•First quarter operating income margin rate of 5.3 percent reflects a 140 basis point improvement in gross margin rate as compared to the prior year.

•First quarter comparable sales declined 3.7 percent, in line with expectations.

◦Digital comparable sales grew 1.4 percent. Same-day services grew nearly 9 percent, led by more than 13 percent growth in Drive Up.

◦Sales declines, primarily in discretionary categories, were partially offset by continued growth in Beauty.

◦Discretionary sales trends continued to improve vs. prior quarters, led by an improvement of nearly 4 percentage points in apparel as compared to Q4 of 2023.

•The Company successfully relaunched its free-to-join Target Circle loyalty program in April, and welcomed more than 1 million new members to the platform in the first quarter.

•Inventory at the end of Q1 was 7 percent lower than last year, even as the Company saw higher in-stock levels than a year ago.

MINNEAPOLIS (May 22, 2024) – Target Corporation (NYSE: TGT) today announced its first quarter 2024 financial results, which reflected sales and profit performance consistent with the Company's previously provided expectations.

The Company reported first quarter GAAP and Adjusted earnings per share1 (EPS) of $2.03, compared with $2.05 in 2023. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

“Our first quarter financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter,” said Brian Cornell, chair and chief executive of Target Corporation. “Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services. Consumers continue to respond to the newness and value that we offer across our shopping experience, and we’re pleased with early results from the relaunch of Target Circle. Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease and convenience, as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals.”

For the second quarter, the Company expects a 0 to 2 percent increase in its comparable sales, and GAAP and Adjusted EPS of $1.95 to $2.35.

For the full year, the Company continues to expect a 0 to 2 percent increase in its comparable sales, and GAAP and Adjusted EPS of $8.60 to $9.60.

Comparable sales declined 3.7 percent in the first quarter, reflecting a comparable store sales decline of 4.8 percent partially offset by a comparable digital sales increase of 1.4 percent. Total revenue of $24.5 billion was 3.1 percent lower than last year, reflecting a total sales decline of 3.2 percent and a 3.9 percent increase in other revenue. First quarter operating income of $1.3 billion was 2.4 percent lower than last year, driven by lower sales volume.

First quarter operating income margin rate was 5.3 percent in 2024, compared with 5.2 percent in 2023. First quarter gross margin rate was 27.7 percent, compared with 26.3 percent in 2023, reflecting the net impact of merchandising activities, including cost improvements that more than offset higher promotional markdown rates, combined with favorable category mix and lower book to physical inventory adjustments as compared to the prior year. First quarter SG&A expense rate was 21.1 percent in 2024, compared with 19.8 percent in 2023, reflecting the combined impact of lower sales and higher costs, including continued investments in pay and benefits and marketing, partially offset by disciplined cost management.

The Company’s first quarter 2024 net interest expense was $106 million, compared with $147 million last year, primarily driven by an increase in interest income reflecting higher cash balances year-over-year.

First quarter 2024 effective income tax rate was 22.7 percent, compared with the prior year rate of 21.1 percent, reflecting lower discrete benefits as compared to the prior year.

The Company paid dividends of $508 million in the first quarter, compared with $497 million last year, reflecting a 1.9 percent increase in the dividend per share.

The Company did not repurchase any stock in the first quarter. As of the end of the 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 first quarter 2024, after-tax return on invested capital (ROIC) was 15.4 percent, compared with 11.4 percent for the trailing twelve months through first quarter 2023. The increase in ROIC reflects higher operating income, partially offset by higher average invested capital. The tables in this release provide additional information about the Company’s ROIC calculation.

Target will webcast its first quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Corporate.Target.com/Investors (click on "Q1 2024 Target Corporation Earnings Conference Call" under "Events & Presentations"). A replay of the webcast will be provided when available. The replay number is 1-800-513-1169.

Statements in this release regarding the Company’s future financial performance, including its fiscal 2024 second 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 February 3, 2024. 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.

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.

 

 

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 462,635,539, 461,675,441, and 461,552,843 shares issued and outstanding as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively.

 

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.

 

 

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 $142 million and $174 million of profit-sharing income under our credit card program agreement for the three months ended May 4, 2024 and April 29, 2023, respectively.

 

Sales by Channel						Three Months Ended
(unaudited)						May 4, 2024						April 29, 2023
Stores originated						81.7		%				82.5		%
Digitally originated						18.3						17.5
Total						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.

 

Number of Stores and Retail Square Feet						Number of Stores																		Retail Square Feet (a)
(unaudited)						May 4, 2024						February 3, 2024						April 29, 2023						May 4, 2024						February 3, 2024						April 29, 2023
170,000 or more sq. ft.						273						273						274						48,824						48,824						48,985
50,000 to 169,999 sq. ft.						1,547						1,542						1,530						193,529						192,908						191,543
49,999 or less sq. ft.						143						141						150						4,301						4,207						4,465
Total						1,963						1,956						1,954						246,654						245,939						244,993

(a)In thousands; reflects total square feet less office, supply chain facilities, and vacant space.

 

 

To provide additional transparency, we disclose non-GAAP adjusted diluted earnings per share (Adjusted EPS). When applicable, this metric excludes certain discretely managed items. 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, U.S. 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
						May 4, 2024						April 29, 2023						Change
GAAP and adjusted diluted earnings per share						$	2.03					$	2.05					(1.0)		%

(a)Second quarter and full-year 2024 GAAP EPS may include the impact of certain discrete items, which will be excluded in calculating Adjusted EPS. The guidance does not currently reflect any such discrete items. In the past, these items have included losses on the early retirement of debt and certain other items that are discretely managed.

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.

(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.

(a)The trailing twelve months ended May 4, 2024, 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 22.2 percent and 19.3 percent for the trailing twelve months ended May 4, 2024, and April 29, 2023, respectively. For the twelve months ended May 4, 2024, and April 29, 2023, includes tax effect of $1.3 billion and $0.8 billion, respectively, related to EBIT, and $30 million and $18 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, respectively.

(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.