MINNEAPOLIS, Aug. 21, 2019 /PRNewswire/ --
- Second quarter comparable sales grew 3.4 percent, driven by
2.4 percent traffic growth.
- Comparable sales have grown approximately 10 percent over
the last two years — the best performance in more than
a decade.
- Second quarter comparable digital channel sales grew 34
percent.
- Same-day fulfillment services (Order Pick Up, Drive Up and
Shipt) accounted for nearly 1.5 percentage points of the Company's
overall comparable sales growth.
- Second quarter operating income of $1.324 billion was 16.9 percent higher than a
year ago. Operating income margin rate improved 80 basis points
compared with last year, reflecting year-over-year improvement in
both gross margin and SG&A rates.
- GAAP EPS from continuing operations and Adjusted EPS of
$1.82 were up over 20 percent from
last year and established new all-time highs for the
Company.
- Target now expects full-year 2019 GAAP EPS from continuing
operations and Adjusted EPS of $5.90
to $6.20, compared with the prior
range of $5.75 to $6.05.
- For additional media materials, please visit:
https://corporate.target.com/article/2019/08/q2-2019-earnings
Target Corporation (NYSE: TGT) today announced its second
quarter 2019 performance, including comparable sales growth of 3.4
percent driven by a 2.4 percent increase in comparable
traffic. The Company reported GAAP earnings per share (EPS)
from continuing operations of $1.82
in second quarter 2019, up 22.0 percent from $1.49 in second quarter 2018. Second
quarter Adjusted EPS of $1.82 was
23.9 percent higher than $1.47 in
second quarter 2018. The attached tables provide a reconciliation
of non-GAAP to GAAP measures. All earnings per share figures refer
to diluted EPS.
Brian Cornell, chairman and CEO
of Target, said, "We are really pleased with our second quarter
performance, which demonstrates the strength of our strategy and
the durable financial model we've built over the last several
years. By appealing to shoppers through a compelling assortment, a
suite of convenience-driven fulfillment options, competitive prices
and an enjoyable shopping experience, we're increasing Target's
relevancy and deepening the relationship between our guests and our
brand. Traffic and sales continue to grow while our EPS reached an
all-time high, driven by the strength of our team's execution and
their focus on delivering for our guests. Because of our
outstanding performance in the first half of the year and our
confidence moving forward, we are increasing our guidance for
full-year earnings per share."
Third Quarter and Full-Year 2019 Guidance
For both the third quarter and second half of 2019, Target
expects comparable sales growth in line with the 3.4 percent
comparable sales growth the company delivered in the second quarter
of 2019. For the third quarter, the Company expects both GAAP EPS
from continuing operations and Adjusted EPS of $1.04 to $1.24.
For full-year 2019, Target now expects GAAP EPS from continuing
operations and Adjusted EPS of $5.90
to $6.20 compared with the prior
range of $5.75 to $6.05. Third quarter and full-year 2019 GAAP EPS
from continuing operations may include the impact of certain
discrete items which will be excluded in calculating Adjusted EPS.
The Company is not currently aware of any such discrete items.
Operating Results
Total revenue of $18.4 billion
increased 3.6 percent from $17.8
billion last year, reflecting sales growth combined with a
6.3 percent increase in other revenue. Second quarter sales growth
of 3.6 percent reflected comparable sales growth of 3.4 percent
combined with the contribution from non-mature stores. Comparable
digital sales grew 34 percent, contributing 1.8 percentage points
to comparable sales growth. Operating income was $1,324 million in second quarter 2019, up 16.9
percent from $1,133 million in
2018.
Second quarter operating income margin rate was 7.2 percent in
2019, compared with 6.4 percent in 2018. Second quarter gross
margin rate was 30.6 percent, compared with 30.3 percent in 2018,
reflecting the benefit of merchandising efforts to optimize costs,
pricing, promotions and assortment, combined with the benefit of
favorable category sales mix. This favorability was partially
offset by higher digital fulfillment and supply chain costs. Second
quarter SG&A expense rate was 21.2 percent in 2019, compared
with 21.7 percent in 2018. This improvement reflected favorability
in asset impairments, timing of certain expenses and other cost
savings.
Interest Expense and Taxes from Continuing Operations
The Company's second quarter 2019 net interest expense was
$120 million, compared with
$115 million last year. Second
quarter 2019 effective income tax rate from continuing operations
was 23.0 percent, compared with 21.8 percent last year. Last year's
effective income tax rate included benefits from the resolution of
certain income tax matters unrelated to current period
operations.
Shareholder Returns
The Company returned $669 million
to shareholders in second quarter 2019, including:
- Dividends of $328 million,
compared with $330 million in second
quarter 2018, reflecting a decline in share count partially offset
by a 3.2 percent increase in the dividend per share.
- Share repurchases totaling $341
million that retired 4.3 million shares of common stock at
an average price of $80.02.
At the end of the second quarter, the Company had approximately
$1.0 billion of remaining capacity
under its current $5 billion share
repurchase program.
For the trailing twelve months through second quarter 2019,
after-tax return on invested capital (ROIC) was 15.2 percent,
compared with 16.0 percent for the twelve months through second
quarter 2018. Excluding the discrete impacts of the Tax Cuts and
Jobs Act of 2017, ROIC was 15.0 percent for the trailing twelve
months ended August 3, 2019, compared
with 14.2 percent in the comparable prior-year period. See
the tables of this release for additional information about the
Company's ROIC calculation.
Conference Call Details
Target will webcast its second quarter earnings conference call
at 7:00 a.m. CDT today. Investors and
the media are invited to listen to the call at investors.target.com
(hover over "investors" then click on "events &
presentations"). A telephone replay of the call will be available
beginning at approximately 10:30 a.m.
CDT today through the end of business on August 23, 2019. The replay number is
888-566-0623.
Miscellaneous
Statements in this release regarding third quarter and full-year
2019 earnings per share and comparable sales 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
actual 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 2,
2019. Forward-looking statements speak only as of the date
they are made, and the Company does not undertake any obligation to
update any forward-looking statement.
About Target
Minneapolis-based Target
Corporation (NYSE: TGT) serves guests at more than 1,800 stores and
at Target.com. Since 1946, Target has given 5% of its profit to
communities, which today equals millions of dollars a week. For the
latest store count or for more information, visit
Target.com/Pressroom. For a behind-the-scenes look at Target, visit
Target.com/abullseyeview or follow @TargetNews on Twitter.
TARGET
CORPORATION
|
|
Consolidated
Statements of Operations
|
|
|
Three Months Ended
|
|
|
|
Six Months
Ended
|
|
|
(millions, except
per share data) (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
Change
|
|
August 3,
2019
|
|
August 4,
2018
|
|
Change
|
Sales
|
$
|
18,183
|
|
|
$
|
17,552
|
|
|
3.6
|
%
|
|
$
|
35,584
|
|
|
$
|
34,108
|
|
|
4.3
|
%
|
Other
revenue
|
239
|
|
|
224
|
|
|
6.3
|
|
|
465
|
|
|
450
|
|
|
3.4
|
|
Total
revenue
|
18,422
|
|
|
17,776
|
|
|
3.6
|
|
|
36,049
|
|
|
34,558
|
|
|
4.3
|
|
Cost of
sales
|
12,625
|
|
|
12,239
|
|
|
3.1
|
|
|
24,874
|
|
|
23,865
|
|
|
4.2
|
|
Selling, general and
administrative expenses
|
3,912
|
|
|
3,865
|
|
|
1.2
|
|
|
7,575
|
|
|
7,410
|
|
|
2.2
|
|
Depreciation and
amortization (exclusive of depreciation included in cost of
sales)
|
561
|
|
|
539
|
|
|
4.1
|
|
|
1,142
|
|
|
1,109
|
|
|
3.0
|
|
Operating
income
|
1,324
|
|
|
1,133
|
|
|
16.9
|
|
|
2,458
|
|
|
2,174
|
|
|
13.1
|
|
Net interest
expense
|
120
|
|
|
115
|
|
|
4.3
|
|
|
246
|
|
|
237
|
|
|
3.8
|
|
Net other
(income) / expense
|
(13)
|
|
|
(4)
|
|
|
202.0
|
|
|
(27)
|
|
|
(12)
|
|
|
119.7
|
|
Earnings from
continuing operations before income taxes
|
1,217
|
|
|
1,022
|
|
|
19.1
|
|
|
2,239
|
|
|
1,949
|
|
|
14.9
|
|
Provision for income
taxes
|
279
|
|
|
223
|
|
|
25.2
|
|
|
509
|
|
|
433
|
|
|
17.5
|
|
Net earnings from
continuing operations
|
938
|
|
|
799
|
|
|
17.4
|
|
|
1,730
|
|
|
1,516
|
|
|
14.1
|
|
Discontinued
operations, net of tax
|
—
|
|
|
—
|
|
|
|
|
3
|
|
|
1
|
|
|
|
Net
earnings
|
$
|
938
|
|
|
$
|
799
|
|
|
17.4
|
%
|
|
$
|
1,733
|
|
|
$
|
1,517
|
|
|
14.3
|
%
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.83
|
|
|
$
|
1.50
|
|
|
21.9
|
%
|
|
$
|
3.37
|
|
|
$
|
2.84
|
|
|
18.7
|
%
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
|
|
0.01
|
|
|
—
|
|
|
|
Net earnings per
share
|
$
|
1.83
|
|
|
$
|
1.50
|
|
|
21.9
|
%
|
|
$
|
3.37
|
|
|
$
|
2.84
|
|
|
18.8
|
%
|
Diluted earnings
per share
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.82
|
|
|
$
|
1.49
|
|
|
22.0
|
%
|
|
$
|
3.34
|
|
|
$
|
2.81
|
|
|
18.7
|
%
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
|
|
0.01
|
|
|
—
|
|
|
|
Net earnings per
share
|
$
|
1.82
|
|
|
$
|
1.49
|
|
|
22.0
|
%
|
|
$
|
3.35
|
|
|
$
|
2.82
|
|
|
18.9
|
%
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
512.1
|
|
|
531.7
|
|
|
(3.7)
|
%
|
|
513.9
|
|
|
534.3
|
|
|
(3.8)
|
%
|
Diluted
|
516.1
|
|
|
536.3
|
|
|
(3.8)
|
%
|
|
517.8
|
|
|
538.6
|
|
|
(3.9)
|
%
|
Antidilutive
shares
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Dividends declared
per share
|
$
|
0.66
|
|
|
$
|
0.64
|
|
|
3.1
|
%
|
|
$
|
1.30
|
|
|
$
|
1.26
|
|
|
3.2
|
%
|
|
Note: Per share
amounts may not foot due to rounding.
|
TARGET
CORPORATION
|
|
Consolidated
Statements of Financial Position
|
|
(millions, except
footnotes) (unaudited)
|
August 3,
2019
|
|
February 2,
2019
|
|
August 4,
2018
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,656
|
|
|
$
|
1,556
|
|
|
$
|
1,180
|
|
Inventory
|
9,122
|
|
|
9,497
|
|
|
9,112
|
|
Other current
assets
|
1,341
|
|
|
1,466
|
|
|
1,211
|
|
Total current
assets
|
12,119
|
|
|
12,519
|
|
|
11,503
|
|
Property and
equipment
|
|
|
|
|
|
Land
|
6,054
|
|
|
6,064
|
|
|
6,074
|
|
Buildings and
improvements
|
29,908
|
|
|
29,240
|
|
|
28,629
|
|
Fixtures and
equipment
|
5,622
|
|
|
5,912
|
|
|
5,356
|
|
Computer hardware and
software
|
2,627
|
|
|
2,544
|
|
|
2,575
|
|
Construction-in-progress
|
667
|
|
|
460
|
|
|
685
|
|
Accumulated
depreciation
|
(18,866)
|
|
|
(18,687)
|
|
|
(18,147)
|
|
Property and
equipment, net
|
26,012
|
|
|
25,533
|
|
|
25,172
|
|
Operating lease
assets
|
2,062
|
|
|
1,965
|
|
|
1,976
|
|
Other noncurrent
assets
|
1,373
|
|
|
1,273
|
|
|
1,345
|
|
Total
assets
|
$
|
41,566
|
|
|
$
|
41,290
|
|
|
$
|
39,996
|
|
Liabilities and
shareholders' investment
|
|
|
|
|
|
Accounts
payable
|
$
|
9,152
|
|
|
$
|
9,761
|
|
|
$
|
9,116
|
|
Accrued and other
current liabilities
|
4,059
|
|
|
4,201
|
|
|
3,878
|
|
Current portion of
long-term debt and other borrowings
|
1,153
|
|
|
1,052
|
|
|
1,044
|
|
Total current
liabilities
|
14,364
|
|
|
15,014
|
|
|
14,038
|
|
Long-term debt and
other borrowings
|
10,365
|
|
|
10,223
|
|
|
10,108
|
|
Noncurrent operating
lease liabilities
|
2,111
|
|
|
2,004
|
|
|
2,028
|
|
Deferred income
taxes
|
1,082
|
|
|
972
|
|
|
828
|
|
Other noncurrent
liabilities
|
1,808
|
|
|
1,780
|
|
|
1,827
|
|
Total noncurrent
liabilities
|
15,366
|
|
|
14,979
|
|
|
14,791
|
|
Shareholders'
investment
|
|
|
|
|
|
Common
stock
|
43
|
|
|
43
|
|
|
44
|
|
Additional paid-in
capital
|
6,114
|
|
|
6,042
|
|
|
5,788
|
|
Retained
earnings
|
6,461
|
|
|
6,017
|
|
|
6,058
|
|
Accumulated other
comprehensive loss
|
(782)
|
|
|
(805)
|
|
|
(723)
|
|
Total shareholders'
investment
|
11,836
|
|
|
11,297
|
|
|
11,167
|
|
Total liabilities
and shareholders' investment
|
$
|
41,566
|
|
|
$
|
41,290
|
|
|
$
|
39,996
|
|
Common Stock Authorized 6,000,000,000 shares,
$0.0833 par value; 511,335,375,
517,761,600 and 526,112,846 shares issued and outstanding at
August 3, 2019, February 2, 2019, and August 4,
2018, 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)
|
|
August 3,
2019
|
|
August 4,
2018
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
|
1,733
|
|
|
$
|
1,517
|
|
Earnings from
discontinued operations, net of tax
|
|
3
|
|
|
1
|
|
Net earnings from
continuing operations
|
|
1,730
|
|
|
1,516
|
|
Adjustments to
reconcile net earnings to cash provided by operations
|
|
|
|
|
Depreciation and
amortization
|
|
1,267
|
|
|
1,234
|
|
Share-based
compensation expense
|
|
86
|
|
|
71
|
|
Deferred income
taxes
|
|
104
|
|
|
129
|
|
Noncash
losses / (gains) and other, net
|
|
42
|
|
|
99
|
|
Changes in operating
accounts
|
|
|
|
|
Inventory
|
|
375
|
|
|
(515)
|
|
Other
assets
|
|
64
|
|
|
1
|
|
Accounts
payable
|
|
(731)
|
|
|
342
|
|
Accrued and other
liabilities
|
|
(127)
|
|
|
(154)
|
|
Cash provided by
operating activities—continuing operations
|
|
2,810
|
|
|
2,723
|
|
Cash provided
by operating activities—discontinued operations
|
|
2
|
|
|
1
|
|
Cash provided by
operations
|
|
2,812
|
|
|
2,724
|
|
Investing
activities
|
|
|
|
|
Expenditures for
property and equipment
|
|
(1,394)
|
|
|
(1,856)
|
|
Proceeds from
disposal of property and equipment
|
|
10
|
|
|
15
|
|
Other
investments
|
|
—
|
|
|
3
|
|
Cash required for
investing activities
|
|
(1,384)
|
|
|
(1,838)
|
|
Financing
activities
|
|
|
|
|
Additions to
long-term debt
|
|
994
|
|
|
—
|
|
Reductions of
long-term debt
|
|
(1,026)
|
|
|
(255)
|
|
Dividends
paid
|
|
(658)
|
|
|
(665)
|
|
Repurchase of
stock
|
|
(662)
|
|
|
(954)
|
|
Accelerated share
repurchase pending final settlement
|
|
—
|
|
|
(525)
|
|
Stock option
exercises
|
|
24
|
|
|
50
|
|
Cash required for
financing activities
|
|
(1,328)
|
|
|
(2,349)
|
|
Net
increase / (decrease) in cash and cash
equivalents
|
|
100
|
|
|
(1,463)
|
|
Cash and cash
equivalents at beginning of period
|
|
1,556
|
|
|
2,643
|
|
Cash and cash
equivalents at end of period
|
|
$
|
1,656
|
|
|
$
|
1,180
|
|
TARGET
CORPORATION
|
|
Operating
Results
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
Rate Analysis (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Gross margin
rate
|
30.6
|
%
|
|
30.3
|
%
|
|
30.1
|
%
|
|
30.0
|
%
|
SG&A expense
rate
|
21.2
|
|
|
21.7
|
|
|
21.0
|
|
|
21.4
|
|
Depreciation and
amortization (exclusive of depreciation included in cost of sales)
expense rate
|
3.0
|
|
|
3.0
|
|
|
3.2
|
|
|
3.2
|
|
Operating income
margin rate
|
7.2
|
|
|
6.4
|
|
|
6.8
|
|
|
6.3
|
|
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 $168
million and $328 million of profit-sharing income under our credit
card program agreement for the three and six months ended
August 3, 2019, respectively, and $167 million and $333
million for the three and six months ended August 4, 2018,
respectively.
|
|
|
|
Three Months Ended
|
|
Six Months
Ended
|
Comparable Sales (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Comparable sales
change
|
3.4
|
%
|
|
6.5
|
%
|
|
4.1
|
%
|
|
4.8
|
%
|
Drivers of change in
comparable sales
|
|
|
|
|
|
|
|
Number of
transactions
|
2.4
|
|
|
6.4
|
|
|
3.3
|
|
|
5.0
|
|
Average transaction
amount
|
0.9
|
|
|
0.1
|
|
|
0.7
|
|
|
(0.3)
|
|
Note: Amounts may not
foot due to rounding.
|
|
|
|
Three Months Ended
|
|
Six Months
Ended
|
Contribution to
Comparable Sales Change (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Stores channel
comparable sales change
|
1.5
|
%
|
|
4.9
|
%
|
|
2.1
|
%
|
|
3.4
|
%
|
Digital channel
contribution to comparable sales change
|
1.8
|
|
|
1.5
|
|
|
1.9
|
|
|
1.3
|
|
Total comparable
sales change
|
3.4
|
%
|
|
6.5
|
%
|
|
4.1
|
%
|
|
4.8
|
%
|
Note: Amounts may not
foot due to rounding.
|
|
|
|
Three Months Ended
|
|
Six Months
Ended
|
Sales by Channel (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Stores
originated
|
92.7
|
%
|
|
94.4
|
%
|
|
92.8
|
%
|
|
94.6
|
%
|
Digitally
originated
|
7.3
|
|
|
5.6
|
|
|
7.2
|
|
|
5.4
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
REDcard
Penetration (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Target Debit
Card
|
12.5
|
%
|
|
13.0
|
%
|
|
12.8
|
%
|
|
13.2
|
%
|
Target Credit
Cards
|
10.7
|
|
|
10.9
|
|
|
10.6
|
|
|
10.8
|
|
Total REDcard
Penetration
|
23.2
|
%
|
|
23.9
|
%
|
|
23.4
|
%
|
|
24.0
|
%
|
Note: Amounts may not
foot due to rounding.
|
|
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
Number of Stores
and Retail Square Feet
(unaudited)
|
August 3,
2019
|
February 2,
2019
|
August 4,
2018
|
|
August 3,
2019
|
February 2,
2019
|
August 4,
2018
|
170,000 or more sq.
ft.
|
272
|
|
272
|
|
274
|
|
|
48,619
|
|
48,604
|
|
48,952
|
|
50,000 to 169,999 sq.
ft.
|
1,499
|
|
1,501
|
|
1,502
|
|
|
188,711
|
|
188,900
|
|
189,258
|
|
49,999 or less sq.
ft.
|
82
|
|
71
|
|
59
|
|
|
2,357
|
|
2,077
|
|
1,644
|
|
Total
|
1,853
|
|
1,844
|
|
1,835
|
|
|
239,687
|
|
239,581
|
|
239,854
|
|
|
|
(a)
|
In thousands,
reflects total square feet less office, distribution center, 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 from continuing operations
(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 continuing operations. This
measure is not in accordance with, or an alternative to, generally
accepted accounting principles in the
United States (GAAP). The most comparable GAAP measure is
diluted earnings per share from continuing operations (GAAP EPS).
Adjusted EPS should not be considered in isolation or as a
substitution for analysis of our results as reported under GAAP.
Other companies may calculate Adjusted EPS differently, limiting
the usefulness of the measure for comparisons with other
companies.
|
Three Months
Ended
|
|
|
|
August 3,
2019
|
|
August 4,
2018
|
|
|
(millions, except
per share data) (unaudited)
|
Pretax
|
|
Net of
Tax
|
|
Per Share
Amounts
|
|
Pretax
|
|
Net of
Tax
|
|
Per Share
Amounts
|
|
Change
|
GAAP diluted earnings
per share from continuing operations
|
|
|
|
|
$
|
1.82
|
|
|
|
|
|
|
$
|
1.49
|
|
|
22.0
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax matters
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12)
|
|
|
(0.02)
|
|
|
|
Adjusted diluted
earnings per share from continuing operations
|
|
|
|
|
$
|
1.82
|
|
|
|
|
|
|
$
|
1.47
|
|
|
23.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
August 3,
2019
|
|
August 4,
2018
|
|
|
(millions, except
per share data) (unaudited)
|
Pretax
|
|
Net of
Tax
|
|
Per Share
Amounts
|
|
Pretax
|
|
Net
of Tax
|
|
Per Share
Amounts
|
|
Change
|
GAAP diluted earnings
per share from continuing operations
|
|
|
|
|
$
|
3.34
|
|
|
|
|
|
|
$
|
2.81
|
|
|
18.7
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax matters
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18)
|
|
|
(0.03)
|
|
|
|
Adjusted diluted
earnings per share from continuing operations
|
|
|
|
|
$
|
3.34
|
|
|
|
|
|
|
$
|
2.78
|
|
|
20.1
|
%
|
|
Note: Amounts
may not foot due to rounding.
|
(a)
|
Represents benefits
from the resolution of certain income tax matters unrelated to
current period operations.
|
Earnings from continuing operations before interest expense and
income taxes (EBIT) and earnings before interest expense, income
taxes, depreciation and amortization (EBITDA) are non-GAAP
financial measures which we believe 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 from continuing
operations. EBIT and EBITDA should not be considered in isolation
or as a substitution for analysis of our results as reported under
GAAP. Other companies may calculate EBIT and EBITDA differently,
limiting the usefulness of the measure for comparisons with other
companies.
EBIT and
EBITDA
|
Three Months Ended
|
|
|
|
Six Months
Ended
|
|
|
(millions) (unaudited)
|
August 3,
2019
|
|
August 4,
2018
|
|
Change
|
|
August 3,
2019
|
|
August 4,
2018
|
|
Change
|
Net earnings from
continuing operations
|
$
|
938
|
|
|
$
|
799
|
|
|
17.4
|
%
|
|
$
|
1,730
|
|
|
$
|
1,516
|
|
|
14.1
|
%
|
+ Provision for
income taxes
|
279
|
|
|
223
|
|
|
25.2
|
|
|
509
|
|
|
433
|
|
|
17.5
|
|
+ Net interest
expense
|
120
|
|
|
115
|
|
|
4.3
|
|
|
246
|
|
|
237
|
|
|
3.8
|
|
EBIT
|
$
|
1,337
|
|
|
$
|
1,137
|
|
|
17.6
|
%
|
|
$
|
2,485
|
|
|
$
|
2,186
|
|
|
13.6
|
%
|
+ Total depreciation
and amortization (a)
|
624
|
|
|
603
|
|
|
3.5
|
|
|
1,267
|
|
|
1,234
|
|
|
2.7
|
|
EBITDA
|
$
|
1,961
|
|
|
$
|
1,740
|
|
|
12.7
|
%
|
|
$
|
3,752
|
|
|
$
|
3,420
|
|
|
9.7
|
%
|
|
|
(a)
|
Represents total
depreciation and amortization, including amounts classified within
Depreciation and Amortization and within Cost of Sales.
|
We have also disclosed after-tax return on invested capital from
continuing operations (ROIC), which is a ratio based on GAAP
information. 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
|
|
August 3,
2019
|
|
August 4,
2018 (a)
|
|
|
Operating
income
|
|
$
|
4,395
|
|
|
$
|
4,150
|
|
|
|
+ Net other income /
(expense)
|
|
42
|
|
|
41
|
|
|
|
EBIT
|
|
4,437
|
|
|
4,191
|
|
|
|
+ Operating lease
interest (b)
|
|
85
|
|
|
81
|
|
|
|
- Income taxes
(c)(d)
|
|
937
|
|
|
589
|
|
|
|
Net operating
profit after taxes
|
|
$
|
3,585
|
|
|
$
|
3,683
|
|
|
|
|
|
Denominator
|
|
August 3,
2019
|
|
August 4,
2018
|
|
July 29,
2017
|
Current portion of
long-term debt and other borrowings
|
|
$
|
1,153
|
|
|
$
|
1,044
|
|
|
$
|
1,365
|
|
+ Noncurrent portion
of long-term debt
|
|
10,365
|
|
|
10,108
|
|
|
10,706
|
|
+ Shareholders'
equity
|
|
11,836
|
|
|
11,167
|
|
|
11,055
|
|
+ Operating lease
liabilities (e)
|
|
2,285
|
|
|
2,183
|
|
|
2,032
|
|
- Cash and cash
equivalents
|
|
1,656
|
|
|
1,180
|
|
|
2,291
|
|
- Net assets of
discontinued operations (f)
|
|
—
|
|
|
—
|
|
|
10
|
|
Invested
capital
|
|
$
|
23,983
|
|
|
$
|
23,322
|
|
|
$
|
22,857
|
|
Average invested
capital (g)
|
|
$
|
23,652
|
|
|
$
|
23,090
|
|
|
|
After-tax return
on invested capital (d)
|
|
15.2
|
%
|
|
16.0
|
%
|
|
|
After-tax return
on invested capital excluding discrete impacts of Tax Act
(d)
|
|
15.0
|
%
|
|
14.2
|
%
|
|
|
|
|
(a)
|
Consisted of 53
weeks.
|
(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 Expenses. 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 for continuing operations, which were 20.7
percent and 13.8 percent for the trailing twelve months ended
August 3, 2019, and August 4, 2018, respectively. For the
trailing twelve months ended August 3, 2019, and
August 4, 2018, includes tax effect of $919 million and $578
million, respectively, related to EBIT, and $18 million and $11
million, respectively, related to operating lease
interest.
|
(d)
|
The effective tax
rate for the trailing twelve months ended August 3, 2019, and
August 4, 2018, includes discrete tax benefits of $36 million
and $343 million, respectively, related to the Tax Cuts and Jobs
Act of 2017 (Tax Act).
|
(e)
|
Total short-term and
long-term operating lease liabilities included within Accrued and
Other Current Liabilities and Noncurrent Operating Lease
Liabilities.
|
(f)
|
Included in Other
Assets and Liabilities.
|
(g)
|
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