MINNEAPOLIS, March 5,
2024 /PRNewswire/ --
Q4 2023 Highlights
- Comparable sales and traffic trends improved sequentially
for the second quarter in a row.
- Same-day services (in-store pickup, Drive Up, and Shipt),
which represent more than 10 percent of total sales, increased 13.6
percent in the quarter, led by growth in Drive Up.
- GAAP and Adjusted EPS1 of $2.98 was 57.6 percent higher than last year, and
well-above the high end of the expected range of $1.90 to $2.60.
Full-Year 2023 Highlights
- Full-year GAAP and Adjusted EPS of $8.94 were both nearly 50 percent higher than in
2022.
- The Company's operating income margin rate of 5.3 percent
was nearly two percentage points higher than last year. Operating
income dollars grew by nearly $2
billion compared with 2022, well-above
expectations.
- The Company's efficiency efforts delivered savings of more
than $500 million in 2023.
- Cash from operations more than doubled from $4.0 billion in 2022 to $8.6 billion in 2023.
- The team maintained appropriate inventory levels by category
throughout the year, resulting in lower markdown rates, more
effective operations, and stronger in-stock measures compared with
2022.
For additional media materials, please
visit:
https://corporate.target.com/news-features/article/2024/03q4-fy2023
Target Corporation (NYSE: TGT) today announced its
fourth-quarter and full-year 2023 results, both of which benefited
from an additional week of sales as compared to 2022. The
Company reported fourth-quarter GAAP and Adjusted earnings per
share (EPS) of $2.98, compared with
$1.89 in 2022. GAAP and
Adjusted EPS were $8.94 for full-year
2023, compared with $5.98 in GAAP EPS
and $6.02 in Adjusted EPS in the
prior year. The attached tables provide a reconciliation of
non-GAAP to GAAP measures. All earnings per share figures refer to
diluted EPS.
1Adjusted
EPS, a non-GAAP financial measure, excludes the impact of certain
discretely managed items. See the tables of this release for
additional information about the items that have been excluded from
Adjusted EPS.
|
"Our team's efforts changed the momentum of our business,
further improving our sales and traffic trends in the fourth
quarter while driving profitability well ahead of expectations,"
said Brian Cornell, chairman and
chief executive officer of Target Corporation.
"Throughout the season, guests responded to newness, value, and
the inspiration and ease of our in-store and digital shopping
experience. Looking ahead, we'll continue to invest in the
strengths and differentiators that have delivered strong financial
performance over time. We'll also roll out fresh innovations,
including our new Target Circle membership program, as part of our
roadmap for growth aimed at meeting consumers where they are,
reigniting sales, traffic and market share gains, and positioning
Target for profitable growth in 2024 and beyond."
Guidance
For first quarter 2024, the Company expects a comparable sales
decline of 3 to 5 percent. First quarter GAAP and Adjusted
EPS are both expected to range from $1.70 to $2.10.
For the full year, the Company expects a modest increase in
comparable sales in a range from flat to two percent. GAAP
EPS and Adjusted EPS are both expected to range from $8.60 to $9.60.
Operating Results
The Company's total comparable sales declined 4.4 percent in the
fourth quarter, reflecting comparable stores sales declines of 5.4
percent and a comparable digital sales decline of 0.7 percent.
Total revenue of $31.9 billion grew
1.7 percent in the fourth quarter compared with 2022, driven by
sales growth of 1.6 percent and a 9.8 percent increase in other
revenue. Sales growth reflected an additional week in fiscal year
2023. Operating income was $1.9
billion in fourth quarter 2023, an increase of 60.9 percent
from $1.2 billion in 2022.
Full-year sales decreased 1.7 percent to $105.8 billion from $107.6
billion last year, reflecting a 3.7 percent decrease in
comparable sales partially offset by sales from non-mature stores
and an additional week in 2023. Full-year total revenue of
$107.4 billion decreased 1.6 percent
compared with 2022, reflecting a 1.7 percent decline in sales
partially offset by a 5.1 percent increase in other revenue.
Fourth quarter operating income margin rate was 5.8 percent
in 2023 compared with 3.7 percent in 2022. Fourth quarter gross
margin rate was 25.6 percent, compared with 22.7 percent in 2022,
reflecting lower markdowns and other inventory-related costs, lower
freight costs, lower supply chain and digital fulfillment costs,
and favorable category mix. Shrink costs were lower than a year
ago, as continued increases in store loss rates were more than
offset by the timing of inventory accruals compared with 2022.
Full-year operating income of $5.7
billion in 2023 grew 48.3 percent from $3.8 billion last year. Full-year gross margin
rate was 26.5 percent, compared with 23.6 percent in 2022,
reflecting lower markdowns and other inventory-related costs, lower
freight costs and lower supply chain and digital fulfillment costs
partially offset by higher inventory shrink.
Fourth quarter SG&A expense rate was 18.9 percent in 2023,
compared with 18.1 percent in 2022. Full-year SG&A
expense rate was 20.1 percent in 2023, compared with 18.9 percent
in 2022. Rate increases in both periods reflect the
de-leveraging impact of lower sales combined with higher costs,
including continued investments in pay and benefits and
inflationary pressures throughout our business partially offset by
disciplined cost management.
Interest Expense and Taxes
The Company's fourth quarter 2023 net interest expense was
$107 million, compared with
$129 million last year, reflecting an
increase in interest income partially offset by higher debt levels
and the impact of higher floating rates on interest rate swaps.
Full-year 2023 net interest expense was $502
million, compared with $478
million in 2022, driven by higher average debt levels and
the impact of higher floating rates on interest rate swaps
partially offset by an increase in interest income.
Fourth quarter 2023 effective income tax rate was 22.6
percent, compared with 16.1 percent last year. The Company's
full-year 2023 effective income tax rate was 21.9 percent compared
with 18.7 percent in 2022. The increases in both fourth
quarter and full-year tax rates reflect higher pretax earnings and
lower discrete benefits in fiscal year 2023.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $508
million in the fourth quarter, compared with $497 million last year, reflecting a 1.9 percent
increase in the dividend per share.
The Company did not repurchase any shares in fourth quarter
2023. As of the end of the fourth 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 fourth quarter 2023,
after-tax return on invested capital (ROIC) was 16.1 percent,
compared with 12.6 percent for the twelve months through fourth
quarter 2022. This increase was driven primarily by higher
profitability partially offset by an increase in average invested
capital. The tables in this release provide additional information
about the Company's ROIC calculation.
Webcast Details
Target will webcast its financial community meeting, including a
Q&A session, beginning at 8:00 a.m.
CST today. Investors and the media are invited to listen to
the meeting at Corporate.Target.com/Investors (click on
"2024 Financial Community Meeting, including Fourth Quarter
and Full-Year 2023 Earnings" under "Events &
Presentations"). A replay of the webcast will be provided when
available.
Miscellaneous
Statements in this release regarding the Company's future
financial performance, including its fiscal 2024 first quarter and
full-year guidance, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to risks and uncertainties which could
cause the Company's results to differ materially. The most
important risks and uncertainties are described in Item 1A of the
Company's Form 10-K for the fiscal year ended January 28, 2023. Forward-looking statements
speak only as of the date they are made, and the Company does not
undertake any obligation to update any forward-looking
statement.
About Target
Minneapolis-based Target
Corporation (NYSE: TGT) serves guests at nearly 2,000 stores and at
Target.com, with the purpose of helping all families discover the
joy of everyday life. Since 1946, Target has given 5% of its profit
to communities, which today equals millions of dollars a week.
Additional company information can be found by visiting the
corporate website (corporate.target.com) and press center.
TARGET
CORPORATION
|
|
Consolidated
Statements of Operations
|
|
|
Three Months Ended
|
|
|
|
Twelve Months
Ended
|
|
|
(millions, except per share data) (unaudited)
|
|
February 3,
2024 (a)
|
|
January 28,
2023
|
|
Change
|
|
February 3,
2024 (a)
|
|
January 28,
2023
|
|
Change
|
Sales
|
|
$ 31,467
|
|
$ 30,983
|
|
1.6 %
|
|
$
105,803
|
|
$
107,588
|
|
(1.7) %
|
Other
revenue
|
|
452
|
|
412
|
|
9.8
|
|
1,609
|
|
1,532
|
|
5.1
|
Total
revenue
|
|
31,919
|
|
31,395
|
|
1.7
|
|
107,412
|
|
109,120
|
|
(1.6)
|
Cost of
sales
|
|
23,403
|
|
23,946
|
|
(2.3)
|
|
77,736
|
|
82,229
|
|
(5.5)
|
Selling, general and
administrative expenses
|
|
6,029
|
|
5,675
|
|
6.3
|
|
21,554
|
|
20,658
|
|
4.3
|
Depreciation and
amortization (exclusive of depreciation included in cost of
sales)
|
|
622
|
|
615
|
|
1.2
|
|
2,415
|
|
2,385
|
|
1.3
|
Operating
income
|
|
1,865
|
|
1,159
|
|
60.9
|
|
5,707
|
|
3,848
|
|
48.3
|
Net interest
expense
|
|
107
|
|
129
|
|
(17.7)
|
|
502
|
|
478
|
|
5.0
|
Net other
income
|
|
(28)
|
|
(13)
|
|
97.3
|
|
(92)
|
|
(48)
|
|
90.5
|
Earnings before income
taxes
|
|
1,786
|
|
1,043
|
|
71.1
|
|
5,297
|
|
3,418
|
|
55.0
|
Provision for income
taxes
|
|
404
|
|
167
|
|
141.1
|
|
1,159
|
|
638
|
|
81.7
|
Net earnings
|
|
$
1,382
|
|
$
876
|
|
57.8 %
|
|
$
4,138
|
|
$
2,780
|
|
48.8 %
|
Basic earnings per
share
|
|
$
2.99
|
|
$
1.90
|
|
57.3 %
|
|
$
8.96
|
|
$
6.02
|
|
49.0 %
|
Diluted earnings per
share
|
|
$
2.98
|
|
$
1.89
|
|
57.6 %
|
|
$
8.94
|
|
$
5.98
|
|
49.4 %
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
461.7
|
|
460.3
|
|
0.3 %
|
|
461.5
|
|
462.1
|
|
(0.1) %
|
Diluted
|
|
463.1
|
|
462.7
|
|
0.1 %
|
|
462.8
|
|
464.7
|
|
(0.4) %
|
Antidilutive
shares
|
|
0.8
|
|
1.2
|
|
|
|
2.1
|
|
1.1
|
|
|
Dividends declared per
share
|
|
$
1.10
|
|
$
1.08
|
|
1.9 %
|
|
$
4.38
|
|
$
4.14
|
|
5.8 %
|
|
|
(a)
|
The fourth quarter and
full year 2023 consisted of 14 weeks and 53 weeks, respectively,
compared with 13 weeks and 52 weeks in the comparable prior-year
periods. The extra week contributed $1,715 million of sales for the
fourth quarter and full year 2023.
|
TARGET
CORPORATION
|
|
Consolidated
Statements of Financial Position
|
(millions, except
footnotes) (unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
Assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
3,805
|
|
$
2,229
|
Inventory
|
|
11,886
|
|
13,499
|
Other current
assets
|
|
1,807
|
|
2,118
|
Total current
assets
|
|
17,498
|
|
17,846
|
Property and
equipment
|
|
|
|
|
Land
|
|
6,547
|
|
6,231
|
Buildings and
improvements
|
|
37,066
|
|
34,746
|
Fixtures and
equipment
|
|
8,765
|
|
7,439
|
Computer hardware and
software
|
|
3,428
|
|
3,039
|
Construction-in-progress
|
|
1,703
|
|
2,688
|
Accumulated
depreciation
|
|
(24,413)
|
|
(22,631)
|
Property and
equipment, net
|
|
33,096
|
|
31,512
|
Operating lease
assets
|
|
3,362
|
|
2,657
|
Other noncurrent
assets
|
|
1,400
|
|
1,320
|
Total
assets
|
|
$
55,356
|
|
$
53,335
|
Liabilities and
shareholders' investment
|
|
|
|
|
Accounts
payable
|
|
$
12,098
|
|
$
13,487
|
Accrued and other
current liabilities
|
|
6,090
|
|
5,883
|
Current portion of
long-term debt and other borrowings
|
|
1,116
|
|
130
|
Total current
liabilities
|
|
19,304
|
|
19,500
|
Long-term debt and
other borrowings
|
|
14,922
|
|
16,009
|
Noncurrent operating
lease liabilities
|
|
3,279
|
|
2,638
|
Deferred income
taxes
|
|
2,480
|
|
2,196
|
Other noncurrent
liabilities
|
|
1,939
|
|
1,760
|
Total noncurrent
liabilities
|
|
22,620
|
|
22,603
|
Shareholders'
investment
|
|
|
|
|
Common
stock
|
|
38
|
|
38
|
Additional paid-in
capital
|
|
6,761
|
|
6,608
|
Retained
earnings
|
|
7,093
|
|
5,005
|
Accumulated other
comprehensive loss
|
|
(460)
|
|
(419)
|
Total shareholders'
investment
|
|
13,432
|
|
11,232
|
Total liabilities
and shareholders' investment
|
|
$
55,356
|
|
$
53,335
|
Common
Stock Authorized 6,000,000,000 shares, $0.0833 par value;
461,675,441 and 460,346,947 shares issued and outstanding as of
February 3, 2024, and January 28, 2023,
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
|
|
|
Twelve Months
Ended
|
(millions) (unaudited)
|
|
February 3,
2024
(a)
|
|
January 28,
2023
|
Operating
activities
|
|
|
|
|
Net earnings
|
|
$
4,138
|
|
$
2,780
|
Adjustments to
reconcile net earnings to cash provided by operations:
|
|
|
|
|
Depreciation and
amortization
|
|
2,801
|
|
2,700
|
Share-based
compensation expense
|
|
251
|
|
220
|
Deferred income
taxes
|
|
298
|
|
582
|
Noncash losses /
(gains) and other, net
|
|
94
|
|
172
|
Changes in operating
accounts:
|
|
|
|
|
Inventory
|
|
1,613
|
|
403
|
Other
assets
|
|
(85)
|
|
22
|
Accounts
payable
|
|
(1,216)
|
|
(2,237)
|
Accrued and other
liabilities
|
|
727
|
|
(624)
|
Cash provided by
operating activities
|
|
8,621
|
|
4,018
|
Investing
activities
|
|
|
|
|
Expenditures for
property and equipment
|
|
(4,806)
|
|
(5,528)
|
Proceeds from disposal
of property and equipment
|
|
24
|
|
8
|
Other
investments
|
|
22
|
|
16
|
Cash required for
investing activities
|
|
(4,760)
|
|
(5,504)
|
Financing
activities
|
|
|
|
|
Additions to long-term
debt
|
|
—
|
|
2,625
|
Reductions of
long-term debt
|
|
(147)
|
|
(163)
|
Dividends
paid
|
|
(2,011)
|
|
(1,836)
|
Repurchase of
stock
|
|
—
|
|
(2,646)
|
Shares withheld for
taxes on share-based compensation
|
|
(127)
|
|
(180)
|
Stock option
exercises
|
|
—
|
|
4
|
Cash required for
financing activities
|
|
(2,285)
|
|
(2,196)
|
Net increase /
(decrease) in cash and cash equivalents
|
|
1,576
|
|
(3,682)
|
Cash and cash
equivalents at beginning of period
|
|
2,229
|
|
5,911
|
Cash and cash
equivalents at end of period
|
|
$
3,805
|
|
$
2,229
|
|
|
(a)
|
2023 consisted of 53
weeks compared with 52 weeks in the prior-year period.
|
TARGET
CORPORATION
|
|
Operating
Results
|
Rate
Analysis
|
|
Three Months Ended
|
|
Twelve Months
Ended
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Gross margin
rate
|
|
25.6 %
|
|
22.7 %
|
|
26.5 %
|
|
23.6 %
|
SG&A expense
rate
|
|
18.9
|
|
18.1
|
|
20.1
|
|
18.9
|
Depreciation and
amortization (exclusive of depreciation included in cost of sales)
expense rate
|
|
1.9
|
|
2.0
|
|
2.2
|
|
2.2
|
Operating income margin
rate
|
|
5.8
|
|
3.7
|
|
5.3
|
|
3.5
|
|
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 $159
million and $667 million of profit-sharing income under our credit
card program agreement for the three and twelve months ended
February 3, 2024, respectively, and $185 million and $734
million for the three and twelve months ended January 28,
2023, respectively.
|
Comparable
Sales
|
|
Three Months Ended
|
|
Twelve Months
Ended
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Comparable sales
change
|
|
(4.4) %
|
|
0.7 %
|
|
(3.7) %
|
|
2.2 %
|
Drivers of change in
comparable sales:
|
|
|
|
|
|
|
|
|
Number of
transactions
|
|
(1.7)
|
|
0.7
|
|
(2.4)
|
|
2.1
|
Average transaction
amount
|
|
(2.8)
|
|
0.0
|
|
(1.4)
|
|
0.1
|
|
Comparable Sales by
Channel
|
|
Three Months Ended
|
|
Twelve Months
Ended
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Stores originated
comparable sales change
|
|
(5.4) %
|
|
1.9 %
|
|
(3.5) %
|
|
2.4 %
|
Digitally originated
comparable sales change
|
|
(0.7)
|
|
(3.6)
|
|
(4.8)
|
|
1.5
|
|
|
|
|
|
|
|
|
|
Sales by
Channel
|
|
Three Months Ended
|
|
Twelve Months
Ended
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Stores
originated
|
|
78.7 %
|
|
79.2 %
|
|
81.7 %
|
|
81.4 %
|
Digitally
originated
|
|
21.3
|
|
20.8
|
|
18.3
|
|
18.6
|
Total
|
|
100 %
|
|
100 %
|
|
100 %
|
|
100 %
|
|
|
|
|
|
|
|
|
|
Sales by Fulfillment
Channel
|
|
Three Months Ended
|
|
Twelve Months
Ended
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Stores
|
|
97.3 %
|
|
96.7 %
|
|
97.4 %
|
|
96.7 %
|
Other
|
|
2.7
|
|
3.3
|
|
2.6
|
|
3.3
|
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
|
|
Twelve Months
Ended
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Total RedCard
Penetration
|
|
18.4 %
|
|
19.4 %
|
|
18.6 %
|
|
19.8 %
|
|
|
|
|
|
Number of Stores and
Retail Square Feet
|
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
(unaudited)
|
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
170,000 or more sq.
ft.
|
|
273
|
|
274
|
|
48,824
|
|
48,985
|
50,000 to 169,999 sq.
ft.
|
|
1,542
|
|
1,527
|
|
192,908
|
|
191,241
|
49,999 or less sq.
ft.
|
|
141
|
|
147
|
|
4,207
|
|
4,358
|
Total
|
|
1,956
|
|
1,948
|
|
245,939
|
|
244,584
|
(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, generally accepted accounting principles in
the United States (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
|
|
|
|
February 3, 2024
(a)
|
|
January 28,
2023
|
|
|
(millions, except
per share data) (unaudited)
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Change
|
GAAP and adjusted
diluted earnings per share
|
|
|
|
|
|
$ 2.98
|
|
|
|
|
|
$ 1.89
|
|
57.6 %
|
|
|
|
|
|
Reconciliation of
Non-GAAP
Adjusted
EPS
|
|
Twelve Months
Ended
|
|
|
|
February 3, 2024
(a)
|
|
January 28,
2023
|
|
|
(millions, except
per share data) (unaudited)
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Pretax
|
|
Net of Tax
|
|
Per Share
|
|
Change
|
GAAP diluted earnings
per share
|
|
|
|
|
|
$ 8.94
|
|
|
|
|
|
$ 5.98
|
|
49.4 %
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(b)
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
20
|
|
$
15
|
|
$ 0.03
|
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
$ 8.94
|
|
|
|
|
|
$ 6.02
|
|
48.6 %
|
|
|
Note: Amounts may not
foot due to rounding.
|
(a)
|
The fourth quarter and
full year 2023 consisted of 14 weeks and 53 weeks, respectively,
compared with 13 weeks and 52 weeks in the comparable prior-year
periods.
|
(b)
|
Other items unrelated
to current period operations, none of which were individually
significant.
|
Reconciliation of
Non-GAAP
Adjusted EPS
Guidance
|
Guidance
|
Q1 2024
|
|
Full Year
2024
|
(unaudited)
|
Per Share
|
|
Per Share
|
GAAP diluted earnings
per share guidance
|
$1.70 -
$2.10
|
|
$8.60 -
$9.60
|
Estimated
adjustments
|
|
|
|
Other
(a)
|
$
—
|
|
$
—
|
Adjusted diluted
earnings per share guidance
|
$1.70 -
$2.10
|
|
$8.60 -
$9.60
|
(a)
|
First quarter and
full-year 2024 GAAP EPS may include the impact of certain discrete
items, which will be excluded in calculating Adjusted EPS. In the
past, these items have included losses on the early retirement of
debt and certain other items that are discretely managed. The
Company is not currently aware of any such discrete
items.
|
Earnings before interest expense and income taxes (EBIT) and
earnings before interest expense, income taxes, depreciation and
amortization (EBITDA) are non-GAAP financial measures. We believe
these measures provide meaningful information about our operational
efficiency compared with our competitors by excluding the impact of
differences in tax jurisdictions and structures, debt levels, and,
for EBITDA, capital investment. These measures are not in
accordance with, or an alternative to, GAAP. The most comparable
GAAP measure is net earnings. EBIT and EBITDA should not be
considered in isolation or as a substitution for analysis of our
results as reported in accordance with GAAP. Other companies may
calculate EBIT and EBITDA differently, limiting the usefulness of
the measures for comparisons with other companies.
EBIT and
EBITDA
|
|
Three Months Ended
|
|
|
|
Twelve Months
Ended
|
|
|
(dollars in
millions) (unaudited)
|
|
February 3,
2024 (a)
|
|
January 28,
2023
|
|
Change
|
|
February 3,
2024 (a)
|
|
January 28,
2023
|
|
Change
|
Net earnings
|
|
$
1,382
|
|
$
876
|
|
57.8 %
|
|
$
4,138
|
|
$
2,780
|
|
48.8 %
|
+ Provision for
income taxes
|
|
404
|
|
167
|
|
141.1
|
|
1,159
|
|
638
|
|
81.7
|
+ Net interest
expense
|
|
107
|
|
129
|
|
(17.7)
|
|
502
|
|
478
|
|
5.0
|
EBIT
|
|
$
1,893
|
|
$
1,172
|
|
61.3 %
|
|
$
5,799
|
|
$
3,896
|
|
48.8 %
|
+ Total
depreciation and amortization (b)
|
|
729
|
|
697
|
|
4.8
|
|
2,801
|
|
2,700
|
|
3.8
|
EBITDA
|
|
$
2,622
|
|
$
1,869
|
|
40.3 %
|
|
$
8,600
|
|
$
6,596
|
|
30.4 %
|
|
|
(a)
|
The fourth quarter and
full year 2023 consisted of 14 weeks and 53 weeks, respectively,
compared with 13 weeks and 52 weeks in the comparable prior-year
periods.
|
(b)
|
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)
|
|
|
|
|
|
|
Trailing Twelve
Months
|
|
|
Numerator
|
|
February 3,
2024 (a)
|
|
January 28,
2023
|
|
|
Operating
income
|
|
$
5,707
|
|
$
3,848
|
|
|
+ Net other
income
|
|
92
|
|
48
|
|
|
EBIT
|
|
5,799
|
|
3,896
|
|
|
+ Operating lease
interest (b)
|
|
120
|
|
93
|
|
|
- Income taxes
(c)
|
|
1,295
|
|
744
|
|
|
Net operating profit
after taxes
|
|
$
4,624
|
|
$
3,245
|
|
|
Denominator
|
|
February 3,
2024
|
|
January 28,
2023
|
|
January 29,
2022
|
Current portion of
long-term debt and other borrowings
|
|
$
1,116
|
|
$
130
|
|
$
171
|
+ Noncurrent
portion of long-term debt
|
|
14,922
|
|
16,009
|
|
13,549
|
+ Shareholders'
investment
|
|
13,432
|
|
11,232
|
|
12,827
|
+ Operating lease
liabilities (d)
|
|
3,608
|
|
2,934
|
|
2,747
|
- Cash and cash
equivalents
|
|
3,805
|
|
2,229
|
|
5,911
|
Invested
capital
|
|
$
29,273
|
|
$
28,076
|
|
$
23,383
|
Average invested
capital (e)
|
|
$
28,674
|
|
$
25,729
|
|
|
|
|
|
|
|
|
|
After-tax return on
invested capital
|
|
16.1 %
|
|
12.6 %
|
|
|
|
|
(a)
|
2023 consisted of 53
weeks compared with 52 weeks in the prior-year period.
|
(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. 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, which were 21.9 percent and 18.7 percent for
the trailing twelve months ended February 3, 2024, and
January 28, 2023, respectively. For the twelve months ended
February 3, 2024, and January 28, 2023, includes tax
effect of $1.3 billion and $0.7 billion, respectively, related to
EBIT and $26 million and $17 million, respectively, related to
operating lease interest.
|
(d)
|
Total short-term and
long-term operating lease liabilities included within Accrued and
Other Current Liabilities and Noncurrent Operating Lease
Liabilities.
|
(e)
|
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