MINNEAPOLIS, Aug. 19, 2020 /PRNewswire/ --
•
|
Second quarter
comparable sales grew 24.3 percent, the strongest the Company has
ever reported.
|
•
|
Store comparable
sales increased 10.9 percent. Digital comparable sales grew 195
percent, accounting for 13.4 percentage points of Target's
comparable sales growth.
|
|
°
|
Stores fulfilled
more than 90 percent of Target's second quarter
sales.
|
|
°
|
Same-day services
(Order Pick Up, Drive Up and Shipt) grew 273 percent and accounted
for approximately 6 percentage points of total Company comparable
sales growth.
|
•
|
The Company saw
unusually strong market-share gains across all five of its core
merchandise categories. In the first half of the year, the Company
has gained approximately $5 billion in market share.
|
•
|
Second quarter
GAAP EPS from continuing operations of $3.35 was 84.4 percent
higher than last year, and Adjusted EPS1 of $3.38 was
85.7 percent higher than last year, as strong operating performance
offset unprecedented investments in team member pay &
benefits.
|
•
|
For additional
media materials, please visit:
https://corporate.target.com/article/2020/08/q2-2020-earnings
|
Target Corporation (NYSE: TGT) today announced its second
quarter 2020 results, which reflect the continuation of heightened
sales volume and significant investments in response to the
COVID-19 pandemic. The Company reported GAAP earnings per
share (EPS) from continuing operations of $3.35 in the second quarter, an increase of 84.4
percent from $1.82 in 2019.
Second quarter Adjusted EPS of $3.38
grew 85.7 percent compared with $1.82
in 2019. The attached tables provide a reconciliation of non-GAAP
to GAAP measures. All earnings per share figures refer to diluted
EPS.
"Our second quarter comparable sales growth of 24.3 percent is
the strongest we have ever reported, which is a true testament to
the resilience of our team and the durability of our business
model. Our stores were the key to this unprecedented growth, with
in-store comp sales growing 10.9 percent and stores enabling more
than three-quarters of Target's digital sales, which rose nearly
200 percent. We also generated outstanding profitability in the
quarter, even as we made significant investments in pay and
benefits for our team," said Brian
Cornell, chairman and chief executive officer of Target
Corporation. "We remain steadfast in our focus on investing in a
safe and convenient shopping experience for our guests, and their
trust has resulted in market share gains of $5 billion in the first six months of the
year. With our differentiated merchandising assortment, a
comprehensive set of convenient fulfillment options, a strong
balance sheet, and our deeply dedicated team, we are well-equipped
to navigate the ongoing challenges of the pandemic, and continue to
grow profitably in the years ahead."
Fiscal 2020 Guidance
During the first quarter, the Company withdrew its guidance
given the unusually wide range of potential outcomes, in light of
the highly fluid and uncertain outlook for consumer shopping
patterns and government policies related to COVID-19.
Operating
Results
The Company's total comparable sales grew 24.3 percent in the
second quarter, reflecting comparable stores sales growth of 10.9
percent and digital sales growth of 195 percent. Total revenue of
$23.0 billion grew 24.7 percent
compared with last year, reflecting sales growth of 24.8 percent
and a 16.6 percent increase in other revenue. Operating income was
$2.3 billion in second quarter 2020,
up 73.8 percent from $1.3 billion in
2019.
Second quarter operating income margin rate was 10.0 percent in
2020 compared with 7.2 percent in 2019, driven primarily by strong
expense leverage on robust topline performance. Second quarter
gross margin rate was 30.9 percent, compared with 30.6 percent in
2019. This increase reflected sales strength across our entire
multi-category assortment and lower discounts driven by high sell
through rates. Second quarter SG&A expense rate was 19.4
percent in 2020, compared with 21.2 percent in 2019,
reflecting higher compensation costs, including investments in
wages and benefits, which were more than offset by the net impact
of other factors, most prominently the leverage from strong sales
growth.
Interest Expense and Taxes
The Company's second quarter 2020 net interest expense was
$122 million, compared with
$120 million last year.
Second quarter 2020 effective income tax rate was 22.8 percent,
compared with 23.0 percent last year, reflecting a larger rate
benefit from discrete items, primarily related to share-based
payments, compared with the prior year.
Shareholder Returns
The Company paid dividends of $330
million, compared with $328
million in second quarter 2019, reflecting a 3.1 percent
increase in the dividend per share, partially offset by a decline
in average share count.
On March 25, 2020, the Company
announced that it had suspended share repurchase activity as a
result of the high level of uncertainty in the current environment.
As of the end of the second quarter, the Company had approximately
$4.5 billion of remaining capacity
under the repurchase program approved by Target's Board of
Directors in September 2019.
For the trailing twelve months through second quarter 2020,
after-tax return on invested capital (ROIC) was 17.2 percent,
compared with 15.2 percent for the twelve months through second
quarter 2019. The increase to ROIC was driven primarily by
increased profitability combined with a small decrease in capital
base. 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
Investors.Target.com (click "investors" then click on "events &
presentations"). A replay of the webcast will be provided when
available. The replay number is 1-800-391-9846.
Miscellaneous
Statements in this release regarding the Company's future
financial performance and future effects of COVID-19 on the
Company's business 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 Feb. 1, 2020 and Item 1A of the Company's Form
10-Q for the fiscal quarter ended May 2,
2020. 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 1,900 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.
For more on the Target Foundation, click here.
|
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.
|
|
|
|
TARGET
CORPORATION
|
|
Consolidated
Statements of Operations
|
|
|
Three Months Ended
|
|
|
|
Six Months
Ended
|
|
|
(millions, except per share data) (unaudited)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
Change
|
|
August 1,
2020
|
|
August 3,
2019
|
|
Change
|
Sales
|
|
$
|
22,696
|
|
|
$
|
18,183
|
|
|
24.8
|
%
|
|
$
|
42,067
|
|
|
$
|
35,584
|
|
|
18.2
|
%
|
Other
revenue
|
|
279
|
|
|
239
|
|
|
16.6
|
|
|
523
|
|
|
465
|
|
|
12.3
|
|
Total
revenue
|
|
22,975
|
|
|
18,422
|
|
|
24.7
|
|
|
42,590
|
|
|
36,049
|
|
|
18.1
|
|
Cost of
sales
|
|
15,673
|
|
|
12,625
|
|
|
24.1
|
|
|
30,183
|
|
|
24,874
|
|
|
21.3
|
|
Selling, general and
administrative expenses
|
|
4,460
|
|
|
3,912
|
|
|
14.0
|
|
|
8,520
|
|
|
7,575
|
|
|
12.5
|
|
Depreciation and
amortization (exclusive of depreciation included in cost of
sales)
|
|
542
|
|
|
561
|
|
|
(3.5)
|
|
|
1,119
|
|
|
1,142
|
|
|
(2.1)
|
|
Operating
income
|
|
2,300
|
|
|
1,324
|
|
|
73.8
|
|
|
2,768
|
|
|
2,458
|
|
|
12.6
|
|
Net interest
expense
|
|
122
|
|
|
120
|
|
|
1.9
|
|
|
239
|
|
|
246
|
|
|
(2.5)
|
|
Net other (income) /
expense
|
|
(11)
|
|
|
(13)
|
|
|
(19.5)
|
|
|
11
|
|
|
(27)
|
|
|
(141.9)
|
|
Earnings from
continuing operations before income taxes
|
|
2,189
|
|
|
1,217
|
|
|
79.8
|
|
|
2,518
|
|
|
2,239
|
|
|
12.5
|
|
Provision for income
taxes
|
|
499
|
|
|
279
|
|
|
78.3
|
|
|
544
|
|
|
509
|
|
|
7.0
|
|
Net earnings from
continuing operations
|
|
1,690
|
|
|
938
|
|
|
80.3
|
|
|
1,974
|
|
|
1,730
|
|
|
14.1
|
|
Discontinued
operations, net of tax
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
3
|
|
|
|
Net
earnings
|
|
$
|
1,690
|
|
|
$
|
938
|
|
|
80.3
|
%
|
|
$
|
1,974
|
|
|
$
|
1,733
|
|
|
13.9
|
%
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
3.38
|
|
|
$
|
1.83
|
|
|
84.6
|
%
|
|
$
|
3.94
|
|
|
$
|
3.37
|
|
|
17.1
|
%
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
0.01
|
|
|
|
Net earnings per
share
|
|
$
|
3.38
|
|
|
$
|
1.83
|
|
|
84.6
|
%
|
|
$
|
3.94
|
|
|
$
|
3.37
|
|
|
16.9
|
%
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
3.35
|
|
|
$
|
1.82
|
|
|
84.4
|
%
|
|
$
|
3.91
|
|
|
$
|
3.34
|
|
|
17.0
|
%
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
0.01
|
|
|
|
Net earnings per
share
|
|
$
|
3.35
|
|
|
$
|
1.82
|
|
|
84.4
|
%
|
|
$
|
3.91
|
|
|
$
|
3.35
|
|
|
16.8
|
%
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
500.1
|
|
|
512.1
|
|
|
(2.3)
|
%
|
|
500.6
|
|
|
513.9
|
|
|
(2.6)
|
%
|
Diluted
|
|
504.4
|
|
|
516.1
|
|
|
(2.3)
|
%
|
|
505.1
|
|
|
517.8
|
|
|
(2.5)
|
%
|
Antidilutive
shares
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Dividends declared
per share
|
|
$
|
0.68
|
|
|
$
|
0.66
|
|
|
3.0
|
%
|
|
$
|
1.34
|
|
|
$
|
1.30
|
|
|
3.1
|
%
|
|
Note: Per share
amounts may not foot due to rounding.
|
TARGET
CORPORATION
|
|
Consolidated
Statements of Financial Position
|
(millions, except
footnotes) (unaudited)
|
|
August 1,
2020
|
|
February 1,
2020
|
|
August 3,
2019
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,284
|
|
|
$
|
2,577
|
|
|
$
|
1,656
|
|
Inventory
|
|
8,876
|
|
|
8,992
|
|
|
9,122
|
|
Other current
assets
|
|
1,463
|
|
|
1,333
|
|
|
1,341
|
|
Total current
assets
|
|
17,623
|
|
|
12,902
|
|
|
12,119
|
|
Property and
equipment
|
|
|
|
|
|
|
Land
|
|
6,027
|
|
|
6,036
|
|
|
6,054
|
|
Buildings and
improvements
|
|
30,946
|
|
|
30,603
|
|
|
29,908
|
|
Fixtures and
equipment
|
|
5,665
|
|
|
6,083
|
|
|
5,622
|
|
Computer hardware and
software
|
|
2,631
|
|
|
2,692
|
|
|
2,627
|
|
Construction-in-progress
|
|
811
|
|
|
533
|
|
|
667
|
|
Accumulated
depreciation
|
|
(19,341)
|
|
|
(19,664)
|
|
|
(18,866)
|
|
Property and
equipment, net
|
|
26,739
|
|
|
26,283
|
|
|
26,012
|
|
Operating lease
assets
|
|
2,233
|
|
|
2,236
|
|
|
2,062
|
|
Other noncurrent
assets
|
|
1,405
|
|
|
1,358
|
|
|
1,373
|
|
Total
assets
|
|
$
|
48,000
|
|
|
$
|
42,779
|
|
|
$
|
41,566
|
|
Liabilities and
shareholders' investment
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
10,726
|
|
|
$
|
9,920
|
|
|
$
|
9,152
|
|
Accrued and other
current liabilities
|
|
5,057
|
|
|
4,406
|
|
|
4,059
|
|
Current portion of
long-term debt and other borrowings
|
|
109
|
|
|
161
|
|
|
1,153
|
|
Total current
liabilities
|
|
15,892
|
|
|
14,487
|
|
|
14,364
|
|
Long-term debt and
other borrowings
|
|
14,188
|
|
|
11,338
|
|
|
10,365
|
|
Noncurrent operating
lease liabilities
|
|
2,241
|
|
|
2,275
|
|
|
2,111
|
|
Deferred income
taxes
|
|
1,121
|
|
|
1,122
|
|
|
1,082
|
|
Other noncurrent
liabilities
|
|
1,980
|
|
|
1,724
|
|
|
1,808
|
|
Total noncurrent
liabilities
|
|
19,530
|
|
|
16,459
|
|
|
15,366
|
|
Shareholders'
investment
|
|
|
|
|
|
|
Common
stock
|
|
42
|
|
|
42
|
|
|
43
|
|
Additional paid-in
capital
|
|
6,248
|
|
|
6,226
|
|
|
6,114
|
|
Retained
earnings
|
|
7,121
|
|
|
6,433
|
|
|
6,461
|
|
Accumulated other
comprehensive loss
|
|
(833)
|
|
|
(868)
|
|
|
(782)
|
|
Total shareholders'
investment
|
|
12,578
|
|
|
11,833
|
|
|
11,836
|
|
Total liabilities
and shareholders' investment
|
|
$
|
48,000
|
|
|
$
|
42,779
|
|
|
$
|
41,566
|
|
Common Stock Authorized 6,000,000,000 shares,
$0.0833 par value; 500,252,831,
504,198,962 and 511,335,375 shares issued and outstanding as of
August 1, 2020, February 1, 2020, and August 3,
2019, 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 1,
2020
|
|
August 3,
2019
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
|
1,974
|
|
|
$
|
1,733
|
|
Earnings from
discontinued operations, net of tax
|
|
—
|
|
|
3
|
|
Net earnings from
continuing operations
|
|
1,974
|
|
|
1,730
|
|
Adjustments to
reconcile net earnings to cash provided by operations:
|
|
|
|
|
Depreciation and
amortization
|
|
1,245
|
|
|
1,267
|
|
Share-based
compensation expense
|
|
104
|
|
|
86
|
|
Deferred income
taxes
|
|
(12)
|
|
|
104
|
|
Noncash losses /
(gains) and other, net
|
|
86
|
|
|
42
|
|
Changes in operating
accounts:
|
|
|
|
|
Inventory
|
|
116
|
|
|
375
|
|
Other
assets
|
|
(14)
|
|
|
64
|
|
Accounts
payable
|
|
795
|
|
|
(731)
|
|
Accrued and other
liabilities
|
|
822
|
|
|
(127)
|
|
Cash provided by
operating activities—continuing operations
|
|
5,116
|
|
|
2,810
|
|
Cash provided by
operating activities—discontinued operations
|
|
—
|
|
|
2
|
|
Cash provided by
operations
|
|
5,116
|
|
|
2,812
|
|
Investing
activities
|
|
|
|
|
Expenditures for
property and equipment
|
|
(1,414)
|
|
|
(1,394)
|
|
Proceeds from disposal
of property and equipment
|
|
10
|
|
|
10
|
|
Other
investments
|
|
2
|
|
|
—
|
|
Cash required for
investing activities
|
|
(1,402)
|
|
|
(1,384)
|
|
Financing
activities
|
|
|
|
|
Additions to long-term
debt
|
|
2,480
|
|
|
994
|
|
Reductions of
long-term debt
|
|
(126)
|
|
|
(1,026)
|
|
Dividends
paid
|
|
(662)
|
|
|
(658)
|
|
Repurchase of
stock
|
|
(706)
|
|
|
(662)
|
|
Stock option
exercises
|
|
7
|
|
|
24
|
|
Cash provided by /
(required for) financing activities
|
|
993
|
|
|
(1,328)
|
|
Net increase in cash
and cash equivalents
|
|
4,707
|
|
|
100
|
|
Cash and cash
equivalents at beginning of period
|
|
2,577
|
|
|
1,556
|
|
Cash and cash
equivalents at end of period
|
|
$
|
7,284
|
|
|
$
|
1,656
|
|
TARGET
CORPORATION
|
|
Operating
Results
|
Rate
Analysis
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Gross margin
rate
|
|
30.9
|
%
|
|
30.6
|
%
|
|
28.3
|
%
|
|
30.1
|
%
|
SG&A expense
rate
|
|
19.4
|
|
|
21.2
|
|
|
20.0
|
|
|
21.0
|
|
Depreciation and
amortization (exclusive of depreciation included in cost of sales)
expense rate
|
|
2.4
|
|
|
3.0
|
|
|
2.6
|
|
|
3.2
|
|
Operating income
margin rate
|
|
10.0
|
|
|
7.2
|
|
|
6.5
|
|
|
6.8
|
|
|
|
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 $158 million and
$324 million of profit-sharing income under our credit card program
agreement for the three and six months ended August 1, 2020,
respectively, and $168 million and $328 million for the three and
six months ended August 3, 2019, respectively.
|
Comparable
Sales
|
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Comparable sales
change
|
|
24.3
|
%
|
|
3.4
|
%
|
|
17.7
|
%
|
|
4.1
|
%
|
Drivers of change in
comparable sales
|
|
|
|
|
|
|
|
|
Number of
transactions
|
|
4.6
|
|
|
2.4
|
|
|
1.6
|
|
|
3.3
|
|
Average transaction
amount
|
|
18.8
|
|
|
0.9
|
|
|
15.8
|
|
|
0.7
|
|
Contribution to
Comparable Sales Change
|
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Stores originated
channel comparable sales change
|
|
10.9
|
%
|
|
1.5
|
%
|
|
6.0
|
%
|
|
2.1
|
%
|
Contribution from
digitally originated sales
|
|
13.4
|
|
|
1.8
|
|
|
11.7
|
|
|
1.9
|
|
Total comparable
sales change
|
|
24.3
|
%
|
|
3.4
|
%
|
|
17.7
|
%
|
|
4.1
|
%
|
|
Note: Amounts may not
foot due to rounding.
|
Sales by
Channel
|
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Stores
originated
|
|
82.8
|
%
|
|
92.7
|
%
|
|
83.7
|
%
|
|
92.8
|
%
|
Digitally
originated
|
|
17.2
|
|
|
7.3
|
|
|
16.3
|
|
|
7.2
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
RedCard
Penetration
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Target Debit
Card
|
|
11.8
|
%
|
|
12.5
|
%
|
|
12.2
|
%
|
|
12.8
|
%
|
Target Credit
Cards
|
|
8.7
|
|
|
10.7
|
|
|
9.2
|
|
|
10.6
|
|
Total RedCard
Penetration
|
|
20.5
|
%
|
|
23.2
|
%
|
|
21.4
|
%
|
|
23.4
|
%
|
|
Note: Amounts may not
foot due to rounding.
|
Number of Stores
and Retail Square Feet
|
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
(unaudited)
|
|
August 1,
2020
|
|
February 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
February 1,
2020
|
|
August 3,
2019
|
170,000 or more sq.
ft.
|
|
272
|
|
|
272
|
|
|
272
|
|
|
48,613
|
|
|
48,619
|
|
|
48,619
|
|
50,000 to 169,999 sq.
ft.
|
|
1,505
|
|
|
1,505
|
|
|
1,499
|
|
|
189,224
|
|
|
189,227
|
|
|
188,711
|
|
49,999 or less sq.
ft.
|
|
94
|
|
|
91
|
|
|
82
|
|
|
2,745
|
|
|
2,670
|
|
|
2,357
|
|
Total
|
|
1,871
|
|
|
1,868
|
|
|
1,853
|
|
|
240,582
|
|
|
240,516
|
|
|
239,687
|
|
|
|
(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. 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
|
|
|
|
August 1,
2020
|
|
August 3,
2019
|
|
|
(millions, except
per share data) (unaudited)
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Change
|
GAAP diluted earnings
per share from continuing operations
|
|
|
|
|
|
$
|
3.35
|
|
|
|
|
|
|
$
|
1.82
|
|
|
84.4
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on investment
(a)
|
|
$
|
(9)
|
|
|
$
|
(6)
|
|
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Other
(b)
|
|
25
|
|
|
18
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Adjusted diluted
earnings per share from continuing operations
|
|
|
|
|
|
$
|
3.38
|
|
|
|
|
|
|
$
|
1.82
|
|
|
85.7
|
%
|
|
|
Reconciliation of
Non-GAAP
Adjusted EPS
|
|
Six Months
Ended
|
|
|
|
August 1,
2020
|
|
August 3,
2019
|
|
|
(millions, except
per share data) (unaudited)
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Change
|
GAAP diluted earnings
per share from continuing operations
|
|
|
|
|
|
$
|
3.91
|
|
|
|
|
|
|
$
|
3.34
|
|
|
17.0
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on investment
(a)
|
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Other
(b)
|
|
25
|
|
|
18
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Adjusted diluted
earnings per share from continuing operations
|
|
|
|
|
|
$
|
3.96
|
|
|
|
|
|
|
$
|
3.34
|
|
|
18.6
|
%
|
|
Note: Amounts may not
foot due to rounding.
|
|
|
(a)
|
Includes an
unrealized (gain) / loss on our investment in Casper Sleep Inc.,
which is not core to our continuing operations.
|
(b)
|
Includes store damage
and inventory losses related to civil unrest.
|
Earnings from continuing operations before interest expense and
income taxes (EBIT) and earnings from continuing operations 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 for, 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 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)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
Change
|
|
August 1,
2020
|
|
August 3,
2019
|
|
Change
|
Net earnings from
continuing operations
|
|
$
|
1,690
|
|
|
$
|
938
|
|
|
80.3
|
%
|
|
$
|
1,974
|
|
|
$
|
1,730
|
|
|
14.1
|
%
|
+ Provision for
income taxes
|
|
499
|
|
|
279
|
|
|
78.3
|
|
|
544
|
|
|
509
|
|
|
7.0
|
|
+ Net interest
expense
|
|
122
|
|
|
120
|
|
|
1.9
|
|
|
239
|
|
|
246
|
|
|
(2.5)
|
|
EBIT
|
|
$
|
2,311
|
|
|
$
|
1,337
|
|
|
72.8
|
%
|
|
$
|
2,757
|
|
|
$
|
2,485
|
|
|
11.0
|
%
|
+ Total
depreciation and amortization (a)
|
|
604
|
|
|
624
|
|
|
(3.2)
|
|
|
1,245
|
|
|
1,267
|
|
|
(1.9)
|
|
EBITDA
|
|
$
|
2,915
|
|
|
$
|
1,961
|
|
|
48.6
|
%
|
|
$
|
4,002
|
|
|
$
|
3,752
|
|
|
6.7
|
%
|
|
|
(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, with the exception of the add-back of operating lease
interest to operating income. We believe this metric is useful in
assessing the effectiveness of our capital allocation over time.
Other companies may calculate ROIC differently, limiting the
usefulness of the measure for comparisons with other companies.
After-Tax Return
on Invested Capital
|
(dollars in
millions)
|
|
|
|
|
Trailing Twelve
Months
|
Numerator
|
|
August 1,
2020
|
|
August 3,
2019
|
Operating
income
|
|
$
|
4,968
|
|
|
$
|
4,395
|
|
+ Net other
income / (expense)
|
|
(28)
|
|
|
42
|
|
EBIT
|
|
4,940
|
|
|
4,437
|
|
+ Operating
lease interest (a)
|
|
87
|
|
|
85
|
|
-
Income taxes (b)
|
|
1,076
|
|
|
937
|
|
Net operating
profit after taxes
|
|
$
|
3,951
|
|
|
$
|
3,585
|
|
Denominator
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 4,
2018
|
Current portion of
long-term debt and other borrowings
|
|
$
|
109
|
|
|
$
|
1,153
|
|
|
$
|
1,044
|
|
+ Noncurrent
portion of long-term debt
|
|
14,188
|
|
|
10,365
|
|
|
10,108
|
|
+ Shareholders'
investment
|
|
12,578
|
|
|
11,836
|
|
|
11,167
|
|
+ Operating
lease liabilities (c)
|
|
2,448
|
|
|
2,285
|
|
|
2,183
|
|
- Cash
and cash equivalents
|
|
7,284
|
|
|
1,656
|
|
|
1,180
|
|
Invested
capital
|
|
$
|
22,039
|
|
|
$
|
23,983
|
|
|
$
|
23,322
|
|
Average invested
capital (d)
|
|
$
|
23,011
|
|
|
$
|
23,652
|
|
|
|
After-tax return
on invested capital
|
|
|
17.2
|
%
|
|
|
15.2
|
%
|
|
|
(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 for continuing operations, which were 21.4
percent and 20.7 percent for the trailing twelve months ended
August 1, 2020, and August 3, 2019, respectively. For the
twelve months ended August 1, 2020, and August 3, 2019,
includes tax effect of $1,057 million and $919 million,
respectively, related to EBIT and $19 million and
$18 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.
|
(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