Target Corporation Reports Second Quarter Earnings
Target Corporation (NYSE: TGT) today announced its second quarter 2023 financial results, which reflected stronger-than-expected profit performance on softer-than-expected sales.
MINNEAPOLIS, Aug. 16, 2023 /PRNewswire/ --
- The Company's second quarter operating income margin rate of 4.8 percent was more than 3 percentage points higher than last year, driven by a higher gross margin rate.
- Second quarter GAAP and Adjusted EPS1 of $1.80 was more than 4 times higher than a year ago and above the high end of the Company's guidance range, reflecting a meaningful profit recovery from last year's inventory actions.
- Second quarter comparable sales declined 5.4 percent.
- Continued growth in frequency businesses (Essentials & Beauty and Food & Beverage) partially offset declines in discretionary categories.
- Same-day services grew nearly 4 percent, led by nearly 7 percent growth in Drive-Up.
- Inventory at the end of Q2 was 17 percent lower than last year, reflecting a 25 percent reduction in discretionary categories, partially offset by inventory investments to support frequency categories, and strategic investments to support long-term market-share opportunities.
- Given recent sales trends, the Company lowered its full year sales and profit expectations. The Company now expects comparable sales in a wide range around a mid-single digit decline for the remainder of the year, and now expects full-year GAAP and Adjusted EPS of $7.00 to $8.00.
For additional media materials, please visit:
https://corporate.target.com/article/2023/08/q2-2023-earnings
Target Corporation (NYSE: TGT) today announced its second quarter 2023 financial results, which reflected stronger-than-expected profit performance on softer-than-expected sales.
The Company reported second quarter GAAP and Adjusted earnings per share1 (EPS) of $1.80, up 357.6 percent from $0.39 in 2022. 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. |
Brian Cornell, chair and chief executive of Target Corporation, said, "Our second quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we saw better-than-expected profitability in the face of softer-than-expected sales. With the benefit of a much-leaner inventory position than a year ago, the team was able to quickly respond to rapidly-changing topline trends throughout the second quarter, while continuing to focus on the guest experience."
"As we move into the Fall, the team is gearing up for the biggest seasons of the year, with a focus on continuing to serve our guests with newness throughout our assortment. At the same time, we continue to take a cautious approach to planning our business, and have therefore adjusted our financial guidance in anticipation of continued near-term challenges on the topline. This approach, along with the long-term investments we're making in our business and strategy, position us to deliver sustainable, profitable growth in the years ahead."
Guidance
Given recent sales trends, Target now expects comparable sales in a wide range around a mid-single digit decline for the remainder of the year. The Company now expects full-year GAAP and Adjusted EPS of $7.00 to $8.00, compared with the prior range of $7.75 to $8.75.
For the third quarter, the Company expects comparable sales in a wide range around a mid-single digit decline, and GAAP and Adjusted EPS of $1.20 to $1.60.
Operating Results
Comparable sales declined 5.4 percent in the second quarter, reflecting comparable store sales declines of 4.3 percent and comparable digital sales declines of 10.5 percent. Total revenue of $24.8 billion was 4.9 percent lower than last year, reflecting a total sales decline of 4.9 percent partially offset by a 1.3 percent increase in other revenue. Second quarter operating income of $1.2 billion was 273.0 percent higher than last year, driven by a higher gross margin rate.
Second quarter operating income margin rate was 4.8 percent in 2023, compared with 1.2 percent in 2022. Second quarter gross margin rate was 27.0 percent, compared with 21.5 percent in 2022, reflecting lower markdowns and other inventory-related costs, lower freight costs, retail price increases, and lower supply chain and digital fulfillment costs. These benefits were partially offset by higher inventory shrink. Second quarter SG&A expense rate was 20.9 percent in 2023, compared with 19.2 percent in 2022, reflecting the de-leveraging impact of lower sales combined with higher costs, including continued investments in pay and benefits and inflationary pressures throughout our business, partially offset by disciplined cost management.
Interest Expense and Taxes
The Company's second quarter 2023 net interest expense was $141 million, compared with $112 million last year, reflecting higher average long-term debt balances combined with the impact of higher floating interest rates.
Second quarter 2023 effective income tax rate was 22.2 percent, compared with the prior year rate of 15.8 percent. The rate increase was driven by higher earnings, which diluted the benefit of fixed and discrete tax items.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $499 million in the second quarter, compared with $417 million last year, primarily driven by a 20.0 percent increase in the dividend per share.
The Company did not repurchase any stock in the second 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 second quarter 2023, after-tax return on invested capital (ROIC) was 13.7 percent, compared with 18.4 percent for the trailing twelve months through second quarter 2022. The decrease in ROIC was driven primarily by lower profitability coupled with an increase in invested capital. The tables in this release provide additional information about the Company's ROIC calculation.
Webcast Details
Target will webcast its second quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Corporate.Target.com/Investors (click on "Q2 2023 Target Corporation Earnings Conference Call" under "Events & Presentations"). A replay of the webcast will be provided when available. The replay number is 1-866-360-8712.
Miscellaneous
Statements in this release regarding the Company's future financial performance, including its fiscal 2023 third 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 January 28, 2023. 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.
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TARGET CORPORATION |
||||||||||||
|
Consolidated Statements of Operations |
||||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||
|
(millions, except per share data) (unaudited) |
July 29, 2023 |
July 30, 2022 |
Change |
July 29, 2023 |
July 30, 2022 |
Change |
||||||
|
Sales |
$ 24,384 |
$ 25,653 |
(4.9) % |
$ 49,332 |
$ 50,483 |
(2.3) % |
||||||
|
Other revenue |
389 |
384 |
1.3 |
763 |
724 |
5.5 |
||||||
|
Total revenue |
24,773 |
26,037 |
(4.9) |
50,095 |
51,207 |
(2.2) |
||||||
|
Cost of sales |
17,798 |
20,142 |
(11.6) |
36,184 |
38,603 |
(6.3) |
||||||
|
Selling, general and administrative expenses |
5,184 |
5,002 |
3.6 |
10,209 |
9,764 |
4.6 |
||||||
|
Depreciation and amortization (exclusive of depreciation included in cost of sales) |
594 |
572 |
3.9 |
1,177 |
1,173 |
0.4 |
||||||
|
Operating income |
1,197 |
321 |
273.0 |
2,525 |
1,667 |
51.5 |
||||||
|
Net interest expense |
141 |
112 |
26.3 |
288 |
224 |
28.7 |
||||||
|
Net other income |
(16) |
(8) |
102.0 |
(39) |
(23) |
73.6 |
||||||
|
Earnings before income taxes |
1,072 |
217 |
393.6 |
2,276 |
1,466 |
55.3 |
||||||
|
Provision for income taxes |
237 |
34 |
591.2 |
491 |
274 |
79.4 |
||||||
|
Net earnings |
$ 835 |
$ 183 |
356.5 % |
$ 1,785 |
$ 1,192 |
49.8 % |
||||||
|
Basic earnings per share |
$ 1.81 |
$ 0.40 |
356.4 % |
$ 3.87 |
$ 2.57 |
50.6 % |
||||||
|
Diluted earnings per share |
$ 1.80 |
$ 0.39 |
357.6 % |
$ 3.86 |
$ 2.55 |
51.1 % |
||||||
|
Weighted average common shares outstanding |
||||||||||||
|
Basic |
461.6 |
461.5 |
0.0 % |
461.3 |
463.8 |
(0.5) % |
||||||
|
Diluted |
462.5 |
463.6 |
(0.2) % |
462.7 |
466.8 |
(0.9) % |
||||||
|
Antidilutive shares |
2.9 |
1.3 |
2.4 |
1.0 |
||||||||
|
Dividends declared per share |
$ 1.10 |
$ 1.08 |
1.9 % |
$ 2.18 |
$ 1.98 |
10.1 % |
||||||
|
TARGET CORPORATION |
||||||
|
Consolidated Statements of Financial Position |
||||||
|
(millions, except footnotes) (unaudited) |
July 29, 2023 |
January 28, 2023 |
July 30, 2022 |
|||
|
Assets |
||||||
|
Cash and cash equivalents |
$ 1,617 |
$ 2,229 |
$ 1,117 |
|||
|
Inventory |
12,684 |
13,499 |
15,320 |
|||
|
Other current assets |
1,797 |
2,118 |
2,016 |
|||
|
Total current assets |
16,098 |
17,846 |
18,453 |
|||
|
Property and equipment |
||||||
|
Land |
6,504 |
6,231 |
6,161 |
|||
|
Buildings and improvements |
35,889 |
34,746 |
33,694 |
|||
|
Fixtures and equipment |
7,936 |
7,439 |
6,744 |
|||
|
Computer hardware and software |
3,178 |
3,039 |
2,684 |
|||
|
Construction-in-progress |
2,641 |
2,688 |
2,245 |
|||
|
Accumulated depreciation |
(23,201) |
(22,631) |
(21,708) |
|||
|
Property and equipment, net |
32,947 |
31,512 |
29,820 |
|||
|
Operating lease assets |
2,840 |
2,657 |
2,542 |
|||
|
Other noncurrent assets |
1,321 |
1,320 |
1,655 |
|||
|
Total assets |
$ 53,206 |
$ 53,335 |
$ 52,470 |
|||
|
Liabilities and shareholders' investment |
||||||
|
Accounts payable |
$ 12,278 |
$ 13,487 |
$ 14,891 |
|||
|
Accrued and other current liabilities |
5,948 |
5,883 |
5,905 |
|||
|
Current portion of long-term debt and other borrowings |
1,106 |
130 |
1,649 |
|||
|
Total current liabilities |
19,332 |
19,500 |
22,445 |
|||
|
Long-term debt and other borrowings |
14,926 |
16,009 |
13,453 |
|||
|
Noncurrent operating lease liabilities |
2,798 |
2,638 |
2,543 |
|||
|
Deferred income taxes |
2,334 |
2,196 |
1,862 |
|||
|
Other noncurrent liabilities |
1,826 |
1,760 |
1,575 |
|||
|
Total noncurrent liabilities |
21,884 |
22,603 |
19,433 |
|||
|
Shareholders' investment |
||||||
|
Common stock |
38 |
38 |
38 |
|||
|
Additional paid-in capital |
6,610 |
6,608 |
6,502 |
|||
|
Retained earnings |
5,767 |
5,005 |
4,421 |
|||
|
Accumulated other comprehensive loss |
(425) |
(419) |
(369) |
|||
|
Total shareholders' investment |
11,990 |
11,232 |
10,592 |
|||
|
Total liabilities and shareholders' investment |
$ 53,206 |
$ 53,335 |
$ 52,470 |
|||
|
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 461,600,640, 460,346,947, and 460,236,393 shares issued and outstanding as of July 29, 2023, January 28, 2023, and July 30, 2022, 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 |
||||
|
Six Months Ended |
||||
|
(millions) (unaudited) |
July 29, 2023 |
July 30, 2022 |
||
|
Operating activities |
||||
|
Net earnings |
$ 1,785 |
$ 1,192 |
||
|
Adjustments to reconcile net earnings to cash (required for) provided by operating activities: |
||||
|
Depreciation and amortization |
1,350 |
1,329 |
||
|
Share-based compensation expense |
107 |
122 |
||
|
Deferred income taxes |
141 |
227 |
||
|
Noncash losses / (gains) and other, net |
11 |
108 |
||
|
Changes in operating accounts: |
||||
|
Inventory |
815 |
(1,418) |
||
|
Other assets |
62 |
(179) |
||
|
Accounts payable |
(1,137) |
(784) |
||
|
Accrued and other liabilities |
264 |
(644) |
||
|
Cash provided by (required for) operating activities |
3,398 |
(47) |
||
|
Investing activities |
||||
|
Expenditures for property and equipment |
(2,825) |
(2,523) |
||
|
Proceeds from disposal of property and equipment |
6 |
4 |
||
|
Other investments |
(2) |
1 |
||
|
Cash required for investing activities |
(2,821) |
(2,518) |
||
|
Financing activities |
||||
|
Change in commercial paper, net |
— |
1,545 |
||
|
Reductions of long-term debt |
(72) |
(113) |
||
|
Dividends paid |
(996) |
(842) |
||
|
Repurchase of stock |
— |
(2,646) |
||
|
Shares withheld for taxes on share-based compensation |
(121) |
(175) |
||
|
Stock option exercises |
— |
2 |
||
|
Cash required for financing activities |
(1,189) |
(2,229) |
||
|
Net decrease in cash and cash equivalents |
(612) |
(4,794) |
||
|
Cash and cash equivalents at beginning of period |
2,229 |
5,911 |
||
|
Cash and cash equivalents at end of period |
$ 1,617 |
$ 1,117 |
||
|
TARGET CORPORATION |
||||||||
|
Operating Results |
||||||||
|
Rate Analysis |
Three Months Ended |
Six Months Ended |
||||||
|
(unaudited) |
July 29, 2023 |
July 30, 2022 |
July 29, 2023 |
July 30, 2022 |
||||
|
Gross margin rate |
27.0 % |
21.5 % |
26.7 % |
23.5 % |
||||
|
SG&A expense rate |
20.9 |
19.2 |
20.4 |
19.1 |
||||
|
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) |
2.4 |
2.2 |
2.3 |
2.3 |
||||
|
Operating income margin rate |
4.8 |
1.2 |
5.0 |
3.3 |
||||
|
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 $169 million and $343 million of profit-sharing income under our credit card program agreement for the three and six months ended July 29, 2023, respectively, and $181 million and $366 million for the three and six months ended July 30, 2022, respectively. |
|
Comparable Sales |
Three Months Ended |
Six Months Ended |
|||||||
|
(unaudited) |
July 29, 2023 |
July 30, 2022 |
July 29, 2023 |
July 30, 2022 |
|||||
|
Comparable sales change |
(5.4) % |
2.6 % |
(2.8) % |
3.0 % |
|||||
|
Drivers of change in comparable sales |
|||||||||
|
Number of transactions (traffic) |
(4.8) |
2.7 |
(2.0) |
3.3 |
|||||
|
Average transaction amount |
(0.7) |
0.0 |
(0.8) |
(0.3) |
|||||
|
Comparable Sales by Channel |
Three Months Ended |
Six Months Ended |
|||||||
|
(unaudited) |
July 29, 2023 |
July 30, 2022 |
July 29, 2023 |
July 30, 2022 |
|||||
|
Stores originated comparable sales change |
(4.3) % |
1.3 % |
(1.8) % |
2.3 % |
|||||
|
Digitally originated comparable sales change |
(10.5) |
9.0 |
(7.0) |
6.1 |
|||||
|
Sales by Channel |
Three Months Ended |
Six Months Ended |
|||||||
|
(unaudited) |
July 29, 2023 |
July 30, 2022 |
July 29, 2023 |
July 30, 2022 |
|||||
|
Stores originated |
83.1 % |
82.1 % |
82.8 % |
81.9 % |
|||||
|
Digitally originated |
16.9 |
17.9 |
17.2 |
18.1 |
|||||
|
Total |
100 % |
100 % |
100 % |
100 % |
|||||
|
Sales by Fulfillment Channel |
Three Months Ended |
Six Months Ended |
|||||||
|
(unaudited) |
July 29, 2023 |
July 30, 2022 |
July 29, 2023 |
July 30, 2022 |
|||||
|
Stores |
97.6 % |
96.6 % |
97.4 % |
96.6 % |
|||||
|
Other |
2.4 |
3.4 |
2.6 |
3.4 |
|||||
|
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. |
|
RedCard Penetration |
Three Months Ended |
Six Months Ended |
||||||
|
(unaudited) |
July 29, 2023 |
July 30, 2022 |
July 29, 2023 |
July 30, 2022 |
||||
|
Total RedCard Penetration |
18.6 % |
20.1 % |
18.8 % |
20.2 % |
||||
|
Number of Stores and Retail Square Feet |
Number of Stores |
Retail Square Feet (a) |
||||||||||
|
(unaudited) |
July 29, |
January 28, |
July 30, |
July 29, |
January 28, |
July 30, |
||||||
|
170,000 or more sq. ft. |
274 |
274 |
273 |
48,995 |
48,985 |
48,798 |
||||||
|
50,000 to 169,999 sq. ft. |
1,534 |
1,527 |
1,521 |
191,947 |
191,241 |
190,734 |
||||||
|
49,999 or less sq. ft. |
147 |
147 |
143 |
4,404 |
4,358 |
4,256 |
||||||
|
Total |
1,955 |
1,948 |
1,937 |
245,346 |
244,584 |
243,788 |
||||||
|
(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 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 |
|||||||||||||
|
July 29, 2023 |
July 30, 2022 |
|||||||||||||
|
(millions, except per share data) (unaudited) |
Pretax |
Net of Tax |
Per Share |
Pretax |
Net of Tax |
Per Share |
Change |
|||||||
|
GAAP and adjusted diluted earnings per share |
$ 1.80 |
$ 0.39 |
357.6 % |
|||||||||||
|
Reconciliation of Non-GAAP Adjusted EPS |
Six Months Ended |
|||||||||||||
|
July 29, 2023 |
July 30, 2022 |
|||||||||||||
|
(millions, except per share data) (unaudited) |
Pretax |
Net of Tax |
Per Share |
Pretax |
Net of Tax |
Per Share |
Change |
|||||||
|
GAAP diluted earnings per share |
$ 3.86 |
$ 2.55 |
51.1 % |
|||||||||||
|
Adjustments |
||||||||||||||
|
Other (a) |
$ — |
$ — |
$ — |
$ 20 |
$ 15 |
$ 0.03 |
||||||||
|
Adjusted diluted earnings per share |
$ 3.86 |
$ 2.59 |
49.2 % |
|||||||||||
|
Note: Amounts may not foot due to rounding. |
|
(a) Other items unrelated to current period operations, none of which were individually significant. |
|
Reconciliation of Non-GAAP Adjusted EPS Guidance |
Guidance |
||
|
Q3 2023 |
Full Year 2023 |
||
|
(unaudited) |
Per Share |
Per Share |
|
|
GAAP diluted earnings per share guidance |
$1.20 - $1.60 |
$7.00 - $8.00 |
|
|
Estimated adjustments |
|||
|
Other (a) |
$ — |
$ — |
|
|
Adjusted diluted earnings per share guidance |
$1.20 - $1.60 |
$7.00 - $8.00 |
|
|
(a) |
Third quarter and full-year 2023 GAAP EPS may include the impact of certain discrete items, which will be excluded in calculating Adjusted EPS. In the past, these items have included losses on the early retirement of debt and certain other items that are discretely managed. The Company is not currently aware of any such discrete items. |
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 |
Six Months Ended |
||||||||||
|
(dollars in millions) (unaudited) |
July 29, 2023 |
July 30, 2022 |
Change |
July 29, 2023 |
July 30, 2022 |
Change |
||||||
|
Net earnings |
$ 835 |
$ 183 |
356.5 % |
$ 1,785 |
$ 1,192 |
49.8 % |
||||||
|
+ Provision for income taxes |
237 |
34 |
591.2 |
491 |
274 |
79.4 |
||||||
|
+ Net interest expense |
141 |
112 |
26.3 |
288 |
224 |
28.7 |
||||||
|
EBIT |
$ 1,213 |
$ 329 |
268.8 % |
$ 2,564 |
$ 1,690 |
51.8 % |
||||||
|
+ Total depreciation and amortization (a) |
683 |
650 |
5.0 |
1,350 |
1,329 |
1.5 |
||||||
|
EBITDA |
$ 1,896 |
$ 979 |
93.6 % |
$ 3,914 |
$ 3,019 |
29.6 % |
||||||
|
(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 |
July 29, 2023 |
July 30, 2022 |
||||
|
Operating income |
$ 4,706 |
$ 5,773 |
||||
|
+ Net other income |
65 |
54 |
||||
|
EBIT |
4,771 |
5,827 |
||||
|
+ Operating lease interest (a) |
102 |
88 |
||||
|
- Income taxes (b) |
986 |
1,282 |
||||
|
Net operating profit after taxes |
$ 3,887 |
$ 4,633 |
||||
|
Denominator |
July 29, 2023 |
July 30, 2022 |
July 31, 2021 |
|||
|
Current portion of long-term debt and other borrowings |
$ 1,106 |
$ 1,649 |
$ 1,190 |
|||
|
+ Noncurrent portion of long-term debt |
14,926 |
13,453 |
11,589 |
|||
|
+ Shareholders' investment |
11,990 |
10,592 |
14,860 |
|||
|
+ Operating lease liabilities (c) |
3,104 |
2,823 |
2,695 |
|||
|
- Cash and cash equivalents |
1,617 |
1,117 |
7,368 |
|||
|
Invested capital |
$ 29,509 |
$ 27,400 |
$ 22,966 |
|||
|
Average invested capital (d) |
$ 28,454 |
$ 25,183 |
||||
|
After-tax return on invested capital |
13.7 % |
18.4 % |
||||
|
(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 20.2 percent and 21.7 percent for the trailing twelve months ended July 29, 2023, and July 30, 2022, respectively. For the twelve months ended July 29, 2023, and July 30, 2022, includes tax effect of $1.0 billion and $1.3 billion, respectively, related to EBIT, and $20 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. |
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SOURCE Target Corporation
