	461.6	$	38	$	6,610	$	5,767	$	(425)	$	11,990
Net earnings	—	—		—		971		—		971
Other comprehensive loss	—	—		—		—		(5)		(5)
Dividends declared	—	—		—		(513)		—		(513)

Stock options and awards	0.1	—		71		—		—		71
October 28, 2023	461.7	$	38	$	6,681	$	6,225	$	(430)	$	12,514

We declared $1.10 and $1.08 dividends per share for the three months ended October 28, 2023 and October 29, 2022, respectively, and $4.14 per share for the fiscal year ended January 28, 2023.

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q3 2023 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	Revenue	9
Note 3	Fair Value Measurements	10
Note 4	Supplier Finance Programs	10
Note 5	Property and Equipment	11
Note 6	Commercial Paper and Long-Term Debt	11
Note 7	Derivative Financial Instruments	11
Note 8	Share Repurchase	12
Note 9	Pension Benefits	12
Note 10	Accumulated Other Comprehensive Income (Loss)	13


TARGET CORPORATION						Q3 2023 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 generally accepted accounting principles (U.S. 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 is 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						Q3 2023 Form 10-Q			8


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

2. Revenue

Merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably credit card profit-sharing income from our arrangement with TD Bank Group (TD).


Revenue	Three Months Ended				Nine Months Ended
(millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Apparel & accessories (a)	$	4,007	$	4,367	$	12,075	$	13,223
Beauty & household essentials (b)	7,619		7,465		22,814		21,726
Food & beverage (c)	5,736		5,748		17,125		16,521
Hardlines (d)	3,192		3,665		9,966		11,244
Home furnishings & décor (e)	4,420		4,832		12,230		13,750
Other	30		45		126		141
Sales	25,004		26,122		74,336		76,605

Credit card profit sharing	165		184		508		550
Other	229		212		649		570
Other revenue	394		396		1,157		1,120

Total revenue	$	25,398	$	26,518	$	75,493	$	77,725

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

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

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

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

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

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 October 28, 2023, January 28, 2023, and October 29, 2022, the accrual for estimated returns was $207 million, $174 million, and $209 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 28, 2023		Gift Cards Issued During Current Period But Not Redeemed (b)		Revenue Recognized From Beginning Liability		October 28, 2023
(millions)
Gift card liability (a)	$	1,240	$	466	$	(796)	$	910

(a)Included in Accrued and Other Current Liabilities.

(b)Net of estimated breakage.


TARGET CORPORATION						Q3 2023 Form 10-Q			9


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

Other Revenue

Credit card profit sharing — We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance.

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

3. 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	October 28, 2023		January 28, 2023		October 29, 2022
Assets
Short-term investments	Cash and Cash Equivalents	Level 1	$	1,004	$	1,343	$	—
Prepaid forward contracts	Other Current Assets	Level 1	18		27		27

Interest rate swaps	Other Current Assets	Level 2	—		—		53
Interest rate swaps	Other Noncurrent Assets	Level 2	—		7		341
Liabilities
Interest rate swaps	Other Current Liabilities	Level 2	7		—		—
Interest rate swaps	Other Noncurrent Liabilities	Level 2	190		81		147


Significant Financial Instruments Not Measured at Fair Value (a) (millions)	October 28, 2023				January 28, 2023				October 29, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion (b)	$	14,149	$	12,485	$	14,141	$	13,688	$	12,505	$	11,291

(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 debt is generally measured using a discounted cash flow analysis based on current market interest rates for the same or similar types of financial instruments and would be classified as Level 2. These amounts exclude commercial paper, fair value hedge adjustments, and lease liabilities.

4. 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 sell their receivables from Target to the financial institutions. A vendor’s election to receive early payment at a discounted amount from the financial institutions 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 $4.5 billion, $3.4 billion, and $4.5 billion as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively, and are included within Accounts Payable on our Consolidated Statements of Financial Position. Our outstanding vendor obligations do not represent actual receivables sold by our vendors to the financial institutions, which may be lower.


TARGET CORPORATION						Q3 2023 Form 10-Q			10


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

5. Property and Equipment

We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable. We recognized impairment charges of $64 million and $98 million for the three and nine months ended October 28, 2023, respectively. We recognized impairment charges of $5 million and $55 million for the three and nine months ended October 29, 2022, respectively. These impairment charges are included in Selling, General and Administrative Expenses (SG&A).

6. Commercial Paper and Long-Term Debt

We obtain short-term financing from time to time under our commercial paper program. For the three months ended October 28, 2023, there were no commercial paper amounts outstanding. For the three months ended October 29, 2022, the maximum amount outstanding was $2.1 billion and the average daily amount outstanding was $1.1 billion, at a weighted average annual interest rate of 2.8 percent.

For the nine months ended October 28, 2023 and October 29, 2022, the maximum amounts outstanding were $90 million and $2.1 billion, respectively, and the average daily amounts outstanding were $1 million and $713 million, respectively, at a weighted average annual interest rate of 4.8 percent and 1.9 percent, respectively.

No balances were outstanding as of October 28, 2023. As of October 29, 2022, $2.1 billion was outstanding and is classified within Current Portion of Long-Term Debt and Other Borrowings on our Consolidated Statements of Financial Position.

In October 2023, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2024 and terminated our prior 364-day credit facility. We also exercised our option to extend our existing five-year unsecured revolving credit facility, which has a maximum committed capacity of $3.0 billion and now expires in October 2028. No balances were outstanding under either credit facility at any time during 2023 or 2022.

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 3 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 October 28, 2023, January 28, 2023, and October 29, 2022. 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 and nine months ended October 28, 2023 and October 29, 2022.

During 2023, we amended interest rate swaps with notional amounts totaling $1.5 billion to replace the London Interbank Offered Rate (LIBOR) with the daily Secured Overnight Financing Rate (SOFR) as part of our planned reference rate reform activities. These amendments did not result in any change to our application of hedge accounting or any impact to our consolidated financial statements.

We were party to forward-starting interest rate swaps with notional amounts totaling $1.45 billion as of October 29, 2022. During 2022, we terminated all remaining forward-starting interest rate swap agreements. The resulting gains upon termination were recorded in Accumulated Other Comprehensive Loss and will be recognized as a reduction to Net Interest Expense over the respective term of the debt.


TARGET CORPORATION						Q3 2023 Form 10-Q			11


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes


Effect of Hedges on Debt (millions)	October 28, 2023		January 28, 2023		October 29, 2022



Long-term debt and other borrowings
Carrying amount of hedged debt	$	2,245	$	2,366	$	2,294
Cumulative hedging adjustments, included in carrying amount	(197)		(74)		(146)


Effect of Hedges on Net Interest Expense	Three Months Ended				Nine Months Ended
(millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022


Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swaps designated as fair value hedges	$	(60)	$	(168)	$	(123)	$	(223)
Hedged debt	60		168		123		223
Gain on cash flow hedges recognized in Net Interest Expense	6		—		18		—
Total	$	6	$	—	$	18	$	—

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 (ASR) arrangements, and other privately negotiated transactions with financial institutions. We did not repurchase any of our shares during the nine months ended October 28, 2023.


Share Repurchase Activity	Three Months Ended				Nine Months Ended
(millions, except per share data)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Number of shares purchased	—		—		—		12.5
Average price paid per share	$	—	$	—	$	—	$	211.57
Total investment	$	—	$	—	$	—	$	2,646

9. Pension Benefits

We provide pension plan benefits to eligible team members.


Net Pension Benefits Expense		Three Months Ended				Nine Months Ended
(millions)	Classification	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Service cost benefits earned	SG&A	$	19	$	22	$	58	$	68
Interest cost on projected benefit obligation	Net Other Income	42		29		125		88
Expected return on assets	Net Other Income	(67)		(59)		(201)		(176)
Amortization of losses	Net Other Income	—		16		1		46
Prior service cost	Net Other Income	—		—		11		10

Total		$	(6)	$	8	$	(6)	$	36


TARGET CORPORATION						Q3 2023 Form 10-Q			12


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

10. Accumulated Other Comprehensive Income (Loss)


Change in Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges		Currency Translation Adjustment		Pension		Total
(millions)
January 28, 2023	$	300	$	(23)	$	(696)	$	(419)
Other comprehensive income (loss) before reclassifications, net of tax	—		(1)		—		(1)
Amounts reclassified from AOCI, net of tax	(13)		—		3		(10)
October 28, 2023	$	287	$	(24)	$	(693)	$	(430)


TARGET CORPORATION						Q3 2023 Form 10-Q			13


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			FINANCIAL SUMMARY			Index to Notes

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Summary

Third quarter 2023 included the following notable items:

•GAAP and Adjusted diluted earnings per share were $2.10.

•Total revenue was $25.4 billion, a decrease of 4.2 percent, reflecting a total sales decrease of 4.3 percent and a 0.6 percent decrease in other revenue.

•Comparable sales decreased 4.9 percent, reflecting a 4.1 percent decrease in traffic and a 0.8 percent decrease in average transaction amount.

◦Comparable stores-originated sales declined 4.6 percent.

◦Comparable digitally-originated sales declined 6.0 percent.

•Operating income of $1.3 billion was 28.9 percent higher than the comparable prior-year period. See Business Environment below for additional information.

Cash flow provided by operating activities was $5.3 billion for the nine months ended October 28, 2023, compared with $552 million for the nine months ended October 29, 2022. The drivers of the operating cash flow increase are described on page 21.


Earnings Per Share	Three Months Ended						Nine Months Ended
	October 28, 2023		October 29, 2022		Change		October 28, 2023		October 29, 2022		Change
GAAP diluted earnings per share	$	2.10	$	1.54	36.3	%	$	5.96	$	4.09	45.6	%
Adjustments	—		—				—		0.03
Adjusted diluted earnings per share	$	2.10	$	1.54	36.3	%	$	5.96	$	4.12	44.4	%

Note: Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 19.

We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital allocation effectiveness over time. For the trailing twelve months ended October 28, 2023, after-tax ROIC was 13.9 percent, compared with 14.6 percent for the trailing twelve months ended October 29, 2022. The calculation of ROIC is provided on page 20.

Business Environment

During the third quarter of 2023, we experienced sales declines across our business, primarily in each of our Discretionary categories (Apparel & Accessories, Hardlines, and Home Furnishings & Décor), partially offset by net growth in Frequency categories (Beauty & Household Essentials and Food & Beverage). The trend of decreased Discretionary category sales began in 2022. In response, during 2022, we took actions and employed strategies to align inventories with sales trends. These actions, as well as improvements in the supply chain, have resulted in decreased inventory as of October 28, 2023 compared with October 29, 2022. These actions and improvements have also resulted in a reduction in costs related to managing elevated inventory levels and reduced our working capital investment.

Along with supply chain improvements, we have experienced a significant decrease in freight costs due to a decline in freight rates compared to 2022. We have also experienced lower digital fulfillment costs due to a decrease in digital sales and an increased mix of digital sales fulfilled through lower-cost same-day services.

We continue to experience higher inventory shrink, as a percentage of sales, relative to historical levels — including significantly higher shrink rates at certain stores. We believe that this trend is pervasive across the retail industry. Increased shrink has had, and if current trends persist will continue to have, an adverse impact on our results of operations, including impairment of our long-lived assets. Note 5 to the Financial Statements provides more information on impairment charges, including those related to store closures.

The Gross Margin Rate analysis on page 17 and the Inventory section on page 21 provide additional information.


TARGET CORPORATION						Q3 2023 Form 10-Q			14


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			FINANCIAL SUMMARY			Index to Notes

Analysis of Results of Operations


Summary of Operating Income	Three Months Ended						Nine Months Ended
(dollars in millions)	October 28, 2023		October 29, 2022		Change		October 28, 2023		October 29, 2022		Change
Sales	$	25,004	$	26,122	(4.3)	%	$	74,336	$	76,605	(3.0)	%
Other revenue	394		396		(0.6)		1,157		1,120		3.3
Total revenue	25,398		26,518		(4.2)		75,493		77,725		(2.9)
Cost of sales	18,149		19,680		(7.8)		54,333		58,283		(6.8)
Selling, general and administrative expenses	5,316		5,219		1.8		15,525		14,983		3.6
Depreciation and amortization (exclusive of depreciation included in cost of sales)	616		597		3.2		1,793		1,770		1.3
Operating income	$	1,317	$	1,022	28.9	%	$	3,842	$	2,689	42.9	%


Rate Analysis	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Gross margin rate	27.4	%	24.7	%	26.9	%	23.9	%
SG&A expense rate	20.9		19.7		20.6		19.3
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)	2.4		2.3		2.4		2.3
Operating income margin rate	5.2		3.9		5.1		3.5

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.

Sales

Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage. We use comparable sales to evaluate the performance of our stores and digital channel sales by measuring the change in sales for a period over the comparable prior-year period of equivalent length. Comparable sales include all sales, except sales from stores open less than 13 months, digital acquisitions we have owned less than 13 months, stores that have been closed, and digital acquisitions that we no longer operate. Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies. Digitally originated sales include all sales initiated through mobile applications and our websites. Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pickup or Drive Up, and delivery via Shipt. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.

Sales growth—from both comparable sales and new stores—represents an important driver of our long-term profitability. We expect that comparable sales growth will drive the majority of our total sales growth. We believe that our ability to successfully differentiate our guests’ shopping experience through a careful combination of merchandise assortment, price, convenience, guest experience, and other factors will, over the long-term, drive both increasing shopping frequency (number of transactions, or "traffic") and the amount spent each visit (average transaction amount).


TARGET CORPORATION						Q3 2023 Form 10-Q			15


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF RESULTS OF OPERATIONS


Comparable Sales	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Comparable sales change	(4.9)	%	2.7	%	(3.5)	%	2.9	%
Drivers of change in comparable sales
Number of transactions (traffic)	(4.1)		1.4		(2.7)		2.6
Average transaction amount	(0.8)		1.3		(0.8)		0.2


Comparable Sales by Channel	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Stores originated comparable sales change	(4.6)	%	3.2	%	(2.8)	%	2.6	%
Digitally originated comparable sales change	(6.0)		0.3		(6.7)		4.1


Sales by Channel	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Stores originated	83.2	%	82.9	%	82.9	%	82.3	%
Digitally originated	16.8		17.1		17.1		17.7
Total	100	%	100	%	100	%	100	%


Sales by Fulfillment Channel	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Stores	97.7	%	96.8	%	97.5	%	96.7	%
Other	2.3		3.2		2.5		3.3
Total	100	%	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.


Sales by Product Category	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Apparel & accessories	16	%	17	%	16	%	17	%
Beauty & household essentials	30		29		31		28
Food & beverage	23		22		23		22
Hardlines	13		14		13		15
Home furnishings & décor	18		18		17		18
Total	100	%	100	%	100	%	100	%

Note 2 to the Financial Statements provides additional product category sales information. The collective interaction of a broad array of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix and the transfer of sales to new stores, makes further analysis of sales metrics infeasible.

We monitor the percentage of purchases that are paid for using RedCards (RedCard Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on RedCards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a RedCard at Target. For the three months ended October 28, 2023 and October 29, 2022, total RedCard Penetration was 18.3 percent and 19.6 percent, respectively. For the nine months ended October 28, 2023 and October 29, 2022, total RedCard Penetration was 18.6 percent and 20.0 percent, respectively.


TARGET CORPORATION						Q3 2023 Form 10-Q			16


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF RESULTS OF OPERATIONS

Gross Margin Rate

Quarter-to-Date

For the three months ended October 28, 2023, our gross margin rate was 27.4 percent compared with 24.7 percent in the comparable prior-year period. The increase reflected the net impact of

•merchandising benefit, including

◦lower freight costs; and

◦lower clearance and promotional markdown rates and other costs compared with the prior-year, which included the impact of inventory impairments and other actions;

•lower digital fulfillment and supply chain costs due to

◦a decrease in digital volume;

◦an increased mix of digital sales fulfilled through lower-cost same-day services; and

◦lower inventory levels;

•favorable category mix; and

•higher inventory shrink.

Year-to-Date

For the nine months ended October 28, 2023, our gross margin rate was 26.9 percent compared with 23.9 percent in the comparable prior-year period. The increase reflected the net impact of

•merchandising benefit, including

◦lower freight costs;

◦lower clearance and promotional markdown rates and other costs compared with the prior-year, which included the impact of inventory impairments and other actions; and


TARGET CORPORATION						Q3 2023 Form 10-Q			17


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF RESULTS OF OPERATIONS

◦retail price increases;

•lower digital fulfillment and supply chain costs due to

◦a decrease in digital volume;

◦an increased mix of digital sales fulfilled through lower-cost same-day services; and

◦lower inventory levels;

•favorable category mix; and

•higher inventory shrink.

Business Environment on page 14 provides additional information.

Selling, General, and Administrative Expense Rate

For the three months ended October 28, 2023, our SG&A expense rate was 20.9 percent compared with 19.7 percent for the comparable prior-year period. For the nine months ended October 28, 2023, our SG&A expense rate was 20.6 percent compared with 19.3 percent for the comparable prior-year period. The increase reflected the net impact of cost increases across our business, including investments in team member pay and benefits, and the deleveraging impact of lower sales.

Store Data


Change in Number of Stores	Three Months Ended		Nine Months Ended
	October 28, 2023	October 29, 2022	October 28, 2023	October 29, 2022
Beginning store count	1,955	1,937	1,948	1,926
Opened	10	4	21	16
Closed	(9)	—	(13)	(1)

Ending store count	1,956	1,941	1,956	1,941


Number of Stores and	Number of Stores			Retail Square Feet (a)
Retail Square Feet	October 28, 2023	January 28, 2023	October 29, 2022	October 28, 2023	January 28, 2023	October 29, 2022
170,000 or more sq. ft.	273	274	274	48,824	48,985	48,985
50,000 to 169,999 sq. ft.	1,542	1,527	1,522	192,877	191,241	190,739
49,999 or less sq. ft.	141	147	145	4,207	4,358	4,305
Total	1,956	1,948	1,941	245,908	244,584	244,029

(a)In thousands; reflects total square feet less office, supply chain facilities, and vacant space.

Other Performance Factors

Net Interest Expense

For the three months ended October 28, 2023, net interest expense was $107 million compared with $125 million in the comparable prior-year period. The decrease in net interest expense was primarily due to an increase in interest income, partially offset by higher debt levels and the impact of higher floating interest rates on our interest rate swaps. For the nine months ended October 28, 2023, net interest expense was $395 million compared with $349 million in the respective comparable prior-year period. The increase in net interest expense was primarily due to higher average debt levels in addition to the net impact of higher floating interest rates.

Provision for Income Taxes

Our effective income tax rate for the three months ended October 28, 2023 was 21.3 percent, consistent with 21.6 percent for the comparable prior-year period. Our effective tax rate for the nine months ended October 28, 2023 was 21.5 percent, compared with 19.8 percent in the comparable prior-year period. For the nine month period, the increase reflects higher pretax earnings in the current year, resulting in a smaller tax rate benefit from ongoing and discrete tax items.


TARGET CORPORATION						Q3 2023 Form 10-Q			18


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			RECONCILIATION OF NON-GAAP FINANCIAL MEASURES			Index to Notes

Reconciliation of Non-GAAP Financial Measures to GAAP 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, U.S. 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

October 28, 2023

October 29, 2022

(millions, except per share data)

Pretax

Net of Tax

Per Share

Pretax

Net of Tax

Per Share

GAAP and adjusted diluted earnings per share

2.10

1.54


Reconciliation of Non-GAAP Adjusted EPS	Nine Months Ended
	October 28, 2023						October 29, 2022
(millions, except per share data)	Pretax		Net of Tax		Per Share		Pretax		Net of Tax		Per Share
GAAP diluted earnings per share					$	5.96					$	4.09
Adjustments




Other (a)	$	—	$	—	$	—	$	20	$	15	$	0.03
Adjusted diluted earnings per share					$	5.96					$	4.12

(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 EBITDA	Three Months Ended						Nine Months Ended
(dollars in millions)	October 28, 2023		October 29, 2022		Change		October 28, 2023		October 29, 2022		Change
Net earnings	$	971	$	712	36.3	%	$	2,756	$	1,904	44.7	%
+ Provision for income taxes	264		197		34.2		755		471		60.6
+ Net interest expense	107		125		(14.1)		395		349		13.4
EBIT	$	1,342	$	1,034	29.8	%	$	3,906	$	2,724	43.5	%
+ Total depreciation and amortization (a)	722		674		7.1		2,072		2,004		3.4
EBITDA	$	2,064	$	1,708	20.9	%	$	5,978	$	4,728	26.5	%

(a)Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.


TARGET CORPORATION						Q3 2023 Form 10-Q			19


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			RECONCILIATION OF NON-GAAP FINANCIAL MEASURES			Index to Notes

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)
	Trailing Twelve Months
Numerator	October 28, 2023		October 29, 2022
Operating income	$	5,001	$	4,784
+ Net other income	79		61
EBIT	5,080		4,845
+ Operating lease interest (a)	106		89
- Income taxes (b)	1,050		1,059
Net operating profit after taxes	$	4,136	$	3,875


Denominator	October 28, 2023			October 29, 2022			October 30, 2021
Current portion of long-term debt and other borrowings	$	1,112		$	2,207		$	1,176
+ Noncurrent portion of long-term debt	14,883			14,237			11,586
+ Shareholders' investment	12,514			11,019			13,803
+ Operating lease liabilities (c)	3,351			2,879			2,737
- Cash and cash equivalents	1,910			954			5,753
Invested capital	$	29,950		$	29,388		$	23,549
Average invested capital (d)	$	29,670		$	26,469

After-tax return on invested capital	13.9		%	14.6		%

(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 20.3 percent and 21.5 percent for the trailing twelve months ended October 28, 2023 and October 29, 2022, respectively. For the trailing twelve months ended October 28, 2023 and October 29, 2022, includes tax effect of $1.0 billion related to EBIT and $22 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.


TARGET CORPORATION						Q3 2023 Form 10-Q			20


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF FINANCIAL CONDITION			Index to Notes

Analysis of Financial Condition

Liquidity and Capital Resources

Capital Allocation

We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals.

Our cash and cash equivalents balance was $1.9 billion, $2.2 billion, and $954 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively. Our cash and cash equivalents balance includes short-term investments of $1.0 billion and $1.3 billion as of October 28, 2023 and January 28, 2023, respectively. We had no short-term investments as of October 29, 2022. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly-rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.

Operating Cash Flows

Cash flows provided by operating activities were $5.3 billion for the nine months ended October 28, 2023, compared with $552 million for the nine months ended October 29, 2022. For the nine months ended October 28, 2023, operating cash flows increased as a result of higher net earnings and an improvement in working capital, including lower inventory levels, compared with the nine months ended October 29, 2022.

Inventory

Inventory was $14.7 billion as of October 28, 2023, compared with $13.5 billion and $17.1 billion at January 28, 2023 and October 29, 2022, respectively. The increase from January 28, 2023, reflects the seasonal inventory build ahead of the November and December holiday sales period. The decrease from the balance as of October 29, 2022, primarily reflects actions taken to align inventory levels with sales trends and improvements in the supply chain, including reduced in-transit inventory, as well as cost decreases, primarily due to lower freight rates in 2023 compared to 2022.

The Business Environment section on page 14 provides additional information.

Investing Cash Flows

Cash required for investing activities decreased to $3.9 billion for the nine months ended October 28, 2023, compared to $4.3 billion for the nine months ended October 29, 2022, due to capital investments.

Dividends

We paid dividends totaling $507 million ($1.10 per share) and $1.5 billion ($3.26 per share) for the three and nine months ended October 28, 2023, respectively, and $497 million ($1.08 per share) and $1.3 billion ($2.88 per share) for the three and nine months ended October 29, 2022, respectively, a per share increase of 1.9 percent for the three month period and 13.2 percent for the nine month period. We declared dividends totaling $513 million ($1.10 per share) during the third quarter of 2023 and $502 million ($1.08 per share) during the third quarter of 2022, a per share increase of 1.9 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.

Share Repurchase

We did not repurchase any shares during the nine months ended October 28, 2023. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 8 to the Financial Statements for more information.


TARGET CORPORATION						Q3 2023 Form 10-Q			21


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF FINANCIAL CONDITION			Index to Notes

Financing

Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of October 28, 2023, our credit ratings were as follows:


Credit Ratings	Moody’s	Standard and Poor’s	Fitch
Long-term debt	A2	A	A
Commercial paper	P-1	A-1	F1

If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit ratings will remain the same as described above.

We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In October 2023, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2024 and terminated our prior 364-day credit facility. We also exercised our option to extend our existing five-year unsecured revolving credit facility, which has a maximum committed capacity of $3.0 billion and now expires in October 2028. Both credit facilities backstop our commercial paper program. No balances were outstanding under either credit facility at any time during 2023 or 2022. We did not have any balances outstanding under our commercial paper program as of October 28, 2023, and we had $2.1 billion outstanding as of October 29, 2022. Note 6 to the Financial Statements provides additional information.

Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of October 28, 2023, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

We believe our sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital, and planned capital expenditures, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.

New Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.


TARGET CORPORATION						Q3 2023 Form 10-Q			22


			MANAGEMENT'S DISCUSSION AND ANALYSIS & SUPPLEMENTAL INFORMATION			Table of Contents
			FORWARD LOOKING STATEMENTS & CONTROLS AND PROCEDURES			Index to Notes

Forward-Looking Statements

This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words “expect,” “may,” “could,” “believe,” “would,” “might,” “anticipates,” or similar words. The principal forward-looking statements in this report include: our financial performance, statements regarding the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 28, 2023, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk of our Form 10-K for the fiscal year ended January 28, 2023.

Item 4. Controls and Procedures

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there were no changes which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.


TARGET CORPORATION						Q3 2023 Form 10-Q			23


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						Index to Notes

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For the quarterly period ended October 28, 2023, no response is required under Item 103 of Regulation S-K, nor have there been any material developments for any previously reported legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 28, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On August 11, 2021, our Board of Directors authorized a $15 billion share repurchase program with no stated expiration. Under the program, we have repurchased 23.8 million shares of common stock at an average price of $223.52, for a total investment of $5.3 billion. As of October 28, 2023, the dollar value of shares that may yet be purchased under the program is $9.7 billion. There were no Target common stock purchases made during the three months ended October 28, 2023 by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.


TARGET CORPORATION						Q3 2023 Form 10-Q			24


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						Index to Notes

Item 6. Exhibits


3.1		Amended and Restated Articles of Incorporation of Target Corporation (as amended through June 9, 2010) (filed as Exhibit (3)A to Target's Current Report on Form 8-K on June 10, 2010 and incorporated herein by reference).
3.2		Bylaws of Target Corporation (as amended and restated through January 11, 2023) (filed as Exhibit 3.2 to Target's Current Report on Form 8-K on January 12, 2023 and incorporated herein by reference).
10.19.2	**	Amendment No. 2 to Five-Year Credit Agreement dated as of September 20, 2023 among Target Corporation, Bank of America, N.A., as Administrative Agent, and the Banks listed therein .
10.20	** ‡	364-Day Credit Agreement dated as of October 18, 2023 among Target Corporation, the Banks listed therein, the Co-Documentation Agents and Syndication Agent listed therein, and Bank of America, N.A., as Administrative Agent .

31.1	**	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	**	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	***	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	***	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	**	Inline XBRL Instance Document
101.SCH	**	Inline XBRL Taxonomy Extension Schema Document
101.CAL	**	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	**	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	**	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	**	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	**	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


**			Filed herewith.
***			Furnished herewith.
‡			Certain schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. We agree to furnish a copy of such schedules and attachments to the Securities and Exchange Commission upon its request.


TARGET CORPORATION						Q3 2023 Form 10-Q			25


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SIGNATURES

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 thereunto duly authorized.


	TARGET CORPORATION



Dated: November 22, 2023	By:	/s/ Michael J. Fiddelke
			Michael J. Fiddelke
			Executive Vice President and
			Chief Financial Officer
			(Duly Authorized Officer and
			Principal Financial Officer)


		/s/ Matthew A. Liegel
			Matthew A. Liegel
			Senior Vice President, Chief Accounting Officer
			and Controller


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