MINNEAPOLIS, May 22, 2024
/PRNewswire/ --
- First quarter operating income margin rate of 5.3 percent
reflects a 140 basis point improvement in gross margin rate as
compared to the prior year.
- First quarter comparable sales declined 3.7 percent, in line
with expectations.
- Digital comparable sales grew 1.4 percent. Same-day services
grew nearly 9 percent, led by more than 13 percent growth in Drive
Up.
- Sales declines, primarily in discretionary categories, were
partially offset by continued growth in Beauty.
- Discretionary sales trends continued to improve vs. prior
quarters, led by an improvement of nearly 4 percentage points in
apparel as compared to Q4 of 2023.
- The Company successfully relaunched its free-to-join Target
Circle loyalty program in April, and welcomed more than 1 million
new members to the platform in the first quarter.
- Inventory at the end of Q1 was 7 percent lower than last
year, even as the Company saw higher in-stock levels than a year
ago.
For additional media materials, please
visit:
https://corporate.target.com/news-features/article/2024/05/q1-2024-earnings
Target Corporation (NYSE: TGT) today announced its first quarter
2024 financial results, which reflected sales and profit
performance consistent with the Company's previously provided
expectations.
The Company reported first quarter GAAP and Adjusted earnings
per share1 (EPS) of $2.03,
compared with $2.05 in 2023. The
attached tables provide a reconciliation of non-GAAP to GAAP
measures. All earnings per share figures refer to diluted EPS.
|
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.
|
|
"Our first quarter financial performance was in line with our
expectations on both the top and bottom line, tracking the
trajectory we outlined for this year and setting up a return to
growth in the second quarter," said Brian
Cornell, chair and chief executive of Target Corporation.
"Our topline performance improved for the third consecutive
quarter, with growth in our digital business led by strength in our
same-day fulfillment services. Consumers continue to respond to the
newness and value that we offer across our shopping experience, and
we're pleased with early results from the relaunch of Target
Circle. Looking ahead, our team will deliver for our guests through
lower prices, a seasonally relevant assortment, ease and
convenience, as we keep investing in our strategy and efficiency
initiatives to get back to growth and deliver on our longer-term
financial goals."
Guidance
For the second quarter, the Company expects a 0 to 2 percent
increase in its comparable sales, and GAAP and Adjusted EPS of
$1.95 to $2.35.
For the full year, the Company continues to expect a 0 to 2
percent increase in its comparable sales, and GAAP and Adjusted EPS
of $8.60 to $9.60.
Operating Results
Comparable sales declined 3.7 percent in the first quarter,
reflecting a comparable store sales decline of 4.8 percent
partially offset by a comparable digital sales increase of 1.4
percent. Total revenue of $24.5
billion was 3.1 percent lower than last year, reflecting a
total sales decline of 3.2 percent and a 3.9 percent increase in
other revenue. First quarter operating income of $1.3 billion was 2.4 percent lower than last
year, driven by lower sales volume.
First quarter operating income margin rate was 5.3 percent
in 2024, compared with 5.2 percent in 2023. First quarter gross
margin rate was 27.7 percent, compared with 26.3 percent in 2023,
reflecting the net impact of merchandising activities, including
cost improvements that more than offset higher promotional markdown
rates, combined with favorable category mix and lower book to
physical inventory adjustments as compared to the prior year.
First quarter SG&A expense rate was 21.1 percent in 2024,
compared with 19.8 percent in 2023, reflecting the combined impact
of lower sales and higher costs, including continued investments in
pay and benefits and marketing, partially offset by disciplined
cost management.
Interest Expense and Taxes
The Company's first quarter 2024 net interest expense was
$106 million, compared with
$147 million last year, primarily
driven by an increase in interest income reflecting higher cash
balances year-over-year.
First quarter 2024 effective income tax rate was 22.7
percent, compared with the prior year rate of 21.1 percent,
reflecting lower discrete benefits as compared to the prior
year.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $508
million in the first quarter, compared with $497 million last year, reflecting a 1.9 percent
increase in the dividend per share.
The Company did not repurchase any stock in the first
quarter. As of the end of the quarter, the Company had
approximately $9.7 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 2024,
after-tax return on invested capital (ROIC) was 15.4 percent,
compared with 11.4 percent for the trailing twelve months through
first quarter 2023. The increase in ROIC reflects higher operating
income, partially offset by higher average invested capital. The
tables in this release provide additional information about the
Company's ROIC calculation.
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
Corporate.Target.com/Investors (click on "Q1 2024 Target
Corporation Earnings Conference Call" under "Events &
Presentations"). A replay of the webcast will be provided when
available. The replay number is 1-800-513-1169.
Miscellaneous
Statements in this release regarding the Company's future
financial performance, including its fiscal 2024 second quarter and
full-year guidance, 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 results to differ materially. The most
important risks and uncertainties are described in Item 1A of the
Company's Form 10-K for the fiscal year ended February 3, 2024. 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.
Additional company information can be found by visiting the
corporate website (corporate.target.com) and press center.
TARGET
CORPORATION
Consolidated
Statements of Operations
|
|
|
Three Months Ended
|
|
|
(millions, except per share data) (unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
|
Change
|
Sales
|
|
$
24,143
|
|
$
24,948
|
|
(3.2) %
|
Other
revenue
|
|
388
|
|
374
|
|
3.9
|
Total
revenue
|
|
24,531
|
|
25,322
|
|
(3.1)
|
Cost of
sales
|
|
17,449
|
|
18,386
|
|
(5.1)
|
Selling, general and
administrative expenses
|
|
5,168
|
|
5,025
|
|
2.8
|
Depreciation and
amortization (exclusive of depreciation included in cost of
sales)
|
|
618
|
|
583
|
|
6.2
|
Operating
income
|
|
1,296
|
|
1,328
|
|
(2.4)
|
Net interest
expense
|
|
106
|
|
147
|
|
(27.8)
|
Net other
income
|
|
(29)
|
|
(23)
|
|
26.9
|
Earnings before income
taxes
|
|
1,219
|
|
1,204
|
|
1.3
|
Provision for income
taxes
|
|
277
|
|
254
|
|
9.0
|
Net earnings
|
|
$
942
|
|
$
950
|
|
(0.8) %
|
Basic earnings per
share
|
|
$
2.04
|
|
$
2.06
|
|
(1.0) %
|
Diluted earnings per
share
|
|
$
2.03
|
|
$
2.05
|
|
(1.0) %
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
Basic
|
|
462.2
|
|
460.9
|
|
0.3 %
|
Diluted
|
|
463.9
|
|
462.9
|
|
0.2 %
|
Antidilutive
shares
|
|
1.6
|
|
1.2
|
|
|
Dividends declared per
share
|
|
$
1.10
|
|
$
1.08
|
|
1.9 %
|
TARGET
CORPORATION
Consolidated
Statements of Financial Position
|
(millions, except
footnotes) (unaudited)
|
|
May 4, 2024
|
|
February 3,
2024
|
|
April 29,
2023
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
3,604
|
|
$
3,805
|
|
$
1,321
|
Inventory
|
|
11,730
|
|
11,886
|
|
12,616
|
Other current
assets
|
|
1,744
|
|
1,807
|
|
1,836
|
Total current
assets
|
|
17,078
|
|
17,498
|
|
15,773
|
Property and
equipment
|
|
|
|
|
|
|
Land
|
|
6,544
|
|
6,547
|
|
6,493
|
Buildings and
improvements
|
|
37,587
|
|
37,066
|
|
35,198
|
Fixtures and
equipment
|
|
8,341
|
|
8,765
|
|
7,473
|
Computer hardware and
software
|
|
3,265
|
|
3,428
|
|
3,067
|
Construction-in-progress
|
|
1,538
|
|
1,703
|
|
2,822
|
Accumulated
depreciation
|
|
(24,161)
|
|
(24,413)
|
|
(22,657)
|
Property and
equipment, net
|
|
33,114
|
|
33,096
|
|
32,396
|
Operating lease
assets
|
|
3,486
|
|
3,362
|
|
2,640
|
Other noncurrent
assets
|
|
1,439
|
|
1,400
|
|
1,341
|
Total
assets
|
|
$
55,117
|
|
$
55,356
|
|
$
52,150
|
Liabilities and
shareholders' investment
|
|
|
|
|
|
|
Accounts
payable
|
|
$
11,561
|
|
$
12,098
|
|
$
11,935
|
Accrued and other
current liabilities
|
|
5,684
|
|
6,090
|
|
5,732
|
Current portion of
long-term debt and other borrowings
|
|
2,614
|
|
1,116
|
|
200
|
Total current
liabilities
|
|
19,859
|
|
19,304
|
|
17,867
|
Long-term debt and
other borrowings
|
|
13,487
|
|
14,922
|
|
16,010
|
Noncurrent operating
lease liabilities
|
|
3,392
|
|
3,279
|
|
2,621
|
Deferred income
taxes
|
|
2,543
|
|
2,480
|
|
2,289
|
Other noncurrent
liabilities
|
|
1,996
|
|
1,939
|
|
1,758
|
Total noncurrent
liabilities
|
|
21,418
|
|
22,620
|
|
22,678
|
Shareholders'
investment
|
|
|
|
|
|
|
Common
stock
|
|
39
|
|
38
|
|
38
|
Additional paid-in
capital
|
|
6,747
|
|
6,761
|
|
6,541
|
Retained
earnings
|
|
7,519
|
|
7,093
|
|
5,448
|
Accumulated other
comprehensive loss
|
|
(465)
|
|
(460)
|
|
(422)
|
Total shareholders'
investment
|
|
13,840
|
|
13,432
|
|
11,605
|
Total liabilities
and shareholders' investment
|
|
$
55,117
|
|
$
55,356
|
|
$
52,150
|
|
Common
Stock Authorized 6,000,000,000 shares, $0.0833 par value;
462,635,539, 461,675,441, and 461,552,843 shares issued and
outstanding as of May 4, 2024, February 3, 2024, and
April 29, 2023, respectively.
|
|
Preferred
Stock Authorized 5,000,000 shares, $0.01 par value; no
shares were issued or outstanding during any period
presented.
|
TARGET
CORPORATION
Consolidated
Statements of Cash Flows
|
|
|
Three Months
Ended
|
(millions) (unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Operating
activities
|
|
|
|
|
Net earnings
|
|
$
942
|
|
$
950
|
Adjustments to
reconcile net earnings to cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
718
|
|
667
|
Share-based
compensation expense
|
|
72
|
|
43
|
Deferred income
taxes
|
|
64
|
|
95
|
Noncash (gains) /
losses and other, net
|
|
(31)
|
|
(11)
|
Changes in operating
accounts:
|
|
|
|
|
Inventory
|
|
156
|
|
883
|
Other
assets
|
|
43
|
|
34
|
Accounts
payable
|
|
(524)
|
|
(1,463)
|
Accrued and other
liabilities
|
|
(339)
|
|
67
|
Cash provided by
operating activities
|
|
1,101
|
|
1,265
|
Investing
activities
|
|
|
|
|
Expenditures for
property and equipment
|
|
(674)
|
|
(1,605)
|
Proceeds from disposal
of property and equipment
|
|
1
|
|
2
|
Other
investments
|
|
2
|
|
1
|
Cash required for
investing activities
|
|
(671)
|
|
(1,602)
|
Financing
activities
|
|
|
|
|
Change in commercial
paper, net
|
|
—
|
|
90
|
Reductions of
long-term debt
|
|
(32)
|
|
(46)
|
Dividends
paid
|
|
(508)
|
|
(497)
|
Shares withheld for
taxes on share-based compensation
|
|
(91)
|
|
(118)
|
Cash required for
financing activities
|
|
(631)
|
|
(571)
|
Net decrease in cash
and cash equivalents
|
|
(201)
|
|
(908)
|
Cash and cash
equivalents at beginning of period
|
|
3,805
|
|
2,229
|
Cash and cash
equivalents at end of period
|
|
$
3,604
|
|
$
1,321
|
TARGET
CORPORATION
Operating
Results
|
|
Rate
Analysis
|
|
Three Months
Ended
|
(unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Gross margin
rate
|
|
27.7 %
|
|
26.3 %
|
SG&A expense
rate
|
|
21.1
|
|
19.8
|
Depreciation and
amortization expense rate (exclusive of depreciation included in
cost of sales)
|
|
2.5
|
|
2.3
|
Operating income margin
rate
|
|
5.3
|
|
5.2
|
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 $142 million and
$174 million of profit-sharing income under our credit card program
agreement for the three months ended May 4, 2024 and April 29,
2023, respectively.
|
Comparable
Sales
|
|
Three Months Ended
|
(unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Comparable sales
change
|
|
(3.7) %
|
|
0.0 %
|
Drivers of change in
comparable sales
|
|
|
|
|
Number of transactions
(traffic)
|
|
(1.9)
|
|
0.9
|
Average transaction
amount
|
|
(1.9)
|
|
(0.9)
|
|
|
|
Comparable Sales by
Channel
|
|
Three Months Ended
|
(unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Stores originated
comparable sales change
|
|
(4.8) %
|
|
0.7 %
|
Digitally originated
comparable sales change
|
|
1.4
|
|
(3.4)
|
|
|
|
Sales by
Channel
|
|
Three Months Ended
|
(unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Stores
originated
|
|
81.7 %
|
|
82.5 %
|
Digitally
originated
|
|
18.3
|
|
17.5
|
Total
|
|
100 %
|
|
100 %
|
|
|
|
Sales by
Fulfillment Channel
|
|
Three Months Ended
|
(unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Stores
|
|
97.7 %
|
|
97.2 %
|
Other
|
|
2.3
|
|
2.8
|
Total
|
|
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.
|
Target Circle Card
Penetration
|
|
Three Months
Ended
|
(unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
Total Target Circle
Card Penetration
|
|
18.0 %
|
|
19.0 %
|
Number of Stores and
Retail Square Feet
|
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
(unaudited)
|
|
May 4,
2024
|
|
February 3,
2024
|
|
April 29,
2023
|
|
May 4,
2024
|
|
February 3,
2024
|
|
April 29,
2023
|
170,000 or more sq.
ft.
|
|
273
|
|
273
|
|
274
|
|
48,824
|
|
48,824
|
|
48,985
|
50,000 to 169,999 sq.
ft.
|
|
1,547
|
|
1,542
|
|
1,530
|
|
193,529
|
|
192,908
|
|
191,543
|
49,999 or less sq.
ft.
|
|
143
|
|
141
|
|
150
|
|
4,301
|
|
4,207
|
|
4,465
|
Total
|
|
1,963
|
|
1,956
|
|
1,954
|
|
246,654
|
|
245,939
|
|
244,993
|
|
|
(a)
|
In thousands; reflects
total square feet less office, supply chain facilities, and vacant
space.
|
TARGET CORPORATION
Reconciliation of Non-GAAP Financial Measures
To provide additional transparency, we disclose non-GAAP
adjusted diluted earnings per share (Adjusted EPS). When
applicable, this metric excludes certain discretely managed items.
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
|
|
|
|
May 4, 2024
|
|
April 29,
2023
|
|
Change
|
GAAP and adjusted
diluted earnings per share
|
|
$
2.03
|
|
$
2.05
|
|
(1.0) %
|
Reconciliation of
Non-GAAP
Adjusted EPS
Guidance
|
Guidance
|
(per share)
(unaudited)
|
Q2 2024
|
|
Full Year
2024
|
GAAP diluted earnings
per share guidance
|
$1.95 -
$2.35
|
|
$8.60 -
$9.60
|
Estimated
adjustments
|
|
|
|
Other
(a)
|
$
—
|
|
$
—
|
Adjusted diluted
earnings per share guidance
|
$1.95 -
$2.35
|
|
$8.60 -
$9.60
|
|
|
(a)
|
Second quarter and
full-year 2024 GAAP EPS may include the impact of certain discrete
items, which will be excluded in calculating Adjusted EPS. The
guidance does not currently reflect any such discrete items. In the
past, these items have included losses on the early retirement of
debt and certain other items that are discretely
managed.
|
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
|
|
|
(dollars in
millions) (unaudited)
|
|
May 4, 2024
|
|
April 29,
2023
|
|
Change
|
Net earnings
|
|
$
942
|
|
$
950
|
|
(0.8) %
|
+ Provision for
income taxes
|
|
277
|
|
254
|
|
9.0
|
+ Net interest
expense
|
|
106
|
|
147
|
|
(27.8)
|
EBIT
|
|
$
1,325
|
|
$
1,351
|
|
(1.9) %
|
+ Total
depreciation and amortization (a)
|
|
718
|
|
667
|
|
7.7
|
EBITDA
|
|
$
2,043
|
|
$
2,018
|
|
1.3 %
|
|
|
(a)
|
Represents total
depreciation and amortization, including amounts classified within
Depreciation and Amortization and within Cost of Sales.
|
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
|
|
May 4, 2024
(a)
|
|
April 29,
2023
|
|
|
Operating
income
|
|
$
5,675
|
|
$
3,830
|
|
|
+ Net other
income
|
|
99
|
|
57
|
|
|
EBIT
|
|
5,774
|
|
3,887
|
|
|
+ Operating lease
interest (b)
|
|
133
|
|
96
|
|
|
- Income
taxes (c)
|
|
1,314
|
|
770
|
|
|
Net operating profit
after taxes
|
|
$
4,593
|
|
$
3,213
|
|
|
|
Denominator
|
|
May 4, 2024
|
|
April 29,
2023
|
|
April 30,
2022
|
Current portion of
long-term debt and other borrowings
|
|
$
2,614
|
|
$
200
|
|
$
1,089
|
+ Noncurrent
portion of long-term debt
|
|
13,487
|
|
16,010
|
|
13,379
|
+ Shareholders'
investment
|
|
13,840
|
|
11,605
|
|
10,774
|
+ Operating lease
liabilities (d)
|
|
3,723
|
|
2,921
|
|
2,854
|
- Cash
and cash equivalents
|
|
3,604
|
|
1,321
|
|
1,112
|
Invested
capital
|
|
$
30,060
|
|
$
29,415
|
|
$
26,984
|
Average invested
capital (e)
|
|
$
29,737
|
|
$
28,199
|
|
|
|
After-tax return on
invested capital
|
|
15.4 %
|
|
11.4 %
|
|
|
|
|
(a)
|
The trailing twelve
months ended May 4, 2024, consisted of 53 weeks compared with 52
weeks in the prior-year period.
|
(b)
|
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.
|
(c)
|
Calculated using the
effective tax rates, which were 22.2 percent and 19.3 percent for
the trailing twelve months ended May 4, 2024, and
April 29, 2023, respectively. For the twelve months ended
May 4, 2024, and April 29, 2023, includes tax effect of
$1.3 billion and $0.8 billion, respectively, related to EBIT,
and $30 million and $18 million, respectively, related to
operating lease interest.
|
(d)
|
Total short-term and
long-term operating lease liabilities included within Accrued and
Other Current Liabilities and Noncurrent Operating Lease
Liabilities, respectively.
|
(e)
|
Average based on the
invested capital at the end of the current period and the invested
capital at the end of the comparable prior period.
|
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SOURCE Target Corporation