MINNEAPOLIS, Aug. 17,
2022 /PRNewswire/ --
- Comparable sales grew 2.6 percent, on top of 8.9 percent
growth last year.
-
- Comparable sales growth reflected 2.7 percent traffic
growth.
- Growth reflected continued strength in Food & Beverage,
Beauty and Household Essentials.
- The Company gained unit share in all five of its core
merchandising categories in the second quarter.
- Store comparable sales increased 1.3 percent, on top of 8.7
percent growth last year.
- Digital comparable sales grew 9.0 percent, following growth
of 9.9 percent last year.
- Same-day services (Order Pickup, Drive Up and Shipt) grew
nearly 11 percent this year, led by Drive Up, which grew in the
mid-teens on top of more than 80 percent last year.
- More than 95 percent of Target's second quarter sales were
fulfilled by its stores.
- Operating margin rate of 1.2 percent reflected gross margin
pressure from actions to reduce excess inventory as well as higher
freight and transportation costs.
- As a result of the Company's inventory actions in the second
quarter, the Company reduced its inventory exposure in
discretionary categories while investing in rapidly-growing
frequency categories. Additionally, Fall season receipts in
discretionary categories were reduced by more than $1.5 billion.
For additional media materials, please
visit:
https://corporate.target.com/article/2022/08/q2-2022-earnings
Target Corporation (NYSE: TGT) today announced its second
quarter 2022 financial results, which reflected continued sales and
traffic growth on top of unprecedented increases over the last two
years, and profit pressure driven primarily by the Company's
inventory reduction efforts.
The Company reported second quarter GAAP earnings per share
(EPS) of $0.39, down 89.2 percent
from $3.65 in 2021. Second quarter
Adjusted EPS1 of $0.39
decreased 89.2 percent compared with $3.64 in 2021. The attached tables provide a
reconciliation of non-GAAP to GAAP measures. All earnings per share
figures refer to diluted EPS.
"I'm really pleased with the underlying performance of our
business, which continues to grow traffic and sales while
delivering broad-based unit-share gains in a very challenging
environment," said Brian Cornell,
chairman and chief executive officer of Target Corporation. "I want
to thank our team for their tireless work to deliver on the
inventory rightsizing goals we announced in June. While these
inventory actions put significant pressure on our near-term
profitability, we're confident this was the right long-term
decision in support of our guests, our team and our business.
Looking ahead, the team is energized and ready to serve our guests
in the back half of the year, with a safe, clean, uncluttered
shopping experience, compelling value across every category, and a
fresh assortment to serve our guests' wants and needs."
Fiscal 2022 Guidance
While the Company is planning cautiously for the remainder of
the year, current trends support the company's prior guidance for
full-year revenue growth in the low- to mid-single digit range, and
an operating margin rate in a range around 6% in the back half of
the year.
Operating Results
Comparable sales grew 2.6 percent in the second quarter,
reflecting comparable store sales growth of 1.3 percent and
comparable digital sales growth of 9.0 percent. Total revenue of
$26.0 billion grew 3.5 percent
compared with last year, reflecting total sales growth of 3.3
percent and a 14.8 percent increase in other revenue. Operating
income was $321 million in second
quarter 2022, down 87.0 percent from $2.5
billion in 2021, reflecting a decline in the Company's gross
margin rate.
Second quarter operating income margin rate was 1.2 percent in
2022, compared with 9.8 percent in 2021. Second quarter gross
margin rate was 21.5 percent, compared with 30.4 percent in 2021.
This year's gross margin rate reflected higher markdown rates,
driven primarily by inventory impairments and actions taken to
address lower-than-expected sales in discretionary categories, as
well as higher merchandise, inventory shrink, and freight
costs. Additionally, gross margin rate was pressured by
increased compensation and headcount in our distribution centers,
the costs of managing excess inventory, and higher per-unit
last-mile shipping costs. Second quarter SG&A expense rate was
19.2 percent in 2022, compared with 19.3 percent in 2021,
reflecting the impact of lower incentive compensation, partially
offset by cost increases across our business, including investments
in hourly team member wages.
Interest Expense and Taxes
The Company's second quarter 2022 net interest expense was
$112 million, compared with
$104 million last year, reflecting
higher commercial paper and average long-term debt levels.
Second quarter 2022 effective income tax rate was 15.8 percent,
compared with the prior year rate of 23.4 percent, reflecting the
impact of tax benefits on lower pre-tax earnings compared with last
year.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $417
million in the second quarter, compared with $336 million last year, reflecting a 32.4 percent
increase in the dividend per share, partially offset by a decline
in average share count.
Final settlement of an Accelerated Share Repurchase (ASR)
arrangement, which the Company initiated during the first quarter
of 2022 occurred in early June. As a result, the Company
recorded the repurchase of $2.6
billion worth of its shares through the ASR, reflecting the
retirement of 12.5 million shares of common stock at an average
price of $211.58. As of the end of
the second 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 2022,
after-tax return on invested capital (ROIC) was 18.4 percent,
compared with 31.7 percent for the trailing twelve months through
second quarter 2021. The decrease in ROIC was driven primarily by
lower profitability in second quarter 2022. 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 on link under "Upcoming Events"). A
replay of the webcast will be provided when available. The replay
number is 1-866-430-8795.
Miscellaneous
Statements in this release regarding second half and full year
revenue growth and operating margin rates 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 actions 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 29, 2022.
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. For
the latest store count or more information, visit
Target.com/Pressroom. For a behind-the-scenes look at Target, visit
Target.com/abullseyeview or follow @TargetNews on Twitter.
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)
|
|
July 30,
2022
|
|
July 31,
2021
|
|
Change
|
|
July 30,
2022
|
|
July 31,
2021
|
|
Change
|
Sales
|
|
$
25,653
|
|
$
24,826
|
|
3.3 %
|
|
$
50,483
|
|
$
48,705
|
|
3.7 %
|
Other
revenue
|
|
384
|
|
334
|
|
14.8
|
|
724
|
|
652
|
|
10.9
|
Total
revenue
|
|
26,037
|
|
25,160
|
|
3.5
|
|
51,207
|
|
49,357
|
|
3.7
|
Cost of
sales
|
|
20,142
|
|
17,280
|
|
16.6
|
|
38,603
|
|
33,996
|
|
13.6
|
Selling, general and
administrative expenses
|
|
5,002
|
|
4,849
|
|
3.1
|
|
9,764
|
|
9,358
|
|
4.3
|
Depreciation and
amortization (exclusive of
depreciation included in cost of
sales)
|
|
572
|
|
564
|
|
1.5
|
|
1,173
|
|
1,162
|
|
0.9
|
Operating
income
|
|
321
|
|
2,467
|
|
(87.0)
|
|
1,667
|
|
4,841
|
|
(65.6)
|
Net interest
expense
|
|
112
|
|
104
|
|
8.0
|
|
224
|
|
212
|
|
5.8
|
Net other (income) /
expense
|
|
(8)
|
|
(7)
|
|
5.2
|
|
(23)
|
|
(350)
|
|
(93.5)
|
Earnings before income
taxes
|
|
217
|
|
2,370
|
|
(90.8)
|
|
1,466
|
|
4,979
|
|
(70.6)
|
Provision for income
taxes
|
|
34
|
|
553
|
|
(93.8)
|
|
274
|
|
1,065
|
|
(74.3)
|
Net earnings
|
|
$
183
|
|
$
1,817
|
|
(89.9) %
|
|
$
1,192
|
|
$
3,914
|
|
(69.6) %
|
Basic earnings per
share
|
|
$
0.40
|
|
$
3.68
|
|
(89.2) %
|
|
$
2.57
|
|
$
7.89
|
|
(67.4) %
|
Diluted earnings per
share
|
|
$
0.39
|
|
$
3.65
|
|
(89.2) %
|
|
$
2.55
|
|
$
7.82
|
|
(67.4) %
|
Weighted average common
shares
outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
461.5
|
|
493.1
|
|
(6.4) %
|
|
463.8
|
|
495.8
|
|
(6.5) %
|
Diluted
|
|
463.6
|
|
497.5
|
|
(6.8) %
|
|
466.8
|
|
500.4
|
|
(6.7) %
|
Antidilutive
shares
|
|
1.3
|
|
—
|
|
|
|
1.0
|
|
—
|
|
|
Dividends declared per
share
|
|
$
1.08
|
|
$
0.90
|
|
20.0 %
|
|
$
1.98
|
|
$
1.58
|
|
25.3 %
|
TARGET
CORPORATION
Consolidated
Statements of Financial Position
|
|
(millions, except
footnotes) (unaudited)
|
|
July 30,
2022
|
|
January 29,
2022
|
|
July 31,
2021
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
1,117
|
|
$
5,911
|
|
$
7,368
|
Inventory
|
|
15,320
|
|
13,902
|
|
11,259
|
Other current
assets
|
|
2,016
|
|
1,760
|
|
1,604
|
Total current
assets
|
|
18,453
|
|
21,573
|
|
20,231
|
Property and
equipment
|
|
|
|
|
|
|
Land
|
|
6,161
|
|
6,164
|
|
6,148
|
Buildings and
improvements
|
|
33,694
|
|
32,985
|
|
32,133
|
Fixtures and
equipment
|
|
6,744
|
|
6,407
|
|
5,892
|
Computer hardware and
software
|
|
2,684
|
|
2,505
|
|
2,260
|
Construction-in-progress
|
|
2,245
|
|
1,257
|
|
944
|
Accumulated
depreciation
|
|
(21,708)
|
|
(21,137)
|
|
(20,133)
|
Property and
equipment, net
|
|
29,820
|
|
28,181
|
|
27,244
|
Operating lease
assets
|
|
2,542
|
|
2,556
|
|
2,503
|
Other noncurrent
assets
|
|
1,655
|
|
1,501
|
|
1,407
|
Total
assets
|
|
$
52,470
|
|
$
53,811
|
|
$
51,385
|
Liabilities and
shareholders' investment
|
|
|
|
|
|
|
Accounts
payable
|
|
$
14,891
|
|
$
15,478
|
|
$
12,632
|
Accrued and other
current liabilities
|
|
5,905
|
|
6,098
|
|
5,600
|
Current portion of
long-term debt and other borrowings
|
|
1,649
|
|
171
|
|
1,190
|
Total current
liabilities
|
|
22,445
|
|
21,747
|
|
19,422
|
Long-term debt and
other borrowings
|
|
13,453
|
|
13,549
|
|
11,589
|
Noncurrent operating
lease liabilities
|
|
2,543
|
|
2,493
|
|
2,462
|
Deferred income
taxes
|
|
1,862
|
|
1,566
|
|
1,146
|
Other noncurrent
liabilities
|
|
1,575
|
|
1,629
|
|
1,906
|
Total noncurrent
liabilities
|
|
19,433
|
|
19,237
|
|
17,103
|
Shareholders'
investment
|
|
|
|
|
|
|
Common
stock
|
|
38
|
|
39
|
|
41
|
Additional paid-in
capital
|
|
6,502
|
|
6,421
|
|
6,332
|
Retained
earnings
|
|
4,421
|
|
6,920
|
|
9,200
|
Accumulated other
comprehensive loss
|
|
(369)
|
|
(553)
|
|
(713)
|
Total shareholders'
investment
|
|
10,592
|
|
12,827
|
|
14,860
|
Total liabilities
and shareholders' investment
|
|
$
52,470
|
|
$
53,811
|
|
$
51,385
|
Common
Stock Authorized 6,000,000,000 shares, $0.0833 par value;
460,236,393, 471,274,073 and 489,651,196 shares issued and
outstanding as of July 30, 2022, January 29, 2022, and
July 31, 2021, 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 30,
2022
|
|
July 31,
2021
|
Operating
activities
|
|
|
|
|
Net earnings
|
|
$
1,192
|
|
$
3,914
|
Adjustments to
reconcile net earnings to cash (required for) provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
1,329
|
|
1,300
|
Share-based
compensation expense
|
|
122
|
|
138
|
Deferred income
taxes
|
|
227
|
|
143
|
Gain on Dermstore
sale
|
|
—
|
|
(335)
|
Noncash losses /
(gains) and other, net
|
|
108
|
|
7
|
Changes in operating
accounts:
|
|
|
|
|
Inventory
|
|
(1,418)
|
|
(606)
|
Other
assets
|
|
(179)
|
|
3
|
Accounts
payable
|
|
(784)
|
|
(311)
|
Accrued and other
liabilities
|
|
(644)
|
|
(831)
|
Cash (required for)
provided by operating activities
|
|
(47)
|
|
3,422
|
Investing
activities
|
|
|
|
|
Expenditures for
property and equipment
|
|
(2,523)
|
|
(1,338)
|
Proceeds from disposal
of property and equipment
|
|
4
|
|
15
|
Proceeds from
Dermstore sale
|
|
—
|
|
356
|
Other
investments
|
|
1
|
|
(5)
|
Cash required for
investing activities
|
|
(2,518)
|
|
(972)
|
Financing
activities
|
|
|
|
|
Change in commercial
paper, net
|
|
1,545
|
|
—
|
Reductions of
long-term debt
|
|
(113)
|
|
(72)
|
Dividends
paid
|
|
(842)
|
|
(676)
|
Repurchase of
stock
|
|
(2,821)
|
|
(2,850)
|
Stock option
exercises
|
|
2
|
|
5
|
Cash required for
financing activities
|
|
(2,229)
|
|
(3,593)
|
Net decrease in cash
and cash equivalents
|
|
(4,794)
|
|
(1,143)
|
Cash and cash
equivalents at beginning of period
|
|
5,911
|
|
8,511
|
Cash and cash
equivalents at end of period
|
|
$
1,117
|
|
$
7,368
|
TARGET
CORPORATION
Operating
Results
|
|
Rate
Analysis
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Gross margin
rate
|
|
21.5 %
|
|
30.4 %
|
|
23.5 %
|
|
30.2 %
|
SG&A expense
rate
|
|
19.2
|
|
19.3
|
|
19.1
|
|
19.0
|
Depreciation and
amortization expense rate (exclusive of
depreciation included in cost of
sales)
|
|
2.2
|
|
2.2
|
|
2.3
|
|
2.4
|
Operating income margin
rate
|
|
1.2
|
|
9.8
|
|
3.3
|
|
9.8
|
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 $181 million and
$366 million of profit-sharing income under our credit card
program agreement for the three and six months ended July 30,
2022, respectively, and $172 million and $343 million for the
three and six months ended July 31, 2021,
respectively.
|
Comparable
Sales
|
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Comparable sales
change
|
|
2.6 %
|
|
8.9 %
|
|
3.0 %
|
|
15.3 %
|
Drivers of change in
comparable sales
|
|
|
|
|
|
|
|
|
Number of transactions
(traffic)
|
|
2.7
|
|
12.7
|
|
3.3
|
|
14.8
|
Average transaction
amount
|
|
0.0
|
|
(3.4)
|
|
(0.3)
|
|
0.5
|
Comparable Sales by
Channel
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Stores originated
comparable sales change
|
1.3 %
|
|
8.7 %
|
|
2.3 %
|
|
13.0 %
|
Digitally originated
comparable sales change
|
9.0
|
|
9.9
|
|
6.1
|
|
27.3
|
Sales by
Channel
|
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Stores
originated
|
|
82.1 %
|
|
83.0 %
|
|
81.9 %
|
|
82.3 %
|
Digitally
originated
|
|
17.9
|
|
17.0
|
|
18.1
|
|
17.7
|
Total
|
|
100 %
|
|
100 %
|
|
100 %
|
|
100 %
|
Sales by
Fulfillment Channel
|
|
Three Months Ended
|
|
Six Months
Ended
|
(unaudited)
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Stores
|
|
96.6 %
|
|
96.6 %
|
|
96.6 %
|
|
96.4 %
|
Other
|
|
3.4
|
|
3.4
|
|
3.4
|
|
3.6
|
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 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Target Debit
Card
|
|
11.2 %
|
|
11.6 %
|
|
11.4 %
|
|
11.9 %
|
Target Credit
Cards
|
|
8.9
|
|
8.7
|
|
8.8
|
|
8.6
|
Total RedCard
Penetration
|
|
20.1 %
|
|
20.3 %
|
|
20.2 %
|
|
20.4 %
|
Note: Amounts may not
foot due to rounding.
|
Number of Stores and
Retail Square Feet
|
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
(unaudited)
|
|
July 30,
2022
|
|
January 29,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
January 29,
2022
|
|
July 31,
2021
|
170,000 or more sq.
ft.
|
|
273
|
|
274
|
|
273
|
|
48,798
|
|
49,071
|
|
48,798
|
50,000 to 169,999 sq.
ft.
|
|
1,521
|
|
1,516
|
|
1,510
|
|
190,734
|
|
190,205
|
|
189,624
|
49,999 or less sq.
ft.
|
|
143
|
|
136
|
|
126
|
|
4,256
|
|
4,008
|
|
3,709
|
Total
|
|
1,937
|
|
1,926
|
|
1,909
|
|
243,788
|
|
243,284
|
|
242,131
|
(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 (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 30,
2022
|
|
July 31,
2021
|
|
|
(millions, except
per share data) (unaudited)
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Change
|
GAAP diluted earnings
per share
|
|
|
|
|
|
$ 0.39
|
|
|
|
|
|
$ 3.65
|
|
(89.2) %
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(a)
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(5)
|
|
$
(4)
|
|
$
(0.01)
|
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
$ 0.39
|
|
|
|
|
|
$ 3.64
|
|
(89.2) %
|
Reconciliation of
Non-GAAP
Adjusted
EPS
|
|
Six Months
Ended
|
|
|
|
July 30,
2022
|
|
July 31,
2021
|
|
|
(millions, except
per share data) (unaudited)
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Change
|
GAAP diluted earnings
per share
|
|
|
|
|
|
$ 2.55
|
|
|
|
|
|
$ 7.82
|
|
(67.4) %
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Dermstore
sale
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(335)
|
|
$ (269)
|
|
$
(0.54)
|
|
|
Other
(a)
|
|
20
|
|
15
|
|
0.03
|
|
36
|
|
27
|
|
0.05
|
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
$ 2.59
|
|
|
|
|
|
$ 7.34
|
|
(64.8) %
|
Note: Amounts may not
foot due to rounding.
|
(a)
|
Other items unrelated
to current period operations, none of which were individually
significant.
|
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 30,
2022
|
|
July 31,
2021
|
|
Change
|
|
July 30,
2022
|
|
July 31,
2021
|
|
Change
|
Net earnings
|
|
$
183
|
|
$
1,817
|
|
(89.9) %
|
|
$
1,192
|
|
$
3,914
|
|
(69.6) %
|
+ Provision for
income taxes
|
|
34
|
|
553
|
|
(93.8)
|
|
274
|
|
1,065
|
|
(74.3)
|
+ Net interest
expense
|
|
112
|
|
104
|
|
8.0
|
|
224
|
|
212
|
|
5.8
|
EBIT
|
|
$
329
|
|
$
2,474
|
|
(86.7) %
|
|
$
1,690
|
|
$
5,191
|
|
(67.4) %
|
+ Total
depreciation and amortization (a)
|
|
650
|
|
633
|
|
2.8
|
|
1,329
|
|
1,300
|
|
2.3
|
EBITDA
|
|
$
979
|
|
$
3,107
|
|
(68.5) %
|
|
$
3,019
|
|
$
6,491
|
|
(53.5) %
|
(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 30,
2022
|
|
July 31,
2021
|
|
|
Operating
income
|
|
$
5,773
|
|
$
8,611
|
|
|
+ Net other
income / (expense)
|
|
54
|
|
346
|
|
|
EBIT
|
|
5,827
|
|
8,957
|
|
|
+ Operating lease
interest (a)
|
|
88
|
|
84
|
|
|
- Income
taxes (b)
|
|
1,282
|
|
1,918
|
|
|
Net operating profit
after taxes
|
|
$
4,633
|
|
$
7,123
|
|
|
Denominator
|
|
July 30,
2022
|
|
July 31,
2021
|
|
August 1,
2020
|
Current portion of
long-term debt and other borrowings
|
|
$
1,649
|
|
$
1,190
|
|
$
109
|
+ Noncurrent
portion of long-term debt
|
|
13,453
|
|
11,589
|
|
14,188
|
+ Shareholders'
investment
|
|
10,592
|
|
14,860
|
|
12,578
|
+ Operating lease
liabilities (c)
|
|
2,823
|
|
2,695
|
|
2,448
|
- Cash
and cash equivalents
|
|
1,117
|
|
7,368
|
|
7,284
|
Invested
capital
|
|
$
27,400
|
|
$
22,966
|
|
$
22,039
|
Average invested
capital (d)
|
|
$
25,183
|
|
$
22,502
|
|
|
After-tax return on
invested capital
|
|
18.4 %
|
|
31.7 %
|
|
|
(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 21.7 percent and 21.2 percent for
the trailing twelve months ended July 30, 2022, and
July 31, 2021, respectively. For the twelve months ended
July 30, 2022, and July 31, 2021, includes tax effect of
$1.3 billion and $1.9 billion, 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, 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