MINNEAPOLIS, May 18, 2022
/PRNewswire/ --
- Comparable sales grew 3.3 percent, on top of 22.9 percent
growth last year.
-
- Comparable sales growth reflected traffic growth of 3.9
percent.
- Store comparable sales increased 3.4 percent, on top of 18.0
percent growth last year.
- Digital comparable sales grew 3.2 percent, following growth
of 50.2 percent last year.
- Same-day services (Order Pickup, Drive Up and Shipt) grew 8
percent this year, led by Drive Up, which grew in the mid-teens on
top of more than 120 percent last year.
- More than 95 percent of Target's first quarter sales were
fulfilled by its stores.
- Sales growth was led by frequently-purchased categories,
including Food & Beverage, Beauty, and Household
Essentials.
- Operating margin rate of 5.3 percent was well below
expectations, driven primarily by gross margin pressure reflecting
actions to reduce excess inventory as well as higher freight and
transportation costs.
For additional media materials, please
visit:
https://corporate.target.com/article/2022/05/q1-2022-earnings
Target Corporation (NYSE: TGT) today announced its first quarter
2022 financial results, which reflected continued topline growth on
top of unprecedented increases over the last two years. The Company
reported first quarter GAAP earnings per share (EPS) of
$2.16, down 48.2 percent from
$4.17 in 2021. First quarter Adjusted
EPS1 of $2.19 decreased
40.7 percent compared with $3.69 in
2021. The attached tables provide a reconciliation of non-GAAP to
GAAP measures. All earnings per share figures refer to diluted
EPS.
"Our first-quarter results mark Target's 20th-consecutive
quarter of sales growth, with comp sales growing more than 3
percent on top of a 23 percent increase one year ago," said
Brian Cornell, chairman and chief
executive officer of Target Corporation. "Guests continue to
depend on Target for our broad and affordable product assortment,
as reflected in Q1 guest traffic growth of nearly 4 percent.
Throughout the quarter, we faced unexpectedly high costs, driven by
a number of factors, resulting in profitability that came in well
below our expectations, and well below where we expect to operate
over time. Despite these near-term challenges, our team remains
passionately dedicated to our guests and serving their needs,
giving us continued confidence in our long-term financial
algorithm, which anticipates mid-single digit revenue growth, and
an operating margin rate of 8 percent or higher over time."
Fiscal 2022 Guidance
For second quarter 2022, the Company expects its operating
income margin rate will be in a wide range centered around first
quarter's operating margin rate of 5.3 percent.
For full-year 2022, the Company continues to expect low- to mid-
single digit revenue growth. The Company now expects its full-year
operating income margin rate will be in a range centered around 6
percent.
Operating Results
Comparable sales grew 3.3 percent in the first quarter,
reflecting comparable store sales growth of 3.4 percent and
comparable digital sales growth of 3.2 percent. Total revenue of
$25.2 billion grew 4.0 percent
compared with last year, reflecting total sales growth of 4.0
percent and a 6.7 percent increase in other revenue. Operating
income was $1.3 billion in first
quarter 2022, down 43.3 percent from $2.4
billion in 2021, driven primarily by a decline in the
Company's gross margin rate.
First quarter operating income margin rate was 5.3 percent in
2022, compared with 9.8 percent in 2021. First quarter gross margin
rate was 25.7 percent, compared with 30.0 percent in 2021. This
year's gross margin rate reflected higher markdown rates, driven
largely by inventory impairments and actions taken to address
lower-than-expected sales in discretionary categories, as well as
costs related to freight, supply chain disruptions, and increased
compensation and headcount in our distribution centers. First
quarter SG&A expense rate was 18.9 percent in 2022, compared
with 18.6 percent in 2021, reflecting the net impact of cost
increases across our business, including investments in hourly team
member wages, partially offset by lower incentive compensation
expense.
Interest Expense and Taxes
The Company's first quarter 2022 net interest expense was
$112 million, in line with
$108 million last year.
First quarter 2022 effective income tax rate was 19.2 percent,
in line with the prior year rate of 19.6 percent.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $424
million in the first quarter, compared with $340 million last year, reflecting a 32.4 percent
increase in the dividend per share, partially offset by a decline
in average share count.
During the first quarter of 2022, the Company entered into an
Accelerated Share Repurchase (ASR) arrangement for up to
$2.75 billion of common stock,
with final settlement outstanding as of the end of the first
quarter.
Additionally, the Company repurchased $10.0 million worth of its shares in first
quarter 2022, retiring 0.1 million shares of common stock at an
average price of $208.60. As of
the end of the first quarter, excluding the outstanding ASR of
$2.75 billion, the Company had
approximately $12.3 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 2022,
after-tax return on invested capital (ROIC) was 25.3 percent,
compared with 30.7 percent for the trailing twelve months through
first quarter 2021. The decrease in ROIC was driven primarily by
lower profitability in first quarter 2022. The tables in this
release provide additional information about the Company's ROIC
calculation.
Webcast Details
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
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 second quarter and full
year comparable sales 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.
(1)
|
Adjusted 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
|
|
|
(millions, except per share data) (unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
|
Change
|
Sales
|
|
$
24,830
|
|
$
23,879
|
|
4.0%
|
Other
revenue
|
|
340
|
|
318
|
|
6.7
|
Total
revenue
|
|
25,170
|
|
24,197
|
|
4.0
|
Cost of
sales
|
|
18,461
|
|
16,716
|
|
10.4
|
Selling, general and
administrative expenses
|
|
4,762
|
|
4,509
|
|
5.6
|
Depreciation and
amortization (exclusive of depreciation included in cost of
sales)
|
|
601
|
|
598
|
|
0.3
|
Operating
income
|
|
1,346
|
|
2,374
|
|
(43.3)
|
Net interest
expense
|
|
112
|
|
108
|
|
3.8
|
Net other (income) /
expense
|
|
(15)
|
|
(343)
|
|
(95.7)
|
Earnings before income
taxes
|
|
1,249
|
|
2,609
|
|
(52.1)
|
Provision for income
taxes
|
|
240
|
|
512
|
|
(53.1)
|
Net earnings
|
|
$
1,009
|
|
$
2,097
|
|
(51.9)%
|
Basic earnings per
share
|
|
$
2.17
|
|
$
4.20
|
|
(48.3)%
|
Diluted earnings per
share
|
|
$
2.16
|
|
$
4.17
|
|
(48.2)%
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
Basic
|
|
464.0
|
|
498.6
|
|
(6.9)%
|
Diluted
|
|
467.8
|
|
503.4
|
|
(7.1)%
|
Antidilutive
shares
|
|
—
|
|
—
|
|
|
Dividends declared per
share
|
|
$
0.90
|
|
$
0.68
|
|
32.4%
|
TARGET
CORPORATION
Consolidated
Statements of Financial Position
|
|
(millions, except footnotes)
(unaudited)
|
|
April 30,
2022
|
|
January 29,
2022
|
|
May 1,
2021
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
1,112
|
|
$
5,911
|
|
$
7,816
|
Inventory
|
|
15,083
|
|
13,902
|
|
10,539
|
Other current
assets
|
|
1,758
|
|
1,760
|
|
1,576
|
Total current assets
|
|
17,953
|
|
21,573
|
|
19,931
|
Property and
equipment
|
|
|
|
|
|
|
Land
|
|
6,164
|
|
6,164
|
|
6,146
|
Buildings and improvements
|
|
33,300
|
|
32,985
|
|
31,710
|
Fixtures and equipment
|
|
6,459
|
|
6,407
|
|
5,496
|
Computer hardware and software
|
|
2,588
|
|
2,505
|
|
2,256
|
Construction-in-progress
|
|
1,444
|
|
1,257
|
|
973
|
Accumulated depreciation
|
|
(21,285)
|
|
(21,137)
|
|
(19,777)
|
Property and equipment, net
|
|
28,670
|
|
28,181
|
|
26,804
|
Operating lease
assets
|
|
2,571
|
|
2,556
|
|
2,362
|
Other noncurrent
assets
|
|
1,648
|
|
1,501
|
|
1,374
|
Total assets
|
|
$
50,842
|
|
$
53,811
|
|
$
50,471
|
Liabilities and shareholders'
investment
|
|
|
|
|
|
|
Accounts
payable
|
|
$
14,053
|
|
$
15,478
|
|
$
11,637
|
Accrued and other
current liabilities
|
|
5,582
|
|
6,098
|
|
5,788
|
Current portion of
long-term debt and other borrowings
|
|
1,089
|
|
171
|
|
1,173
|
Total current liabilities
|
|
20,724
|
|
21,747
|
|
18,598
|
Long-term debt and
other borrowings
|
|
13,379
|
|
13,549
|
|
11,509
|
Noncurrent operating
lease liabilities
|
|
2,581
|
|
2,493
|
|
2,337
|
Deferred income
taxes
|
|
1,752
|
|
1,566
|
|
1,169
|
Other noncurrent
liabilities
|
|
1,632
|
|
1,629
|
|
1,899
|
Total noncurrent liabilities
|
|
19,344
|
|
19,237
|
|
16,914
|
Shareholders'
investment
|
|
|
|
|
|
|
Common stock
|
|
39
|
|
39
|
|
41
|
Additional paid-in capital
|
|
5,592
|
|
6,421
|
|
6,271
|
Retained earnings
|
|
5,495
|
|
6,920
|
|
9,372
|
Accumulated other comprehensive loss
|
|
(352)
|
|
(553)
|
|
(725)
|
Total shareholders' investment
|
|
10,774
|
|
12,827
|
|
14,959
|
Total liabilities and shareholders'
investment
|
|
$
50,842
|
|
$
53,811
|
|
$
50,471
|
|
|
Common Stock
Authorized 6,000,000,000 shares, $0.0833 par value; 463,683,711,
471,274,073 and 496,093,160 shares issued and outstanding as of
April 30, 2022, January 29, 2022, and May 1, 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
|
|
|
Three Months
Ended
|
(millions) (unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
Operating activities
|
|
|
|
|
Net earnings
|
|
$
1,009
|
|
$
2,097
|
Adjustments to
reconcile net earnings to cash (required for) provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
679
|
|
667
|
Share-based compensation expense
|
|
83
|
|
79
|
Deferred income taxes
|
|
115
|
|
170
|
Gain on Dermstore sale
|
|
—
|
|
(335)
|
Noncash losses / (gains) and other, net
|
|
52
|
|
(30)
|
Changes in operating accounts:
|
|
|
|
|
Inventory
|
|
(1,181)
|
|
114
|
Other assets
|
|
(86)
|
|
(5)
|
Accounts payable
|
|
(1,560)
|
|
(1,205)
|
Accrued and other
liabilities
|
|
(505)
|
|
(413)
|
Cash (required for)
provided by operating activities
|
|
(1,394)
|
|
1,139
|
Investing activities
|
|
|
|
|
Expenditures for property and equipment
|
|
(952)
|
|
(540)
|
Proceeds from disposal of property and equipment
|
|
2
|
|
12
|
Proceeds from Dermstore sale
|
|
—
|
|
356
|
Other investments
|
|
2
|
|
7
|
Cash required for
investing activities
|
|
(948)
|
|
(165)
|
Financing activities
|
|
|
|
|
Change in commercial paper, net
|
|
945
|
|
—
|
Reductions of long-term debt
|
|
(48)
|
|
(21)
|
Dividends paid
|
|
(424)
|
|
(340)
|
Repurchase of stock
|
|
(181)
|
|
(1,310)
|
Accelerated share repurchase pending final
settlement
|
|
(2,750)
|
|
—
|
Stock option exercises
|
|
1
|
|
2
|
Cash required for
financing activities
|
|
(2,457)
|
|
(1,669)
|
Net decrease in cash
and cash equivalents
|
|
(4,799)
|
|
(695)
|
Cash and cash
equivalents at beginning of period
|
|
5,911
|
|
8,511
|
Cash and cash equivalents at end of
period
|
|
$
1,112
|
|
$
7,816
|
TARGET
CORPORATION
Operating
Results
|
Rate Analysis
|
|
Three Months
Ended
|
(unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
Gross margin
rate
|
|
25.7%
|
|
30.0%
|
SG&A expense
rate
|
|
18.9
|
|
18.6
|
Depreciation and
amortization expense rate (exclusive of depreciation included in
cost of sales)
|
|
2.4
|
|
2.5
|
Operating income margin
rate
|
|
5.3
|
|
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 $185 million and
$171 million of profit-sharing income under our credit card program
agreement for the three months ended April 30, 2022 and
May 1, 2021, respectively.
|
Comparable Sales
|
|
Three Months Ended
|
(unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
Comparable sales
change
|
|
3.3%
|
|
22.9%
|
Drivers of change in
comparable sales
|
|
|
|
|
Number of transactions (traffic)
|
|
3.9
|
|
17.1
|
Average transaction amount
|
|
(0.6)
|
|
5.0
|
Comparable Sales by Channel
|
Three Months Ended
|
(unaudited)
|
April 30,
2022
|
|
May 1,
2021
|
Stores originated
comparable sales change
|
3.4%
|
|
18.0%
|
Digitally originated
comparable sales change
|
3.2
|
|
50.2
|
Sales by Channel
|
|
Three Months Ended
|
(unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
Stores
originated
|
|
81.8%
|
|
81.7%
|
Digitally
originated
|
|
18.2
|
|
18.3
|
Total
|
|
100%
|
|
100%
|
Sales by Fulfillment
Channel
|
|
Three Months Ended
|
(unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
Stores
|
|
96.5%
|
|
96.3%
|
Other
|
|
3.5
|
|
3.7
|
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.
|
RedCard Penetration
|
|
Three Months
Ended
|
(unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
Target Debit
Card
|
|
11.6%
|
|
12.1%
|
Target Credit
Cards
|
|
8.7
|
|
8.4
|
Total RedCard
Penetration
|
|
20.3%
|
|
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)
|
|
April 30,
2022
|
|
January
29,
2022
|
|
May 1,
2021
|
|
April 30,
2022
|
|
January
29,
2022
|
|
May 1,
2021
|
170,000 or more sq.
ft.
|
|
274
|
|
274
|
|
273
|
|
49,071
|
|
49,071
|
|
48,798
|
50,000 to 169,999 sq.
ft.
|
|
1,519
|
|
1,516
|
|
1,510
|
|
190,461
|
|
190,205
|
|
189,618
|
49,999 or less sq.
ft.
|
|
140
|
|
136
|
|
126
|
|
4,147
|
|
4,008
|
|
3,690
|
Total
|
|
1,933
|
|
1,926
|
|
1,909
|
|
243,679
|
|
243,284
|
|
242,106
|
|
|
(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
|
|
|
|
April 30,
2022
|
|
May 1,
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
|
|
|
|
|
|
$ 2.16
|
|
|
|
|
|
$ 4.17
|
|
(48.2)%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Dermstore sale
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(335)
|
|
$ (269)
|
|
$
(0.53)
|
|
|
Other (a)
|
|
20
|
|
15
|
|
0.03
|
|
41
|
|
30
|
|
0.06
|
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
$ 2.19
|
|
|
|
|
|
$ 3.69
|
|
(40.7)%
|
|
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
|
|
|
(dollars in
millions) (unaudited)
|
|
April 30,
2022
|
|
May 1,
2021
|
|
Change
|
Net earnings
|
|
$
1,009
|
|
$
2,097
|
|
(51.9)%
|
+
Provision for income taxes
|
|
240
|
|
512
|
|
(53.1)
|
+
Net interest expense
|
|
112
|
|
108
|
|
3.8
|
EBIT
|
|
$
1,361
|
|
$
2,717
|
|
(49.9)%
|
+
Total depreciation and amortization
(a)
|
|
679
|
|
667
|
|
1.8
|
EBITDA
|
|
$
2,040
|
|
$
3,384
|
|
(39.7)%
|
|
|
(a)
|
Represents total
depreciation and amortization, including amounts classified within
Depreciation and Amortization and within Cost of Sales.
|
We have also disclosed after-tax 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
|
|
April 30,
2022
|
|
May 1,
2021
|
|
|
Operating
income
|
|
$
7,918
|
|
$
8,444
|
|
|
+
Net other income / (expense)
|
|
55
|
|
350
|
|
|
EBIT
|
|
7,973
|
|
8,794
|
|
|
+
Operating lease interest (a)
|
|
87
|
|
85
|
|
|
- Income taxes (b)
|
|
1,804
|
|
1,864
|
|
|
Net operating profit after
taxes
|
|
$
6,256
|
|
$
7,015
|
|
|
Denominator
|
|
April 30,
2022
|
|
May 1,
2021
|
|
May 2,
2020
|
Current portion of
long-term debt and other borrowings
|
|
$
1,089
|
|
$
1,173
|
|
$
168
|
+
Noncurrent portion of long-term debt
|
|
13,379
|
|
11,509
|
|
14,073
|
+
Shareholders' investment
|
|
10,774
|
|
14,959
|
|
11,169
|
+
Operating lease liabilities (c)
|
|
2,854
|
|
2,563
|
|
2,448
|
- Cash and cash equivalents
|
|
1,112
|
|
7,816
|
|
4,566
|
Invested
capital
|
|
$
26,984
|
|
$
22,388
|
|
$
23,292
|
Average invested capital
(d)
|
|
$
24,686
|
|
$
22,840
|
|
|
|
|
|
|
|
|
|
After-tax return on invested
capital
|
|
25.3%
|
|
30.7%
|
|
|
|
|
(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 22.4 percent and 21.0 percent for
the trailing twelve months ended April 30, 2022, and May 1, 2021,
respectively. For the twelve months ended April 30, 2022, and May
1, 2021, includes tax effect of $1.8 billion 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