MINNEAPOLIS, Nov. 16,
2022 /PRNewswire/ --
- Comparable sales increased 2.7 percent, on top of 12.7
percent growth last year.
- Comparable sales growth was driven by 1.4 percent traffic
growth and a 1.3 percent increase in average ticket.
- Category performance was led by growth in frequency
businesses including Beauty, Food and Beverage and Household
Essentials, which offset continued softness in discretionary
categories.
- The Company saw unit share gains across all five core
merchandising categories.
- Third quarter operating margin rate of 3.9 percent improved
meaningfully compared with the second quarter results, but fell far
short of expectations.
- In light of an increasingly challenging environment, the
Company lowered its topline and bottom line expectations for the
fourth quarter.
- The Company announced an enterprise initiative to simplify
and gain efficiencies across its business, representing an
estimated cumulative savings opportunity of $2 to $3 billion
over the next three years.
For additional media materials, please
visit:
https://corporate.target.com/article/2022/11/q3-2022-earnings
Target Corporation (NYSE: TGT) today announced its third quarter
2022 financial results, which reflected continued sales and traffic
growth in an increasingly challenging environment.
The Company reported third quarter GAAP earnings per share (EPS)
of $1.54, down 49.3 percent from
$3.04 in 2021. Third quarter Adjusted
EPS1 of $1.54 decreased
49.1 percent compared with $3.03 in
2021. 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.
|
"In the third quarter, our business delivered comparable sales
growth of 2.7 percent, and we saw unit share gains across all of
our core merchandise categories. This performance
demonstrates the durability of our business model which continues
to serve our guests and drive loyalty despite the challenging
economic environment," said Brian
Cornell, chairman and chief executive officer of Target
Corporation. "In the latter weeks of the quarter, sales and profit
trends softened meaningfully, with guests' shopping behavior
increasingly impacted by inflation, rising interest rates and
economic uncertainty. This resulted in a third quarter profit
performance well below our expectations.
While we're ready to deliver exceptional value for our guests
this holiday season, supported by the decisive inventory actions we
took earlier this year, the rapidly evolving consumer environment
means we're planning the balance of the year more conservatively.
We're also taking new actions to drive efficiencies now and in the
future, optimizing our operations to match the scale of our
business and drive continued growth. The strides we have made in
recent years to build a truly differentiated, guest-centered retail
offering, punctuated by a balanced, multi-category portfolio,
positions us well to navigate in any environment. Looking ahead, we
remain laser-focused on delivering the best of Target to our
guests, and continuing to invest in our long-term, profitable
growth."
Fiscal 2022 Guidance
Based on softening sales and profit trends that emerged late in
the third quarter and persisted into November, the Company believes
it is prudent to plan for a wide range of sales outcomes in the
fourth quarter, centered around a low-single digit decline in
comparable sales, consistent with those recent trends. Similarly,
the Company is now planning a wide range for its fourth quarter
operating margin rate centered around 3 percent.
Enterprise Efficiency
The Company announced today it was undertaking an
enterprise-wide effort to simplify and gain efficiencies across its
business with a focus on reducing complexities and lowering costs
while continuing to support its team. The Company believes it can
save a total of $2 to $3 billion over the next three years through this
work. These savings will support the company's investments in
driving deeper guest engagement and long-term growth while also
delivering on its profit goals. This opportunity is enabled
by the rapid growth since 2019, in which Target's total
revenue has grown approximately 40 percent. In light of this
growth, this effort is focused on fully leveraging the scale that's
been gained to best-position the Company to continue growing
efficiently over time.
Operating Results
Comparable sales grew 2.7 percent in the third quarter,
reflecting comparable store sales growth of 3.2 percent and
comparable digital sales growth of 0.3 percent. Total revenue of
$26.5 billion grew 3.4 percent
compared with last year, reflecting total sales growth of 3.3
percent and a 9.5 percent increase in other revenue. Operating
income was $1.0 billion in third
quarter 2022, down 49.2 percent from $2.0
billion in 2021, driven primarily by a decline in the
Company's gross margin rate.
Third quarter operating income margin rate was 3.9 percent
in 2022, compared with 7.8 percent in 2021. Third quarter gross
margin rate was 24.7 percent, compared with 28.0 percent in 2021.
This year's gross margin rate reflected higher markdown rates,
inventory shrink, and merchandise and freight costs, net of retail
price increases, compared with last year. Additionally, gross
margin rate was pressured by increased compensation and headcount
in our distribution centers and the costs of managing early
receipts of inventory, with a slight offset from favorable category
mix. Third quarter SG&A expense rate was 19.7 percent in
2022, compared with 18.9 percent in 2021. This reflected the impact
of cost inflation across multiple parts of the business, including
investments in hourly team member compensation, which was partially
offset by lower incentive compensation.
Interest Expense and Taxes
The Company's third quarter 2022 net interest expense was
$125 million, compared with
$105 million last year, reflecting
higher average long-term debt and commercial paper balances.
Third quarter 2022 effective income tax rate was 21.6
percent, compared with the prior year rate of 22.1 percent,
reflecting the rate 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 $497
million in the third quarter, compared with $440 million last year, reflecting a 20.0 percent
increase in the dividend per share, partially offset by a decline
in average share count.
The Company did not repurchase stock in the third quarter.
As of the end of the third 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 third quarter 2022,
after-tax return on invested capital (ROIC) was 14.6 percent,
compared with 31.3 percent for the trailing twelve months through
third quarter 2021. The decrease in ROIC was driven primarily by
lower profitability in third quarter 2022. The tables in this
release provide additional information about the Company's ROIC
calculation.
Webcast Details
Target will webcast its third 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 1-800-391-9853.
Miscellaneous
Statements in this release regarding fourth quarter comparable
sales levels and operating margin rate, and the potential benefits
from the enterprise initiative to simplify and gain efficiencies
across the 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 actions to differ materially. These risk and
uncertainties include difficulties and delays in identifying and
achieving the potential cost savings associated with the enterprise
initiative to simplify and gain efficiencies and the other risks
and uncertainties 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.
|
TARGET
CORPORATION
|
|
|
Consolidated
Statements of Operations
|
|
|
Three Months Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
(millions, except per share data) (unaudited)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Change
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Change
|
|
Sales
|
|
$
26,122
|
|
$
25,290
|
|
3.3 %
|
|
$
76,605
|
|
$
73,995
|
|
3.5 %
|
|
Other
revenue
|
|
396
|
|
362
|
|
9.5
|
|
1,120
|
|
1,014
|
|
10.4
|
|
Total
revenue
|
|
26,518
|
|
25,652
|
|
3.4
|
|
77,725
|
|
75,009
|
|
3.6
|
|
Cost of
sales
|
|
19,680
|
|
18,206
|
|
8.1
|
|
58,283
|
|
52,202
|
|
11.6
|
|
Selling, general and
administrative expenses
|
|
5,219
|
|
4,859
|
|
7.4
|
|
14,983
|
|
14,217
|
|
5.4
|
|
Depreciation and
amortization (exclusive of
depreciation included in cost of
sales)
|
|
597
|
|
577
|
|
3.6
|
|
1,770
|
|
1,739
|
|
1.8
|
|
Operating
income
|
|
1,022
|
|
2,010
|
|
(49.2)
|
|
2,689
|
|
6,851
|
|
(60.8)
|
|
Net interest
expense
|
|
125
|
|
105
|
|
17.5
|
|
349
|
|
317
|
|
9.8
|
|
Net other (income) /
expense
|
|
(12)
|
|
(6)
|
|
106.0
|
|
(35)
|
|
(356)
|
|
(90.3)
|
|
Earnings before income
taxes
|
|
909
|
|
1,911
|
|
(52.4)
|
|
2,375
|
|
6,890
|
|
(65.5)
|
|
Provision for income
taxes
|
|
197
|
|
423
|
|
(53.6)
|
|
471
|
|
1,488
|
|
(68.4)
|
|
Net earnings
|
|
$
712
|
|
$
1,488
|
|
(52.1) %
|
|
$
1,904
|
|
$
5,402
|
|
(64.7) %
|
|
Basic earnings per
share
|
|
$
1.55
|
|
$
3.07
|
|
(49.5) %
|
|
$
4.11
|
|
$
10.97
|
|
(62.5) %
|
|
Diluted earnings per
share
|
|
$
1.54
|
|
$
3.04
|
|
(49.3) %
|
|
$
4.09
|
|
$
10.87
|
|
(62.4) %
|
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
460.3
|
|
484.8
|
|
(5.1) %
|
|
462.6
|
|
492.2
|
|
(6.0) %
|
|
Diluted
|
|
462.5
|
|
489.4
|
|
(5.5) %
|
|
465.3
|
|
496.8
|
|
(6.3) %
|
|
Antidilutive
shares
|
|
1.3
|
|
—
|
|
|
|
1.1
|
|
—
|
|
|
|
Dividends declared per
share
|
|
$
1.08
|
|
$
0.90
|
|
20.0 %
|
|
$
3.06
|
|
$
2.48
|
|
23.4 %
|
|
TARGET
CORPORATION
|
|
|
Consolidated
Statements of Financial Position
|
|
(millions, except
footnotes) (unaudited)
|
|
October 29,
2022
|
|
January 29,
2022
|
|
October 30,
2021
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
954
|
|
$
5,911
|
|
$
5,753
|
|
Inventory
|
|
17,117
|
|
13,902
|
|
14,958
|
|
Other current
assets
|
|
2,322
|
|
1,760
|
|
1,865
|
|
Total current
assets
|
|
20,393
|
|
21,573
|
|
22,576
|
|
Property and
equipment
|
|
|
|
|
|
|
|
Land
|
|
6,214
|
|
6,164
|
|
6,146
|
|
Buildings and
improvements
|
|
34,279
|
|
32,985
|
|
32,478
|
|
Fixtures and
equipment
|
|
7,184
|
|
6,407
|
|
6,144
|
|
Computer hardware and
software
|
|
2,899
|
|
2,505
|
|
2,447
|
|
Construction-in-progress
|
|
2,358
|
|
1,257
|
|
1,302
|
|
Accumulated
depreciation
|
|
(22,013)
|
|
(21,137)
|
|
(20,602)
|
|
Property and
equipment, net
|
|
30,921
|
|
28,181
|
|
27,915
|
|
Operating lease
assets
|
|
2,596
|
|
2,556
|
|
2,539
|
|
Other noncurrent
assets
|
|
1,705
|
|
1,501
|
|
1,381
|
|
Total
assets
|
|
$
55,615
|
|
$
53,811
|
|
$
54,411
|
|
Liabilities and
shareholders' investment
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
15,438
|
|
$
15,478
|
|
$
16,250
|
|
Accrued and other
current liabilities
|
|
6,138
|
|
6,098
|
|
5,925
|
|
Current portion of
long-term debt and other borrowings
|
|
2,207
|
|
171
|
|
1,176
|
|
Total current
liabilities
|
|
23,783
|
|
21,747
|
|
23,351
|
|
Long-term debt and
other borrowings
|
|
14,237
|
|
13,549
|
|
11,586
|
|
Noncurrent operating
lease liabilities
|
|
2,590
|
|
2,493
|
|
2,494
|
|
Deferred income
taxes
|
|
2,240
|
|
1,566
|
|
1,246
|
|
Other noncurrent
liabilities
|
|
1,746
|
|
1,629
|
|
1,931
|
|
Total noncurrent
liabilities
|
|
20,813
|
|
19,237
|
|
17,257
|
|
Shareholders'
investment
|
|
|
|
|
|
|
|
Common
stock
|
|
38
|
|
39
|
|
40
|
|
Additional paid-in
capital
|
|
6,558
|
|
6,421
|
|
6,381
|
|
Retained
earnings
|
|
4,631
|
|
6,920
|
|
8,069
|
|
Accumulated other
comprehensive loss
|
|
(208)
|
|
(553)
|
|
(687)
|
|
Total shareholders'
investment
|
|
11,019
|
|
12,827
|
|
13,803
|
|
Total liabilities
and shareholders' investment
|
|
$
55,615
|
|
$
53,811
|
|
$
54,411
|
|
|
Common
Stock Authorized 6,000,000,000 shares, $0.0833 par value;
460,297,654, 471,274,073 and 480,905,493 shares issued
and outstanding as of October 29, 2022, January 29, 2022,
and October 30, 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
|
|
|
Nine Months
Ended
|
|
(millions) (unaudited)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Operating
activities
|
|
|
|
|
|
Net earnings
|
|
$
1,904
|
|
$
5,402
|
|
Adjustments to
reconcile net earnings to cash (required for) provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
2,004
|
|
1,952
|
|
Share-based
compensation expense
|
|
177
|
|
187
|
|
Deferred income
taxes
|
|
548
|
|
233
|
|
Gain on Dermstore
sale
|
|
—
|
|
(335)
|
|
Noncash losses /
(gains) and other, net
|
|
141
|
|
18
|
|
Changes in operating
accounts:
|
|
|
|
|
|
Inventory
|
|
(3,215)
|
|
(4,305)
|
|
Other
assets
|
|
(205)
|
|
(117)
|
|
Accounts
payable
|
|
(224)
|
|
3,284
|
|
Accrued and other
liabilities
|
|
(578)
|
|
(722)
|
|
Cash (required for)
provided by operating activities
|
|
552
|
|
5,597
|
|
Investing
activities
|
|
|
|
|
|
Expenditures for
property and equipment
|
|
(4,323)
|
|
(2,483)
|
|
Proceeds from disposal
of property and equipment
|
|
4
|
|
23
|
|
Proceeds from
Dermstore sale
|
|
—
|
|
356
|
|
Other
investments
|
|
16
|
|
14
|
|
Cash required for
investing activities
|
|
(4,303)
|
|
(2,090)
|
|
Financing
activities
|
|
|
|
|
|
Change in commercial
paper, net
|
|
2,104
|
|
—
|
|
Additions to long-term
debt
|
|
991
|
|
—
|
|
Reductions of
long-term debt
|
|
(139)
|
|
(112)
|
|
Dividends
paid
|
|
(1,339)
|
|
(1,116)
|
|
Repurchase of
stock
|
|
(2,825)
|
|
(5,042)
|
|
Stock option
exercises
|
|
2
|
|
5
|
|
Cash required for
financing activities
|
|
(1,206)
|
|
(6,265)
|
|
Net decrease in cash
and cash equivalents
|
|
(4,957)
|
|
(2,758)
|
|
Cash and cash
equivalents at beginning of period
|
|
5,911
|
|
8,511
|
|
Cash and cash
equivalents at end of period
|
|
$
954
|
|
$
5,753
|
|
TARGET
CORPORATION
|
|
|
Operating
Results
|
|
Rate
Analysis
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(unaudited)
|
|
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Gross margin
rate
|
|
|
|
|
|
24.7 %
|
|
28.0 %
|
|
23.9 %
|
|
29.5 %
|
|
SG&A expense
rate
|
|
|
|
|
|
19.7
|
|
18.9
|
|
19.3
|
|
19.0
|
|
Depreciation and
amortization expense rate (exclusive of depreciation included in
cost of sales)
|
|
|
|
|
|
2.3
|
|
2.2
|
|
2.3
|
|
2.3
|
|
Operating income margin
rate
|
|
|
|
|
|
3.9
|
|
7.8
|
|
3.5
|
|
9.1
|
|
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 $184 million and $550 million of profit-sharing income
under our credit card program agreement for the three and nine
months ended October 29, 2022, respectively, and $184 million
and $527 million for the three and nine months ended
October 30, 2021, respectively.
|
|
|
Comparable
Sales
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
(unaudited)
|
|
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Comparable sales
change
|
|
|
|
|
|
2.7 %
|
|
12.7 %
|
|
2.9 %
|
|
14.4 %
|
|
Drivers of change in
comparable sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of transactions
(traffic)
|
|
|
|
|
|
1.4
|
|
12.9
|
|
2.6
|
|
14.0
|
|
Average transaction
amount
|
|
|
|
|
|
1.3
|
|
(0.2)
|
|
0.2
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
Comparable Sales by
Channel
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
(unaudited)
|
|
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Stores originated
comparable sales change
|
|
|
|
|
|
3.2 %
|
|
9.7 %
|
|
2.6 %
|
|
11.9 %
|
|
Digitally originated
comparable sales change
|
|
|
|
|
|
0.3
|
|
28.9
|
|
4.1
|
|
27.8
|
|
|
|
|
|
|
|
|
|
|
Sales by
Channel
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
(unaudited)
|
|
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Stores
originated
|
|
|
|
|
|
82.9 %
|
|
82.4 %
|
|
82.3 %
|
|
82.3 %
|
|
Digitally
originated
|
|
|
|
|
|
17.1
|
|
17.6
|
|
17.7
|
|
17.7
|
|
Total
|
|
|
|
|
|
100 %
|
|
100 %
|
|
100 %
|
|
100 %
|
|
|
|
|
|
|
|
|
|
|
Sales by
Fulfillment Channel
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
(unaudited)
|
|
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Stores
|
|
|
|
|
|
96.8 %
|
|
96.7 %
|
|
96.7 %
|
|
96.5 %
|
|
Other
|
|
|
|
|
|
3.2
|
|
3.3
|
|
3.3
|
|
3.5
|
|
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
|
|
Nine Months
Ended
|
|
(unaudited)
|
|
|
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Target Debit
Card
|
|
|
|
|
|
10.8 %
|
|
11.7 %
|
|
11.2 %
|
|
11.8 %
|
|
Target Credit
Cards
|
|
|
|
|
|
8.8
|
|
8.9
|
|
8.8
|
|
8.7
|
|
Total RedCard
Penetration
|
|
|
|
|
|
19.6 %
|
|
20.7 %
|
|
20.0 %
|
|
20.5 %
|
|
Note: Amounts may not
foot due to rounding.
|
|
|
Number of Stores and
Retail Square Feet
|
|
Number of
Stores
|
|
Retail Square Feet
(a)
|
|
(unaudited)
|
|
October 29,
2022
|
|
January 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
January 29,
2022
|
|
October 30,
2021
|
|
170,000 or more sq.
ft.
|
|
274
|
|
274
|
|
274
|
|
48,985
|
|
49,071
|
|
49,071
|
|
50,000 to 169,999 sq.
ft.
|
|
1,522
|
|
1,516
|
|
1,515
|
|
190,739
|
|
190,205
|
|
190,116
|
|
49,999 or less sq.
ft.
|
|
145
|
|
136
|
|
135
|
|
4,305
|
|
4,008
|
|
3,952
|
|
Total
|
|
1,941
|
|
1,926
|
|
1,924
|
|
244,029
|
|
243,284
|
|
243,139
|
|
(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
|
|
|
|
October 29,
2022
|
|
October 30,
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
|
|
|
|
|
|
$ 1.54
|
|
|
|
|
|
$ 3.04
|
|
(49.3) %
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(a)
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(9)
|
|
$
(7)
|
|
$
(0.01)
|
|
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
$ 1.54
|
|
|
|
|
|
$ 3.03
|
|
(49.1) %
|
|
|
|
Reconciliation of
Non-GAAP
Adjusted
EPS
|
|
Nine Months
Ended
|
|
|
|
October 29,
2022
|
|
October 30,
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
|
|
|
|
|
|
$ 4.09
|
|
|
|
|
|
$
10.87
|
|
(62.4) %
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Dermstore
sale
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(335)
|
|
$ (269)
|
|
$
(0.54)
|
|
|
|
Other
(a)
|
|
20
|
|
15
|
|
0.03
|
|
27
|
|
20
|
|
0.04
|
|
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
$ 4.12
|
|
|
|
|
|
$
10.37
|
|
(60.2) %
|
|
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
|
|
|
|
Nine Months
Ended
|
|
|
|
(dollars in
millions) (unaudited)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Change
|
|
October 29,
2022
|
|
October 30,
2021
|
|
Change
|
|
Net earnings
|
|
$
712
|
|
$
1,488
|
|
(52.1) %
|
|
$
1,904
|
|
$
5,402
|
|
(64.7) %
|
|
+ Provision for
income taxes
|
|
197
|
|
423
|
|
(53.6)
|
|
471
|
|
1,488
|
|
(68.4)
|
|
+ Net interest
expense
|
|
125
|
|
105
|
|
17.5
|
|
349
|
|
317
|
|
9.8
|
|
EBIT
|
|
$
1,034
|
|
$
2,016
|
|
(48.7) %
|
|
$
2,724
|
|
$
7,207
|
|
(62.2) %
|
|
+ Total
depreciation and amortization (a)
|
|
674
|
|
652
|
|
3.5
|
|
2,004
|
|
1,952
|
|
2.7
|
|
EBITDA
|
|
$
1,708
|
|
$
2,668
|
|
(36.0) %
|
|
$
4,728
|
|
$
9,159
|
|
(48.4) %
|
|
(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
|
|
October 29,
2022
|
|
October 30,
2021
|
|
|
|
Operating
income
|
|
$
4,784
|
|
$
8,687
|
|
|
|
+ Net other
income / (expense)
|
|
61
|
|
358
|
|
|
|
EBIT
|
|
4,845
|
|
9,045
|
|
|
|
+ Operating lease
interest (a)
|
|
89
|
|
85
|
|
|
|
- Income
taxes (b)
|
|
1,059
|
|
1,947
|
|
|
|
Net operating profit
after taxes
|
|
$
3,875
|
|
$
7,183
|
|
|
|
|
Denominator
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 31,
2020
|
|
Current portion of
long-term debt and other borrowings
|
|
$
2,207
|
|
$
1,176
|
|
$
131
|
|
+ Noncurrent
portion of long-term debt
|
|
14,237
|
|
11,586
|
|
12,490
|
|
+ Shareholders'
investment
|
|
11,019
|
|
13,803
|
|
13,319
|
|
+ Operating lease
liabilities (c)
|
|
2,879
|
|
2,737
|
|
2,400
|
|
- Cash
and cash equivalents
|
|
954
|
|
5,753
|
|
5,996
|
|
Invested
capital
|
|
$
29,388
|
|
$
23,549
|
|
$
22,344
|
|
Average invested
capital (d)
|
|
$
26,469
|
|
$
22,947
|
|
|
|
|
After-tax return on
invested capital
|
|
14.6 %
|
|
31.3 %
|
|
|
|
(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 21.5 percent and 21.3 percent
for the trailing twelve months ended
October 29, 2022, and October 30, 2021, respectively. For
the twelve months ended October 29, 2022, and
October 30,
2021, includes tax effect of $1.0 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