MINNEAPOLIS, Nov. 20, 2019 /PRNewswire/ --
- Third quarter comparable sales grew 4.5 percent, on top of
5.1 percent last year, meaning that comparable sales have risen
nearly 10 percent over the last two years.
- Third quarter comparable sales growth reflects 2.8 percent
growth in stores and a 1.7 percentage point contribution from
digital sales.
- Third quarter comparable digital channel sales grew 31
percent, on top of 49 percent last year. Same-day fulfillment
services (Order Pick Up, Drive Up and Shipt) accounted for 80% of
Target's digital comparable sales growth.
- Third quarter comparable traffic grew 3.1 percent, driven by
increases in both stores and digital channels.
- Third quarter operating income grew 22.3 percent compared
with last year.
- GAAP EPS from continuing operations of $1.37 was 18.2 percent higher than last year.
Adjusted EPS of $1.36 was 24.9
percent higher than last year.
- Target now expects full-year 2019 GAAP EPS from continuing
operations of $6.27 to $6.47 and Adjusted EPS of $6.25 to $6.45, compared with the prior range of
$5.90 to $6.20.
- For additional media materials, please
visit: https://corporate.target.com/article/2019/11/q3-2019-earnings
Target Corporation (NYSE: TGT) today announced its third quarter
2019 performance, including comparable sales growth of 4.5 percent
and a 3.1 percent increase in comparable traffic. The Company
reported GAAP earnings per share (EPS) from continuing
operations of $1.37 in third quarter
2019, up 18.2 percent from $1.16 in
third quarter 2018. Third quarter Adjusted EPS of
$1.36 was 24.9 percent higher than
$1.09 in third 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 "The Target team did an excellent job serving our
guests and executing our strategy throughout the third quarter. Our
third quarter results are further proof of the durability of our
strategy, as we're seeing industry-leading strength across multiple
metrics, from the top line to the bottom line. Looking ahead, we
have ushered in the holiday season with an unwavering commitment to
guest service that complements our highly differentiated,
value-driven assortment, our exceptional in-store shopping
experience as well as an unmatched suite of easy and
convenient fulfillment options."
Fourth Quarter and Full-Year 2019 Guidance
For the fourth quarter, Target expects comparable sales growth
of 3 to 4 percent, and GAAP EPS from continuing operations of
$1.55 to $1.75 and Adjusted EPS of $1.54 to $1.74. For
the full year, the Company now expects GAAP EPS from continuing
operations of $6.27 to $6.47 and Adjusted EPS of $6.25 to $6.45,
compared with the prior range of $5.90 to $6.20. The
difference between the GAAP and Adjusted ranges reflect an expected
$0.01 impact from a discrete item in
the fourth quarter and the $0.01
difference recognized through the third quarter.
Fourth quarter and full-year 2019 GAAP EPS from continuing
operations may include the impact of additional discrete items
which will be excluded in calculating Adjusted EPS.
The Company announced today that it plans to issue a
post-holiday financial update on Wednesday,
January 15, 2020.
Operating Results
Total revenue of $18.7 billion
increased 4.7 percent from $17.8
billion last year, reflecting sales growth combined with an
8.8 percent increase in other revenue. Third quarter sales growth
of 4.7 percent reflected comparable sales growth of 4.5 percent
combined with the contribution from non-mature stores. Comparable
digital sales grew 31 percent, contributing 1.7 percentage points
to total comparable sales growth. Operating income was
$1,002 million in third quarter 2019,
up 22.3 percent from $819 million in
third quarter 2018.
Third quarter operating income margin rate was 5.4 percent in
2019, compared with 4.6 percent in 2018. Third quarter gross margin
rate was 29.8 percent, compared with 28.7 percent in 2018,
reflecting the benefit of merchandising efforts to optimize costs,
pricing, promotions and assortment, combined with favorable
category sales mix. Third quarter SG&A expense rate was 22.3
percent in 2019, compared with 22.1 percent in 2018. This
increase reflected higher marketing and compensation costs,
partially offset by broad-based cost savings.
Interest Expense and Taxes
The Company's third quarter 2019 net interest expense was
$113 million, compared with
$115 million last year, reflecting
lower average net debt balances compared to last year. Third
quarter 2019 effective income tax rate from continuing operations
was 21.7 percent, compared with 13.6 percent last year. Last year's
effective income tax rate included discrete benefits of the Tax
Cuts and Jobs Act of 2017 (Tax Act).
Shareholder Returns
The Company returned $631 million
to shareholders in third quarter 2019, including:
- Dividends of $337 million,
compared with $337 million in third
quarter 2018, reflecting a 3.1 percent increase in the dividend per
share offset by a decline in share count.
- Share repurchases totaling $294
million that retired 3.0 million shares of common stock at
an average price of $99.25.
At the end of the third quarter, the Company had approximately
$0.3 billion of remaining capacity
under the $5 billion share repurchase
program approved in 2016. In September
2019, Target's Board of Directors authorized a new
$5 billion share repurchase program.
Repurchases through this program will begin upon completion of the
2016 program.
For the trailing twelve months through third quarter 2019,
after-tax return on invested capital (ROIC) was 15.0 percent,
compared with 15.8 percent for the twelve months through third
quarter 2018. Excluding the discrete impacts of the Tax Act, ROIC
was 15.1 percent for the trailing twelve months ended November 2, 2019, compared with 13.9 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 third quarter earnings conference call
at 7:00 a.m. CST 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.
CST today through the end of business on November 22, 2019. The replay number is
800-477-4783.
Miscellaneous
Statements in this release regarding fourth 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
|
|
|
|
Nine Months
Ended
|
|
|
(millions, except per share data) (unaudited)
|
|
November 2,
2019
|
|
November 3,
2018
|
|
Change
|
|
November 2,
2019
|
|
November 3,
2018
|
|
Change
|
Sales
|
|
$
|
18,414
|
|
|
$
|
17,590
|
|
|
4.7
|
%
|
|
$
|
53,997
|
|
|
$
|
51,699
|
|
|
4.4
|
%
|
Other
revenue
|
|
251
|
|
|
231
|
|
|
8.8
|
|
|
716
|
|
|
680
|
|
|
5.3
|
|
Total
revenue
|
|
18,665
|
|
|
17,821
|
|
|
4.7
|
|
|
54,713
|
|
|
52,379
|
|
|
4.5
|
|
Cost of
sales
|
|
12,935
|
|
|
12,535
|
|
|
3.2
|
|
|
37,808
|
|
|
36,400
|
|
|
3.9
|
|
Selling, general and
administrative expenses
|
|
4,153
|
|
|
3,937
|
|
|
5.5
|
|
|
11,728
|
|
|
11,347
|
|
|
3.4
|
|
Depreciation and
amortization (exclusive of depreciation included in cost of
sales)
|
|
575
|
|
|
530
|
|
|
8.5
|
|
|
1,717
|
|
|
1,639
|
|
|
4.8
|
|
Operating
income
|
|
1,002
|
|
|
819
|
|
|
22.3
|
|
|
3,460
|
|
|
2,993
|
|
|
15.6
|
|
Net interest
expense
|
|
113
|
|
|
115
|
|
|
(1.6)
|
|
|
359
|
|
|
352
|
|
|
2.0
|
|
Net other
(income) / expense
|
|
(12)
|
|
|
(9)
|
|
|
36.5
|
|
|
(38)
|
|
|
(21)
|
|
|
83.8
|
|
Earnings from
continuing operations before income taxes
|
|
901
|
|
|
713
|
|
|
26.3
|
|
|
3,139
|
|
|
2,662
|
|
|
17.9
|
|
Provision for income
taxes
|
|
195
|
|
|
97
|
|
|
100.8
|
|
|
703
|
|
|
530
|
|
|
32.8
|
|
Net earnings from
continuing operations
|
|
706
|
|
|
616
|
|
|
14.5
|
|
|
2,436
|
|
|
2,132
|
|
|
14.3
|
|
Discontinued
operations, net of tax
|
|
8
|
|
|
6
|
|
|
|
|
11
|
|
|
7
|
|
|
|
Net
earnings
|
|
$
|
714
|
|
|
$
|
622
|
|
|
14.8
|
%
|
|
$
|
2,447
|
|
|
$
|
2,139
|
|
|
14.4
|
%
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
1.38
|
|
|
$
|
1.17
|
|
|
18.2
|
%
|
|
$
|
4.75
|
|
|
$
|
4.01
|
|
|
18.5
|
%
|
Discontinued
operations
|
|
0.02
|
|
|
0.01
|
|
|
|
|
0.02
|
|
|
0.01
|
|
|
|
Net earnings per
share
|
|
$
|
1.40
|
|
|
$
|
1.18
|
|
|
18.5
|
%
|
|
$
|
4.77
|
|
|
$
|
4.02
|
|
|
18.6
|
%
|
Diluted earnings
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
1.37
|
|
|
$
|
1.16
|
|
|
18.2
|
%
|
|
$
|
4.71
|
|
|
$
|
3.98
|
|
|
18.5
|
%
|
Discontinued
operations
|
|
0.02
|
|
|
0.01
|
|
|
|
|
0.02
|
|
|
0.01
|
|
|
|
Net earnings per
share
|
|
$
|
1.39
|
|
|
$
|
1.17
|
|
|
18.5
|
%
|
|
$
|
4.74
|
|
|
$
|
3.99
|
|
|
18.7
|
%
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
509.7
|
|
|
525.9
|
|
|
(3.1)
|
%
|
|
512.5
|
|
|
531.5
|
|
|
(3.6)
|
%
|
Diluted
|
|
514.8
|
|
|
531.2
|
|
|
(3.1)
|
%
|
|
516.8
|
|
|
536.2
|
|
|
(3.6)
|
%
|
Antidilutive
shares
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Dividends declared
per share
|
|
$
|
0.66
|
|
|
$
|
0.64
|
|
|
3.1
|
%
|
|
$
|
1.96
|
|
|
$
|
1.90
|
|
|
3.2
|
%
|
Note: Per share
amounts may not foot due to rounding.
|
TARGET
CORPORATION
|
|
Consolidated
Statements of Financial Position
|
|
(millions, except
footnotes) (unaudited)
|
|
November 2,
2019
|
|
February 2,
2019
|
|
November 3,
2018
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
969
|
|
|
$
|
1,556
|
|
|
$
|
825
|
|
Inventory
|
|
11,396
|
|
|
9,497
|
|
|
12,393
|
|
Other current
assets
|
|
1,440
|
|
|
1,466
|
|
|
1,421
|
|
Total current
assets
|
|
13,805
|
|
|
12,519
|
|
|
14,639
|
|
Property and
equipment
|
|
|
|
|
|
|
Land
|
|
6,040
|
|
|
6,064
|
|
|
6,069
|
|
Buildings and
improvements
|
|
30,467
|
|
|
29,240
|
|
|
29,090
|
|
Fixtures and
equipment
|
|
6,032
|
|
|
5,912
|
|
|
5,784
|
|
Computer hardware and
software
|
|
2,636
|
|
|
2,544
|
|
|
2,660
|
|
Construction-in-progress
|
|
298
|
|
|
460
|
|
|
384
|
|
Accumulated
depreciation
|
|
(19,089)
|
|
|
(18,687)
|
|
|
(18,380)
|
|
Property and
equipment, net
|
|
26,384
|
|
|
25,533
|
|
|
25,607
|
|
Operating lease
assets
|
|
2,151
|
|
|
1,965
|
|
|
1,997
|
|
Other noncurrent
assets
|
|
1,401
|
|
|
1,273
|
|
|
1,329
|
|
Total
assets
|
|
$
|
43,741
|
|
|
$
|
41,290
|
|
|
$
|
43,572
|
|
Liabilities and
shareholders' investment
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
11,258
|
|
|
$
|
9,761
|
|
|
$
|
11,959
|
|
Accrued and other
current liabilities
|
|
4,191
|
|
|
4,201
|
|
|
4,096
|
|
Current portion of
long-term debt and other borrowings
|
|
1,159
|
|
|
1,052
|
|
|
1,535
|
|
Total current
liabilities
|
|
16,608
|
|
|
15,014
|
|
|
17,590
|
|
Long-term debt and
other borrowings
|
|
10,513
|
|
|
10,223
|
|
|
10,104
|
|
Noncurrent operating
lease liabilities
|
|
2,208
|
|
|
2,004
|
|
|
2,046
|
|
Deferred income
taxes
|
|
1,215
|
|
|
972
|
|
|
970
|
|
Other noncurrent
liabilities
|
|
1,652
|
|
|
1,780
|
|
|
1,782
|
|
Total noncurrent
liabilities
|
|
15,588
|
|
|
14,979
|
|
|
14,902
|
|
Shareholders'
investment
|
|
|
|
|
|
|
Common
stock
|
|
42
|
|
|
43
|
|
|
43
|
|
Additional paid-in
capital
|
|
6,006
|
|
|
6,042
|
|
|
5,867
|
|
Retained
earnings
|
|
6,270
|
|
|
6,017
|
|
|
5,884
|
|
Accumulated other
comprehensive loss
|
|
(773)
|
|
|
(805)
|
|
|
(714)
|
|
Total shareholders'
investment
|
|
11,545
|
|
|
11,297
|
|
|
11,080
|
|
Total liabilities
and shareholders' investment
|
|
$
|
43,741
|
|
|
$
|
41,290
|
|
|
$
|
43,572
|
|
Common Stock Authorized 6,000,000,000 shares,
$0.0833 par value; 506,677,740,
517,761,600 and 521,810,597 shares issued and outstanding at
November 2, 2019, February 2, 2019, and November 3,
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
|
|
|
|
Nine Months
Ended
|
(millions) (unaudited)
|
|
November 2,
2019
|
|
November 3,
2018
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
|
2,447
|
|
|
$
|
2,139
|
|
Earnings from
discontinued operations, net of tax
|
|
11
|
|
|
7
|
|
Net earnings from
continuing operations
|
|
2,436
|
|
|
2,132
|
|
Adjustments to
reconcile net earnings to cash provided by operations
|
|
|
|
|
Depreciation and
amortization
|
|
1,905
|
|
|
1,826
|
|
Share-based
compensation expense
|
|
116
|
|
|
106
|
|
Deferred income
taxes
|
|
235
|
|
|
261
|
|
Noncash
losses / (gains) and other, net
|
|
6
|
|
|
85
|
|
Changes in operating
accounts
|
|
|
|
|
Inventory
|
|
(1,899)
|
|
|
(3,796)
|
|
Other
assets
|
|
(10)
|
|
|
(140)
|
|
Accounts
payable
|
|
1,473
|
|
|
3,298
|
|
Accrued and other
liabilities
|
|
(121)
|
|
|
(158)
|
|
Cash provided by
operating activities—continuing operations
|
|
4,141
|
|
|
3,614
|
|
Cash provided
by operating activities—discontinued operations
|
|
18
|
|
|
10
|
|
Cash provided by
operations
|
|
4,159
|
|
|
3,624
|
|
Investing
activities
|
|
|
|
|
Expenditures for
property and equipment
|
|
(2,403)
|
|
|
(2,873)
|
|
Proceeds from
disposal of property and equipment
|
|
29
|
|
|
39
|
|
Other
investments
|
|
14
|
|
|
15
|
|
Cash required for
investing activities
|
|
(2,360)
|
|
|
(2,819)
|
|
Financing
activities
|
|
|
|
|
Change in commercial
paper, net
|
|
—
|
|
|
490
|
|
Additions to
long-term debt
|
|
994
|
|
|
—
|
|
Reductions of
long-term debt
|
|
(1,041)
|
|
|
(268)
|
|
Dividends
paid
|
|
(995)
|
|
|
(1,001)
|
|
Repurchase of
stock
|
|
(959)
|
|
|
(1,485)
|
|
Accelerated share
repurchase pending final settlement
|
|
(450)
|
|
|
(450)
|
|
Stock option
exercises
|
|
65
|
|
|
91
|
|
Cash required for
financing activities
|
|
(2,386)
|
|
|
(2,623)
|
|
Net decrease in cash
and cash equivalents
|
|
(587)
|
|
|
(1,818)
|
|
Cash and cash
equivalents at beginning of period
|
|
1,556
|
|
|
2,643
|
|
Cash and cash
equivalents at end of period
|
|
$
|
969
|
|
|
$
|
825
|
|
TARGET
CORPORATION
|
|
Operating
Results
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Rate Analysis
(unaudited)
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Gross margin
rate
|
29.8
|
%
|
|
28.7
|
%
|
|
30.0
|
%
|
|
29.6
|
%
|
SG&A expense
rate
|
22.3
|
|
|
22.1
|
|
|
21.4
|
|
|
21.7
|
|
Depreciation and
amortization (exclusive of depreciation included in cost of sales)
expense rate
|
3.1
|
|
|
3.0
|
|
|
3.1
|
|
|
3.1
|
|
Operating income
margin rate
|
5.4
|
|
|
4.6
|
|
|
6.3
|
|
|
5.7
|
|
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 $177
million and $505 million of profit-sharing income under our credit
card program agreement for the three and nine months ended
November 2, 2019, respectively, and $169 million and $503
million for the three and nine months ended November 3, 2018,
respectively.
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
Comparable Sales
(unaudited)
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Comparable sales
change
|
4.5
|
%
|
|
5.1
|
%
|
|
4.2
|
%
|
|
4.9
|
%
|
Drivers of change in
comparable sales
|
|
|
|
|
|
|
|
Number of
transactions
|
3.1
|
|
|
5.3
|
|
|
3.3
|
|
|
5.1
|
|
Average transaction
amount
|
1.4
|
|
|
(0.2)
|
|
|
0.9
|
|
|
(0.2)
|
|
Note: Amounts may not
foot due to rounding.
|
|
Contribution to
Comparable Sales Change
(unaudited)
|
Three Months Ended
|
|
Nine Months
Ended
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Stores channel
comparable sales change
|
2.8
|
%
|
|
3.2
|
%
|
|
2.3
|
%
|
|
3.4
|
%
|
Digital channel
contribution to comparable sales change
|
1.7
|
|
|
1.9
|
|
|
1.9
|
|
|
1.5
|
|
Total comparable
sales change
|
4.5
|
%
|
|
5.1
|
%
|
|
4.2
|
%
|
|
4.9
|
%
|
Note: Amounts may not
foot due to rounding.
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
Sales by Channel
(unaudited)
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Stores
originated
|
92.5
|
%
|
|
94.0
|
%
|
|
92.7
|
%
|
|
94.4
|
%
|
Digitally
originated
|
7.5
|
|
|
6.0
|
|
|
7.3
|
|
|
5.6
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
RedCard
Penetration
(unaudited)
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Target Debit
Card
|
12.5
|
%
|
|
12.9
|
%
|
|
12.7
|
%
|
|
13.1
|
%
|
Target Credit
Cards
|
10.7
|
|
|
10.8
|
|
|
10.6
|
|
|
10.8
|
|
Total RedCard
Penetration
|
23.1
|
%
|
|
23.7
|
%
|
|
23.3
|
%
|
|
23.9
|
%
|
Note: Amounts may not
foot due to rounding.
|
|
Number of Stores
and Retail Square Feet
(unaudited)
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
November 2,
2019
|
February 2,
2019
|
November 3,
2018
|
|
November 2,
2019
|
February 2,
2019
|
November 3,
2018
|
170,000 or more sq.
ft.
|
272
|
|
272
|
|
273
|
|
|
48,619
|
|
48,604
|
|
48,778
|
|
50,000 to 169,999 sq.
ft.
|
1,504
|
|
1,501
|
|
1,505
|
|
|
189,164
|
|
188,900
|
|
189,496
|
|
49,999 or less sq.
ft.
|
86
|
|
71
|
|
68
|
|
|
2,475
|
|
2,077
|
|
1,984
|
|
Total
|
1,862
|
|
1,844
|
|
1,846
|
|
|
240,258
|
|
239,581
|
|
240,258
|
|
(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
|
|
|
|
|
November 2,
2019
|
|
November 3,
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
|
|
|
|
|
|
$
|
1.37
|
|
|
|
|
|
|
$
|
1.16
|
|
|
18.2
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Act
(a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(39)
|
|
|
$
|
(0.07)
|
|
|
|
Other
(c)
|
|
(9)
|
|
|
(6)
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Adjusted diluted
earnings per share from continuing operations
|
|
|
|
|
|
$
|
1.36
|
|
|
|
|
|
|
$
|
1.09
|
|
|
24.9
|
%
|
|
|
|
Nine Months
Ended
|
|
|
|
|
November 2,
2019
|
|
November 3,
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
|
|
|
|
|
|
$
|
4.71
|
|
|
|
|
|
|
$
|
3.98
|
|
|
18.5
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Act
(a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(39)
|
|
|
$
|
(0.07)
|
|
|
|
Income tax matters
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18)
|
|
|
(0.03)
|
|
|
|
Other
(c)
|
|
(9)
|
|
|
(6)
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Adjusted diluted
earnings per share from continuing operations
|
|
|
|
|
|
$
|
4.70
|
|
|
|
|
|
|
$
|
3.87
|
|
|
21.4
|
%
|
Note: Amounts
may not foot due to rounding.
|
(a)
|
Represents discrete
items related to the Tax Cuts and Jobs Act of 2017 (Tax
Act).
|
(b)
|
Represents benefits
from the resolution of certain income tax matters unrelated to
current period operations.
|
(c)
|
Represents an
insurance recovery related to the 2013 data breach.
|
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
|
|
|
|
Nine Months
Ended
|
|
|
(millions) (unaudited)
|
|
November 2,
2019
|
|
November 3,
2018
|
|
Change
|
|
November 2,
2019
|
|
November 3,
2018
|
|
Change
|
Net earnings from
continuing operations
|
|
$
|
706
|
|
|
$
|
616
|
|
|
14.5
|
%
|
|
$
|
2,436
|
|
|
$
|
2,132
|
|
|
14.3
|
%
|
+ Provision for
income taxes
|
|
195
|
|
|
97
|
|
|
100.8
|
|
|
703
|
|
|
530
|
|
|
32.8
|
|
+ Net interest
expense
|
|
113
|
|
|
115
|
|
|
(1.6)
|
|
|
359
|
|
|
352
|
|
|
2.0
|
|
EBIT
|
|
$
|
1,014
|
|
|
$
|
828
|
|
|
22.4
|
%
|
|
$
|
3,498
|
|
|
$
|
3,014
|
|
|
16.1
|
%
|
+ Total depreciation
and amortization (a)
|
|
637
|
|
|
592
|
|
|
7.6
|
|
|
1,905
|
|
|
1,826
|
|
|
4.3
|
|
EBITDA
|
|
$
|
1,651
|
|
|
$
|
1,420
|
|
|
16.2
|
%
|
|
$
|
5,403
|
|
|
$
|
4,840
|
|
|
11.6
|
%
|
(a)
|
Represents total
depreciation and amortization, including amounts classified within
Depreciation and Amortization and within Cost of Sales.
|
We have also disclosed after-tax 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
|
|
November 2,
2019
|
|
November
3,
2018
(a)
|
|
|
Operating
income
|
|
$
|
4,577
|
|
|
$
|
4,122
|
|
|
|
+ Net other income /
(expense)
|
|
45
|
|
|
35
|
|
|
|
EBIT
|
|
4,622
|
|
|
4,157
|
|
|
|
+ Operating lease
interest (b)
|
|
86
|
|
|
83
|
|
|
|
- Income taxes
(c)(d)
|
|
1,043
|
|
|
524
|
|
|
|
Net operating
profit after taxes
|
|
$
|
3,665
|
|
|
$
|
3,716
|
|
|
|
|
Denominator
|
|
November 2,
2019
|
|
November 3,
2018
|
|
October 28,
2017
|
Current portion of
long-term debt and other borrowings
|
|
$
|
1,159
|
|
|
$
|
1,535
|
|
|
$
|
1,366
|
|
+ Noncurrent portion
of long-term debt
|
|
10,513
|
|
|
10,104
|
|
|
11,090
|
|
+ Shareholders'
equity
|
|
11,545
|
|
|
11,080
|
|
|
11,092
|
|
+ Operating lease
liabilities (e)
|
|
2,390
|
|
|
2,208
|
|
|
2,041
|
|
- Cash and cash
equivalents
|
|
969
|
|
|
825
|
|
|
2,725
|
|
- Net assets of
discontinued operations (f)
|
|
—
|
|
|
—
|
|
|
4
|
|
Invested
capital
|
|
$
|
24,638
|
|
|
$
|
24,102
|
|
|
$
|
22,860
|
|
Average invested
capital (g)
|
|
$
|
24,369
|
|
|
$
|
23,481
|
|
|
|
After-tax return
on invested capital (d)
|
|
|
15.0
|
%
|
|
|
15.8
|
%
|
|
|
|
|
After-tax return
on invested capital excluding discrete impacts of Tax Act
(d)
|
|
|
15.1
|
%
|
|
|
13.9
|
%
|
|
|
|
|
(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 22.1
percent and 12.3 percent for the trailing twelve months ended
November 2, 2019, and November 3, 2018, respectively. For
the trailing twelve months ended November 2, 2019, and
November 3, 2018, includes tax effect of $1,024 million and
$514 million, respectively, related to EBIT, and $19 million and
$10 million, respectively, related to operating lease
interest.
|
(d)
|
The effective tax
rate for the trailing twelve months ended November 2, 2019,
and November 3, 2018, includes discrete tax items of $(3)
million and $382 million, respectively, related to the 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