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As Of Filer Filing For·On·As Docs:Size 11/20/19 Target Corp 8-K:2,9 11/20/19 13:767K |
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Exhibit |
• | Third
quarter comparable sales grew 4.5 percent, on top of 5.1 percent last year, meaning that comparable sales have risen nearly 10 percent over the last two years. |
• | Third quarter comparable sales growth reflects 2.8 percent growth in stores and a 1.7 percentage point contribution from digital sales. |
• | Third quarter comparable digital channel sales grew 31 percent, on top of 49 percent last year. Same-day fulfillment services (Order Pick Up, Drive Up and Shipt) accounted for 80% of Target’s digital comparable sales growth. |
• | Third
quarter comparable traffic grew 3.1 percent, driven by increases in both stores and digital channels. |
• | Third quarter operating income grew 22.3 percent compared with last year. |
• | GAAP EPS from continuing operations of $1.37 was 18.2 percent higher than last year. Adjusted EPS of $1.36 was 24.9 percent higher than last year. |
• | Target
now expects full-year 2019 GAAP EPS from continuing operations of $6.27 to $6.47 and Adjusted EPS of $6.25 to $6.45, compared with the prior range of $5.90 to $6.20. |
• | For additional media materials, please visit: |
• | Dividends
of $337 million, compared with $337 million in third quarter 2018, reflecting a 3.1 percent increase in the dividend per share offset by a decline in share count. |
• | Share repurchases totaling $294 million that retired 3.0 million shares of common stock at an average price of $99.25. |
Three Months Ended | Nine
Months Ended | |||||||||||||||||||||
(millions, except per share data) (unaudited) | Change | Change | ||||||||||||||||||||
Sales | $ | 18,414 | $ | 17,590 | 4.7 | % | $ | 53,997 | $ | 51,699 | 4.4 | % | ||||||||||
Other
revenue | 251 | 231 | 8.8 | 716 | 680 | 5.3 | ||||||||||||||||
Total
revenue | 18,665 | 17,821 | 4.7 | 54,713 | 52,379 | 4.5 | ||||||||||||||||
Cost
of sales | 12,935 | 12,535 | 3.2 | 37,808 | 36,400 | 3.9 | ||||||||||||||||
Selling,
general and administrative expenses | 4,153 | 3,937 | 5.5 | 11,728 | 11,347 | 3.4 | ||||||||||||||||
Depreciation
and amortization (exclusive of depreciation included in cost of sales) | 575 | 530 | 8.5 | 1,717 | 1,639 | 4.8 | ||||||||||||||||
Operating
income | 1,002 | 819 | 22.3 | 3,460 | 2,993 | 15.6 | ||||||||||||||||
Net
interest expense | 113 | 115 | (1.6 | ) | 359 | 352 | 2.0 | |||||||||||||||
Net
other (income) / expense | (12 | ) | (9 | ) | 36.5 | (38 | ) | (21 | ) | 83.8 | ||||||||||||
Earnings
from continuing operations before income taxes | 901 | 713 | 26.3 | 3,139 | 2,662 | 17.9 | ||||||||||||||||
Provision
for income taxes | 195 | 97 | 100.8 | 703 | 530 | 32.8 | ||||||||||||||||
Net
earnings from continuing operations | 706 | 616 | 14.5 | 2,436 | 2,132 | 14.3 | ||||||||||||||||
Discontinued
operations, net of tax | 8 | 6 | 11 | 7 | ||||||||||||||||||
Net
earnings | $ | 714 | $ | 622 | 14.8 | % | $ | 2,447 | $ | 2,139 | 14.4 | % | ||||||||||
Basic
earnings per share | ||||||||||||||||||||||
Continuing operations | $ | 1.38 | $ | 1.17 | 18.2 | % | $ | 4.75 | $ | 4.01 | 18.5 | % | ||||||||||
Discontinued
operations | 0.02 | 0.01 | 0.02 | 0.01 | ||||||||||||||||||
Net
earnings per share | $ | 1.40 | $ | 1.18 | 18.5 | % | $ | 4.77 | $ | 4.02 | 18.6 | % | ||||||||||
Diluted
earnings per share | ||||||||||||||||||||||
Continuing operations | $ | 1.37 | $ | 1.16 | 18.2 | % | $ | 4.71 | $ | 3.98 | 18.5 | % | ||||||||||
Discontinued
operations | 0.02 | 0.01 | 0.02 | 0.01 | ||||||||||||||||||
Net
earnings per share | $ | 1.39 | $ | 1.17 | 18.5 | % | $ | 4.74 | $ | 3.99 | 18.7 | % | ||||||||||
Weighted
average common shares outstanding | ||||||||||||||||||||||
Basic | 509.7 | 525.9 | (3.1 | )% | 512.5 | 531.5 | (3.6 | )% | ||||||||||||||
Diluted | 514.8 | 531.2 | (3.1 | )% | 516.8 | 536.2 | (3.6 | )% | ||||||||||||||
Antidilutive
shares | — | — | — | — | ||||||||||||||||||
Dividends
declared per share | $ | 0.66 | $ | 0.64 | 3.1 | % | $ | 1.96 | $ | 1.90 | 3.2 | % |
(millions,
except footnotes) (unaudited) | ||||||||||||
Assets | ||||||||||||
Cash
and cash equivalents | $ | 969 | $ | 1,556 | $ | 825 | ||||||
Inventory | 11,396 | 9,497 | 12,393 | |||||||||
Other
current assets | 1,440 | 1,466 | 1,421 | |||||||||
Total current assets | 13,805 | 12,519 | 14,639 | |||||||||
Property
and equipment | ||||||||||||
Land | 6,040 | 6,064 | 6,069 | |||||||||
Buildings
and improvements | 30,467 | 29,240 | 29,090 | |||||||||
Fixtures and equipment | 6,032 | 5,912 | 5,784 | |||||||||
Computer
hardware and software | 2,636 | 2,544 | 2,660 | |||||||||
Construction-in-progress | 298 | 460 | 384 | |||||||||
Accumulated
depreciation | (19,089 | ) | (18,687 | ) | (18,380 | ) | ||||||
Property and equipment, net | 26,384 | 25,533 | 25,607 | |||||||||
Operating
lease assets | 2,151 | 1,965 | 1,997 | |||||||||
Other noncurrent assets | 1,401 | 1,273 | 1,329 | |||||||||
Total
assets | $ | 43,741 | $ | 41,290 | $ | 43,572 | ||||||
Liabilities and shareholders’ investment | ||||||||||||
Accounts
payable | $ | 11,258 | $ | 9,761 | $ | 11,959 | ||||||
Accrued and other current liabilities | 4,191 | 4,201 | 4,096 | |||||||||
Current
portion of long-term debt and other borrowings | 1,159 | 1,052 | 1,535 | |||||||||
Total current liabilities | 16,608 | 15,014 | 17,590 | |||||||||
Long-term
debt and other borrowings | 10,513 | 10,223 | 10,104 | |||||||||
Noncurrent operating lease liabilities | 2,208 | 2,004 | 2,046 | |||||||||
Deferred
income taxes | 1,215 | 972 | 970 | |||||||||
Other noncurrent liabilities | 1,652 | 1,780 | 1,782 | |||||||||
Total
noncurrent liabilities | 15,588 | 14,979 | 14,902 | |||||||||
Shareholders’ investment | ||||||||||||
Common
stock | 42 | 43 | 43 | |||||||||
Additional paid-in capital | 6,006 | 6,042 | 5,867 | |||||||||
Retained
earnings | 6,270 | 6,017 | 5,884 | |||||||||
Accumulated other comprehensive loss | (773 | ) | (805 | ) | (714 | ) | ||||||
Total
shareholders’ investment | 11,545 | 11,297 | 11,080 | |||||||||
Total liabilities and shareholders’ investment | $ | 43,741 | $ | 41,290 | $ | 43,572 |
Nine
Months Ended | ||||||||
(millions) (unaudited) | ||||||||
Operating activities | ||||||||
Net
earnings | $ | 2,447 | $ | 2,139 | ||||
Earnings from discontinued operations, net of tax | 11 | 7 | ||||||
Net
earnings from continuing operations | 2,436 | 2,132 | ||||||
Adjustments to reconcile net earnings to cash provided by operations | ||||||||
Depreciation
and amortization | 1,905 | 1,826 | ||||||
Share-based compensation expense | 116 | 106 | ||||||
Deferred
income taxes | 235 | 261 | ||||||
Noncash losses / (gains) and other, net | 6 | 85 | ||||||
Changes
in operating accounts | ||||||||
Inventory | (1,899 | ) | (3,796 | ) | ||||
Other
assets | (10 | ) | (140 | ) | ||||
Accounts payable | 1,473 | 3,298 | ||||||
Accrued
and other liabilities | (121 | ) | (158 | ) | ||||
Cash provided by operating activities—continuing operations | 4,141 | 3,614 | ||||||
Cash
provided by operating activities—discontinued operations | 18 | 10 | ||||||
Cash provided by operations | 4,159 | 3,624 | ||||||
Investing
activities | ||||||||
Expenditures for property and equipment | (2,403 | ) | (2,873 | ) | ||||
Proceeds
from disposal of property and equipment | 29 | 39 | ||||||
Other investments | 14 | 15 | ||||||
Cash
required for investing activities | (2,360 | ) | (2,819 | ) | ||||
Financing activities | ||||||||
Change
in commercial paper, net | — | 490 | ||||||
Additions to long-term debt | 994 | — | ||||||
Reductions
of long-term debt | (1,041 | ) | (268 | ) | ||||
Dividends paid | (995 | ) | (1,001 | ) | ||||
Repurchase
of stock | (959 | ) | (1,485 | ) | ||||
Accelerated share repurchase pending final settlement | (450 | ) | (450 | ) | ||||
Stock
option exercises | 65 | 91 | ||||||
Cash required for financing activities | (2,386 | ) | (2,623 | ) | ||||
Net
decrease in cash and cash equivalents | (587 | ) | (1,818 | ) | ||||
Cash and cash equivalents at beginning of period | 1,556 | 2,643 | ||||||
Cash
and cash equivalents at end of period | $ | 969 | $ | 825 |
Three Months Ended | Nine Months Ended | ||||||||||
Rate Analysis (unaudited) | |||||||||||
Gross margin rate | 29.8 | % | 28.7 | % | 30.0 | % | 29.6 | % | |||
SG&A
expense rate | 22.3 | 22.1 | 21.4 | 21.7 | |||||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate | 3.1 | 3.0 | 3.1 | 3.1 | |||||||
Operating
income margin rate | 5.4 | 4.6 | 6.3 | 5.7 |
Three Months Ended | Nine
Months Ended | ||||||||||
Comparable Sales (unaudited) | |||||||||||
Comparable
sales change | 4.5 | % | 5.1 | % | 4.2 | % | 4.9 | % | |||
Drivers of change in comparable sales | |||||||||||
Number
of transactions | 3.1 | 5.3 | 3.3 | 5.1 | |||||||
Average transaction amount | 1.4 | (0.2 | ) | 0.9 | (0.2 | ) |
Contribution to Comparable Sales Change (unaudited) | Three Months Ended | Nine Months Ended | |||||||||
Stores channel comparable sales change | 2.8 | % | 3.2 | % | 2.3 | % | 3.4 | % | |||
Digital
channel contribution to comparable sales change | 1.7 | 1.9 | 1.9 | 1.5 | |||||||
Total comparable sales change | 4.5 | % | 5.1 | % | 4.2 | % | 4.9 | % |
Three Months Ended | Nine Months Ended | ||||||||||
Sales by Channel (unaudited) | |||||||||||
Stores originated | 92.5 | % | 94.0 | % | 92.7 | % | 94.4 | % | |||
Digitally
originated | 7.5 | 6.0 | 7.3 | 5.6 | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Three
Months Ended | Nine Months Ended | ||||||||||
RedCard Penetration (unaudited) | |||||||||||
Target Debit Card | 12.5 | % | 12.9 | % | 12.7 | % | 13.1 | % | |||
Target Credit Cards | 10.7 | 10.8 | 10.6 | 10.8 | |||||||
Total
RedCard Penetration | 23.1 | % | 23.7 | % | 23.3 | % | 23.9 | % |
Number of Stores and Retail Square Feet (unaudited) | Number of Stores | Retail Square Feet (a) | |||||||||||
170,000 or more sq. ft. | 272 | 272 | 273 | 48,619 | 48,604 | 48,778 | |||||||
50,000
to 169,999 sq. ft. | 1,504 | 1,501 | 1,505 | 189,164 | 188,900 | 189,496 | |||||||
49,999
or less sq. ft. | 86 | 71 | 68 | 2,475 | 2,077 | 1,984 | |||||||
Total | 1,862 | 1,844 | 1,846 | 240,258 | 239,581 | 240,258 |
(a) | In
thousands, reflects total square feet less office, distribution center, and vacant space. |
Three
Months Ended | |||||||||||||||||||||||||||
(millions, except per share data) (unaudited) | Pretax | Net
of Tax | Per Share Amounts | Pretax | Net of Tax | Per Share Amounts | Change | ||||||||||||||||||||
GAAP
diluted earnings per share from continuing operations | $ | 1.37 | $ | 1.16 | 18.2 | % | |||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||
Tax
Act (a) | $ | — | $ | — | $ | — | $ | — | $ | (39 | ) | $ | (0.07 | ) | |||||||||||||
Other
(c) | (9 | ) | (6 | ) | (0.01 | ) | — | — | — | ||||||||||||||||||
Adjusted
diluted earnings per share from continuing operations | $ | 1.36 | $ | 1.09 | 24.9 | % |
Nine
Months Ended | |||||||||||||||||||||||||||
(millions, except per share data) (unaudited) | Pretax | Net
of Tax | Per Share Amounts | Pretax | Net of Tax | Per Share Amounts | Change | ||||||||||||||||||||
GAAP
diluted earnings per share from continuing operations | $ | 4.71 | $ | 3.98 | 18.5 | % | |||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||
Tax
Act (a) | $ | — | $ | — | $ | — | $ | — | $ | (39 | ) | $ | (0.07 | ) | |||||||||||||
Income
tax matters (b) | — | — | — | — | (18 | ) | (0.03 | ) | |||||||||||||||||||
Other
(c) | (9 | ) | (6 | ) | (0.01 | ) | — | — | — | ||||||||||||||||||
Adjusted
diluted earnings per share from continuing operations | $ | 4.70 | $ | 3.87 | 21.4 | % |
(a) | Represents discrete items related to the Tax Cuts and Jobs Act of 2017 (Tax Act). |
(b) | Represents benefits from the resolution of certain income tax matters unrelated to current period operations. |
(c) | Represents
an insurance recovery related to the 2013 data breach. |
EBIT and EBITDA | Three Months Ended | Nine
Months Ended | ||||||||||||||||||||
(millions) (unaudited) | Change | Change | ||||||||||||||||||||
Net earnings from continuing operations | $ | 706 | $ | 616 | 14.5 | % | $ | 2,436 | $ | 2,132 | 14.3 | % | ||||||||||
+
Provision for income taxes | 195 | 97 | 100.8 | 703 | 530 | 32.8 | ||||||||||||||||
+
Net interest expense | 113 | 115 | (1.6 | ) | 359 | 352 | 2.0 | |||||||||||||||
EBIT | $ | 1,014 | $ | 828 | 22.4 | % | $ | 3,498 | $ | 3,014 | 16.1 | % | ||||||||||
+
Total depreciation and amortization (a) | 637 | 592 | 7.6 | 1,905 | 1,826 | 4.3 | ||||||||||||||||
EBITDA | $ | 1,651 | $ | 1,420 | 16.2 | % | $ | 5,403 | $ | 4,840 | 11.6 | % |
(a) | Represents
total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales. |
After-Tax
Return on Invested Capital | ||||||||||||
(dollars in millions) (unaudited) | ||||||||||||
Trailing Twelve Months | ||||||||||||
Numerator | 2018 (a) | |||||||||||
Operating income | $ | 4,577 | $ | 4,122 | ||||||||
+
Net other income / (expense) | 45 | 35 | ||||||||||
EBIT | 4,622 | 4,157 | ||||||||||
+
Operating lease interest (b) | 86 | 83 | ||||||||||
- Income taxes (c)(d) | 1,043 | 524 | ||||||||||
Net
operating profit after taxes | $ | 3,665 | $ | 3,716 |
Denominator | ||||||||||||
Current portion of long-term debt and other borrowings | $ | 1,159 | $ | 1,535 | $ | 1,366 | ||||||
+
Noncurrent portion of long-term debt | 10,513 | 10,104 | 11,090 | |||||||||
+ Shareholders' equity | 11,545 | 11,080 | 11,092 | |||||||||
+
Operating lease liabilities (e) | 2,390 | 2,208 | 2,041 | |||||||||
- Cash and cash equivalents | 969 | 825 | 2,725 | |||||||||
-
Net assets of discontinued operations (f) | — | — | 4 | |||||||||
Invested capital | $ | 24,638 | $ | 24,102 | $ | 22,860 | ||||||
Average
invested capital (g) | $ | 24,369 | $ | 23,481 |
After-tax
return on invested capital (d) | 15.0 | % | 15.8 | % | ||||
After-tax return on invested capital excluding discrete impacts of Tax Act (d) | 15.1 | % | 13.9 | % |
(a) | Consisted
of 53 weeks. |
(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 Expenses. 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 for continuing operations, which were 22.1 percent and 12.3 percent for the trailing twelve months ended November 2, 2019, and November 3, 2018, respectively. For the trailing twelve months ended November 2, 2019, and November 3, 2018, includes tax effect of $1,024 million and $514 million, respectively, related to EBIT, and $19 million
and $10 million, respectively, related to operating lease interest. |
(d) | The effective tax rate for the trailing twelve months ended November 2, 2019, and November 3, 2018, includes discrete tax items of $(3) million and $382 million, respectively, related to the Tax Act. |
(e) | Total
short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities. |
(f) | Included in Other Assets and Liabilities. |
(g) | 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. |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
1/15/20 | 3 | |||
11/22/19 | ||||
Filed on / For Period end: | 11/20/19 | 4 | ||
11/2/19 | 10-Q | |||
2/2/19 | 10-K | |||
11/3/18 | 10-Q | |||
10/28/17 | 10-Q | |||
List all Filings |