
TARGET CORPORATION						Q3 2020 Form 10-Q			1

Consolidated Statements of Comprehensive Income
Three Months Ended Nine Months Ended
(millions) (unaudited) October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Net earnings $ 480
$ 608
$ 1,833
$ 1,920
Other comprehensive income

Pension and other benefit liabilities, net of taxes of $5, $3, $15 and $11 8
6
22
17
Currency translation adjustment and cash flow hedges, net of taxes of $1, $1, $2, and $2 (2 ) —
6
5
Other comprehensive income 6
6
28
22
Comprehensive income $ 486
$ 614
$ 1,861
$ 1,942


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Comprehensive Income
	Three Months Ended				Nine Months Ended
(millions) (unaudited)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Net earnings	$	1,014	$	714	$	2,988	$	2,447
Other comprehensive income
Pension, net of tax	22		10		66		30
Currency translation adjustment and cash flow hedges, net of tax	14		(1)		5		2
Other comprehensive income	36		9		71		32
Comprehensive income	$	1,050	$	723	$	3,059	$	2,479

See accompanying Notes to Consolidated Financial ~~Statements.~~

Statements.


TARGET CORPORATION						Q3 2020 Form 10-Q			2

Consolidated Statements of Financial Position

(millions) (unaudited) October 28,
2017
January 28,
2017
October 29,
2016
Assets

Cash and cash equivalents $ 2,725
$ 2,512
$ 1,231
Inventory 10,586
8,309
10,057
Assets of discontinued operations 6
69
62
Other current assets 1,392
1,100
1,492
Total current assets 14,709
11,990
12,842
Property and equipment

Land 6,087
6,106
6,106
Buildings and improvements 28,310
27,611
27,518
Fixtures and equipment 5,548
5,503
5,467
Computer hardware and software 2,658
2,651
2,538
Construction-in-progress 389
200
219
Accumulated depreciation (17,880 ) (17,413 ) (16,946 )
Property and equipment, net 25,112
24,658
24,902
Noncurrent assets of discontinued operations 9
12
17
Other noncurrent assets 878
771
842
Total assets $ 40,708
$ 37,431
$ 38,603
Liabilities and shareholders’ investment

Accounts payable $ 9,986
$ 7,252
$ 8,250
Accrued and other current liabilities 4,036
3,737
3,662
Current portion of long-term debt and other borrowings 1,354
1,718
729
Total current liabilities 15,376
12,707
12,641
Long-term debt and other borrowings 11,277
11,031
12,097
Deferred income taxes 944
861
920
Liabilities of discontinued operations 11
19
19
Other noncurrent liabilities 1,963
1,860
1,857
Total noncurrent liabilities 14,195
13,771
14,893
Shareholders’ investment

Common stock 45
46
47
Additional paid-in capital 5,762
5,661
5,598
Retained earnings 5,940
5,884
6,031
Accumulated other comprehensive loss (610 ) (638 ) (607 )
Total shareholders’ investment 11,137
10,953
11,069
Total liabilities and shareholders’ investment $ 40,708
$ 37,431
$ 38,603


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)	October 31, 2020		February 1, 2020		November 2, 2019
Assets
Cash and cash equivalents	$	5,996	$	2,577	$	969
Inventory	12,712		8,992		11,396
Other current assets	1,601		1,333		1,440
Total current assets	20,309		12,902		13,805
Property and equipment
Land	6,063		6,036		6,040
Buildings and improvements	31,398		30,603		30,467
Fixtures and equipment	5,843		6,083		6,032
Computer hardware and software	2,706		2,692		2,636
Construction-in-progress	518		533		298
Accumulated depreciation	(19,755)		(19,664)		(19,089)
Property and equipment, net	26,773		26,283		26,384
Operating lease assets	2,208		2,236		2,151
Other noncurrent assets	1,371		1,358		1,401
Total assets	$	50,661	$	42,779	$	43,741
Liabilities and shareholders’ investment
Accounts payable	$	14,203	$	9,920	$	11,258
Accrued and other current liabilities	5,023		4,406		4,191
Current portion of long-term debt and other borrowings	131		161		1,159
Total current liabilities	19,357		14,487		16,608
Long-term debt and other borrowings	12,490		11,338		10,513
Noncurrent operating lease liabilities	2,196		2,275		2,208
Deferred income taxes	1,171		1,122		1,215
Other noncurrent liabilities	2,128		1,724		1,652
Total noncurrent liabilities	17,985		16,459		15,588
Shareholders’ investment
Common stock	42		42		42
Additional paid-in capital	6,285		6,226		6,006
Retained earnings	7,789		6,433		6,270
Accumulated other comprehensive loss	(797)		(868)		(773)
Total shareholders’ investment	13,319		11,833		11,545
Total liabilities and shareholders’ investment	$	50,661	$	42,779	$	43,741

Common Stock Authorized 6,000,000,000 shares, ~~$.0833~~$0.0833 par value; ~~543,913,318, 556,156,228~~500,754,729, 504,198,962 and ~~563,676,785~~506,677,740 shares issued and outstanding at as of October ~~28, 2017~~, ~~January 28, 2017~~31, 2020, February 1, 2020, and ~~October 29, 2016~~,November 2, 2019, respectively.

Preferred Stock Authorized 5,000,000 shares, ~~$.01~~$0.01 par value; no0 shares were issued or outstanding during any period presented.

See accompanying Notes to Consolidated Financial ~~Statements.~~

Statements.


TARGET CORPORATION						Q3 2020 Form 10-Q			3

Consolidated Statements of Cash Flows
Nine Months Ended
(millions) (unaudited) October 28,
2017
October 29,
2016
Operating activities

Net earnings $ 1,833
$ 1,920
Earnings from discontinued operations, net of tax 7
73
Net earnings from continuing operations 1,826
1,847
Adjustments to reconcile net earnings to cash provided by operations

Depreciation and amortization 1,784
1,686
Share-based compensation expense 81
85
Deferred income taxes 37
83
Loss on debt extinguishment 123
422
Noncash losses / (gains) and other, net
189
(5 )
Changes in operating accounts

Inventory (2,277 ) (1,455 )
Other assets (89 ) (14 )
Accounts payable 2,738
832
Accrued and other liabilities 2
(711 )
Cash provided by operating activities—continuing operations 4,414
2,770
Cash provided by operating activities—discontinued operations
75
111
Cash provided by operations 4,489
2,881
Investing activities

Expenditures for property and equipment (2,049 ) (1,184 )
Proceeds from disposal of property and equipment 27
23
Other investments (62 ) 23
Cash required for investing activities (2,084 ) (1,138 )
Financing activities

Change in commercial paper, net —
89
Additions to long-term debt 739
1,977
Reductions of long-term debt (1,087 ) (2,625 )
Dividends paid (1,001 ) (1,011 )
Repurchase of stock (757 ) (3,034 )
Prepayment of accelerated share repurchase (111 ) (120 )
Stock option exercises 25
166
Cash required for financing activities (2,192 ) (4,558 )
Net increase / (decrease) in cash and cash equivalents
213
(2,815 )
Cash and cash equivalents at beginning of period 2,512
4,046
Cash and cash equivalents at end of period $ 2,725
$ 1,231


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Cash Flows
	Nine Months Ended
(millions) (unaudited)	October 31, 2020		November 2, 2019
Operating activities
Net earnings	$	2,988	$	2,447
Earnings from discontinued operations, net of tax	0		11
Net earnings from continuing operations	2,988		2,436
Adjustments to reconcile net earnings to cash provided by operations
Depreciation and amortization	1,848		1,905
Share-based compensation expense	161		116
Deferred income taxes	26		235
Loss on debt extinguishment	512		0
Noncash losses / (gains) and other, net	124		6
Changes in operating accounts
Inventory	(3,720)		(1,899)
Other assets	(174)		(10)
Accounts payable	4,287		1,473
Accrued and other liabilities	992		(121)
Cash provided by operating activities—continuing operations	7,044		4,141
Cash provided by operating activities—discontinued operations	0		18
Cash provided by operations	7,044		4,159
Investing activities
Expenditures for property and equipment	(2,009)		(2,403)
Proceeds from disposal of property and equipment	27		29
Other investments	(3)		14
Cash required for investing activities	(1,985)		(2,360)
Financing activities
Additions to long-term debt	2,480		994
Reductions of long-term debt	(2,395)		(1,041)
Dividends paid	(1,002)		(995)
Repurchase of stock	(741)		(959)
Accelerated share repurchase pending final settlement	0		(450)
Stock option exercises	18		65
Cash required for financing activities	(1,640)		(2,386)
Net increase in cash and cash equivalents	3,419		(587)
Cash and cash equivalents at beginning of period	2,577		1,556
Cash and cash equivalents at end of period	$	5,996	$	969
Supplemental information
Leased assets obtained in exchange for new finance lease liabilities	$	344	$	301
Leased assets obtained in exchange for new operating lease liabilities	186		334

See accompanying Notes to Consolidated Financial ~~Statements.~~

Statements.


TARGET CORPORATION						Q3 2020 Form 10-Q			4

Consolidated Statements of Shareholders’ Investment
Common
Stock
Additional

Accumulated Other

Stock
Par
Paid-in
Retained
Comprehensive

(millions) (unaudited) Shares
Value
Capital
Earnings

(Loss) / Income

Total
January 30, 2016 602.2
$ 50
$ 5,348
$ 8,188
$ (629 ) $ 12,957
Net earnings —
—
—
2,737
—
2,737
Other comprehensive loss —
—
—
—
(9 ) (9 )
Dividends declared —
—
—
(1,359 ) —
(1,359 )
Repurchase of stock (50.9 ) (4 ) —
(3,682 ) —
(3,686 )
Stock options and awards 4.9
—
313
—
—
313
January 28, 2017 556.2
$ 46
$ 5,661
$ 5,884
$ (638 ) $ 10,953
Net earnings —
—
—
1,833
—
1,833
Other comprehensive income —
—
—
—
28
28
Dividends declared —
—
—
(1,016 ) —
(1,016 )
Repurchase of stock (13.3 ) (1 ) —
(750 ) —
(751 )
Stock to be received upon settlement of ASR —
—
—
(11 ) —
(11 )
Stock options and awards 1.0
—
101
—
—
101
October 28, 2017 543.9
$ 45
$ 5,762
$ 5,940
$ (610 ) $ 11,137


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Shareholders’ Investment
	Common	Stock		Additional				Accumulated Other
	Stock	Par		Paid-in		Retained		Comprehensive
(millions) (unaudited)	Shares	Value		Capital		Earnings		(Loss) / Income		Total
February 2, 2019	517.8	$	43	$	6,042	$	6,017	$	(805)	$	11,297
Net earnings	—	—		—		795		—		795
Other comprehensive income	—	—		—		—		13		13
Dividends declared	—	—		—		(330)		—		(330)
Repurchase of stock	(3.6)	—		—		(277)		—		(277)
Accelerated share repurchase pending final settlement	(3.0)	—		(153)		(247)		—		(400)
Stock options and awards	1.1	—		19		—		—		19
May 4, 2019	512.3	$	43	$	5,908	$	5,958	$	(792)	$	11,117
Net earnings	—	—		—		938		—		938
Other comprehensive income	—	—		—		—		10		10
Dividends declared	—	—		—		(341)		—		(341)
Repurchase of stock	(1.3)	—		153		(94)		—		59
Stock options and awards	0.3	—		53		—		—		53
August 3, 2019	511.3	$	43	$	6,114	$	6,461	$	(782)	$	11,836
Net earnings	—	—		—		714		—		714
Other comprehensive income	—	—		—		—		9		9
Dividends declared	—	—		—		(338)		—		(338)
Repurchase of stock	(3.0)	(1)		—		(295)		—		(296)
Accelerated share repurchase pending final settlement	(2.5)	—		(178)		(272)		—		(450)
Stock options and awards	0.9	—		70		—		—		70
November 2, 2019	506.7	$	42	$	6,006	$	6,270	$	(773)	$	11,545
Net earnings	—	—		—		834		—		834
Other comprehensive loss	—	—		—		—		(95)		(95)
Dividends declared	—	—		—		(336)		—		(336)
Repurchase of stock	(2.6)	—		178		(335)		—		(157)
Stock options and awards	0.1	—		42		—		—		42
February 1, 2020	504.2	$	42	$	6,226	$	6,433	$	(868)	$	11,833


TARGET CORPORATION						Q3 2020 Form 10-Q			5


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Shareholders’ Investment
	Common	Stock		Additional				Accumulated Other
	Stock	Par		Paid-in		Retained		Comprehensive
(millions) (unaudited)	Shares	Value		Capital		Earnings		(Loss) / Income		Total
February 1, 2020	504.2	$	42	$	6,226	$	6,433	$	(868)	$	11,833
Net earnings	—	—		—		284		—		284
Other comprehensive income	—	—		—		—		14		14
Dividends declared	—	—		—		(333)		—		(333)
Repurchase of stock	(5.7)	—		—		(609)		—		(609)
Stock options and awards	1.4	—		(20)		—		—		(20)
May 2, 2020	499.9	$	42	$	6,206	$	5,775	$	(854)	$	11,169
Net earnings	—	—		—		1,690		—		1,690
Other comprehensive income	—	—		—		—		21		21
Dividends declared	—	—		—		(344)		—		(344)
Stock options and awards	0.4	—		42		—		—		42
August 1, 2020	500.3	$	42	$	6,248	$	7,121	$	(833)	$	12,578
Net earnings	—	—		—		1,014		—		1,014
Other comprehensive income	—	—		—		—		36		36
Dividends declared	—	—		—		(346)		—		(346)
Stock options and awards	0.5	—		37		—		—		37
October 31, 2020	500.8	$	42	$	6,285	$	7,789	$	(797)	$	13,319

We declared $0.68 and $0.66 dividends per share for the three months ended October 31, 2020, and November 2, 2019, respectively, and $2.62 per share for the fiscal year ended February 1, 2020.

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements.


TARGET CORPORATION						Q3 2020 Form 10-Q			6


			FINANCIAL STATEMENTS			Table of Contents
			INDEX			Index to Notes


TARGET CORPORATION						Q3 2020 Form 10-Q			7


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

Notes to Consolidated Financial Statements (unaudited)

1. Accounting Policies

These unaudited condensed consolidated financial statements are prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States (U.S.) generally accepted accounting principles (U.S. GAAP) for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in our ~~2016~~2019 Form 10-K.

We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. Certain prior-year amounts have been reclassified to conform to the current year presentation. Note 3 provides more information about a reclassification of supply chain-related depreciation expense to cost of sales. Unless otherwise noted, amounts presented within the Notes to Consolidated Financial Statements refer to our continuing operations.

We operate as a single segment that includes all of our continuing operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Nearly all of our revenues are generated in the U.S. The vast majority of our long-lived assets are located within the U.S.

Due to the seasonal nature of our business, quarterly revenues, expenses, earnings, and cash flows are not necessarily indicative of the results that may be expected for the full year.

2. ~~Revenues~~Coronavirus (COVID-19)

~~In May 2014,~~On March 11, 2020, the ~~FASB issued Accounting Standards Update (ASU) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606).~~ ~~We plan~~World Health Organization declared the novel coronavirus disease (COVID-19) a pandemic, and on March 13, 2020, the United States declared a national emergency. States and cities have taken various measures in response to ~~adopt~~COVID-19, including mandating the ~~standard~~closure of certain businesses and encouraging or requiring citizens to avoid large gatherings. To date, virtually all of our stores, digital channels, and distribution centers have remained open.

Throughout the nine months ended October 31, 2020, guest shopping patterns changed significantly and unpredictably in reaction to the COVID-19 pandemic. NaN of our 5 core merchandise categories have experienced significant sales growth throughout the year; however, sales of Apparel and Accessories declined significantly in the first quarter before rebounding in the second and third quarters. Note 3 provides sales by category. In response to these changes, we have taken many actions, including accelerating purchases of ~~fiscal 2018 using~~certain merchandise in our core categories and slowing or canceling certain purchase orders, primarily for Apparel and Accessories. As a result of these actions, during the ~~full retrospective approach. We do not expect the standard to materially affect our consolidated net earnings, financial position, or cash flows. We expect minor changes to the timing~~first quarter of ~~recognition~~2020, we recorded $216 million of ~~revenues related to promotional gift cards.~~purchase order cancellation fees in Cost of Sales.

We are nearly complete with our evaluation of the impact the standard has on our determination of whether we act as principal or agent in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. We record revenue and related costs on a gross basis for


TARGET CORPORATION						Q3 2020 Form 10-Q			8


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

3. Revenues

General merchandise sales represent the vast majority of ~~these arrangements, which represent approximately 3 percent~~our revenues. We also earn revenues from a variety of ~~our consolidated sales. We expect to conclude that we should continue to record these transactions on a gross basis.~~

~~We expect to present certain~~ other ~~income streams, including~~sources, most notably credit card profit sharing income from our arrangement with TD Bank Group (TD).


Revenues	Three Months Ended				Nine Months Ended
(millions)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Apparel and accessories (a)	$	3,927	$	3,564	$	10,630	$	10,510
Beauty and household essentials (b)	6,103		5,125		18,172		15,172
Food and beverage (c)	4,397		3,717		13,158		10,899
Hardlines (d)	3,377		2,460		9,959		7,348
Home furnishings and décor (e)	4,506		3,527		12,395		9,985
Other	26		21		89		83
Sales	22,336		18,414		64,403		53,997
Credit card profit sharing	164		177		488		505
Other	132		74		331		211
Other revenue	296		251		819		716
Total revenue	$	22,632	$	18,665	$	65,222	$	54,713

(a)Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as jewelry, accessories, and shoes.

(b)Includes beauty and personal care, baby gear, cleaning, paper products, and pet supplies.

(c)Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and food service in anour stores.

(d)Includes electronics (including video game hardware and software), toys, entertainment, sporting goods, and luggage.

(e)Includes furniture, lighting, storage, kitchenware, small appliances, home décor, bed and bath, home improvement, school/office supplies, greeting cards and party supplies, and other seasonal merchandise.

Merchandise sales – We record almost all retail store revenues at the point of sale. Digitally originated sales may include shipping revenue ~~line on~~and are recorded upon delivery to the guest or upon guest pickup at the store. Sales are recognized net of expected returns, which we estimate using historical return patterns and our ~~Consolidated Statements~~expectation of ~~Operations upon adoption.~~

~~3. Cost~~future returns. As of ~~Sales~~October 31, 2020, February 1, 2020, and ~~Selling, General and Administrative Expenses~~

~~Beginning in~~November 2, 2019, the ~~second quarter of 2017, we reclassified supply chain-related depreciation expense to cost of sales whereas it~~accrual for estimated returns was previously included in depreciation and amortization on our Consolidated Statements of Operations. We reclassified prior year amounts to reflect this change. This reclassification increased cost of sales by $60$182 million, $117 million, and ~~$189~~$137 million, respectively.

Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance.


Gift Card Liability Activity	February 1, 2020		Gift Cards Issued During Current Period But Not Redeemed (b)		Revenue Recognized From Beginning Liability		October 31, 2020
(millions)
Gift card liability (a)	$	935	$	372	$	(549)	$	758

(a)Included in Accrued and Other Current Liabilities.

(b)Net of estimated breakage.

Credit card profit sharing – We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for ~~the three~~performing account servicing and ~~nine months ended October 28, 2017, respectively,~~primary marketing functions. TD underwrites, funds, and ~~$65 million~~owns Target Credit Card and ~~$200 million for the three~~Target MasterCard receivables, controls risk management policies, and nine months ended October 29, 2016, respectively, with equal and offsetting decreases to depreciation and amortization. This reclassification had no impact on sales, earnings before interest expense and income taxes, net earnings or earnings per share.oversees regulatory compliance.

~~The following table illustrates the primary items classified in each major expense category:~~


TARGET CORPORATION						Q3 2020 Form 10-Q			9


		FINANCIAL STATEMENTS	Table of Contents
~~Cost of Sales~~		~~Selling, General and Administrative Expenses~~
~~Total cost of products sold including:~~ ~~• Freight expenses associated with moving~~ ~~merchandise from our vendors to and between our~~ ~~distribution centers and our retail stores~~ ~~• Vendor income that is not reimbursement of~~ ~~specific, incremental and identifiable costs~~ ~~Inventory shrink~~ ~~Markdowns~~ ~~Outbound shipping and handling expenses~~ ~~associated with sales to our guests~~ ~~Payment term cash discounts~~ ~~Distribution center costs, including compensation~~ ~~and benefits costs and depreciation~~ ~~Import costs~~NOTES	~~Compensation and benefit costs for stores and~~ ~~headquarters~~ ~~Occupancy and operating costs of retail and~~ ~~headquarters facilities~~ ~~Advertising, offset by vendor income that is a~~ ~~reimbursement of specific, incremental and~~ ~~identifiable costs~~ ~~Pre-opening and exit costs of stores and other facilities~~ ~~U.S. credit cards servicing expenses and profit~~ ~~sharing~~ ~~Costs associated with accepting 3~~^rd ~~party bank issued~~ ~~payment cards~~ ~~Litigation and defense costs and related insurance~~ ~~recovery~~ ~~Other administrative costs~~Index to Notes

~~Note: The classification of these expenses varies across the retail industry.~~

4. Fair Value Measurements

Fair value measurements are reported in one of three levels reflecting the valuation techniques used to determine fair value.


Fair Value Measurements - Recurring Basis			Fair Value at
(millions)	Classification	Pricing Category	October 31, 2020		February 1, 2020		November 2, 2019
Assets
Short-term investments	Cash and Cash Equivalents	Level 1	$	5,089	$	1,810	$	163
Prepaid forward contracts	Other Current Assets	Level 1	32		23		24
Equity securities (a)	Other Current Assets	Level 1	19		39		80
Interest rate swaps	Other Noncurrent Assets	Level 2	205		137		122
Liabilities


Interest rate swaps	Other Noncurrent Liabilities	Level 2	3		0		0

Fair Value Measurements - Recurring Basis Fair Value at
(millions) Pricing Category October 28,
2017
January 28,
2017
October 29,
2016
Assets

Cash and cash equivalents

Short-term investments held by U.S. entities Level 1 $ 953
$ 1,110
$ —
Short-term investments held by entities located outside the U.S. ^(a)
Level 1 1,050
762
514
Other current assets

Prepaid forward contracts Level 1 30
26
28
Beneficial interest asset Level 3 3
12
10
Interest rate swaps ^(b)
Level 2 —
1
—
Other noncurrent assets

Interest rate swaps ^(b)
Level 2 1
4
19
Beneficial interest asset Level 3 —
—
5
(a)Represents our investment in Casper Sleep Inc. common stock.

^(a) ~~Amounts may be subject to tax if repatriated.~~

^(b) ~~See Note 8 for additional information on interest rate swaps.~~


Significant Financial Instruments Not Measured at Fair Value (a) (millions)	October 31, 2020				February 1, 2020				November 2, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion (b)	$	10,641	$	12,787	$	9,992	$	11,864	$	10,246	$	11,870

Significant Financial Instruments not Measured at Fair Value ^(a)

(millions)
October 28, 2017 January 28, 2017 October 29, 2016
Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Debt ^(b)
$ 11,522
$ 12,403
$ 11,715
$ 12,545
$ 11,802
$ 13,171

^(a)The carrying amounts of certain other current assets, commercial paper, accounts payable, and certain accrued and other current liabilities approximate fair value due to their short-term nature.

^(b)The ~~carrying amount and estimated~~ fair value of debt is generally measured using a discounted cash flow analysis based on current market interest rates for the same or similar types of financial instruments and would be classified as Level 2. These amounts exclude commercial paper, unamortized swap valuation adjustments, and ~~capital~~ lease ~~obligations.~~liabilities.

5. ~~Cash and Cash Equivalents~~

Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of purchase. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card transactions, which typically settle in 5 days or less.

(millions) October 28,
2017
January 28,
2017
October 29,
2016

Cash held by U.S. entities $ 242
$ 257
$ 247
Cash held by entities located outside the U.S. ^(a)
34
17
35
Short-term investments held by U.S. entities 953
1,110
—
Short-term investments held by entities located outside the U.S. ^(a)
1,050
762
514
Receivables from third-party financial institutions for credit and debit card transactions 446
366
435
Cash and cash equivalents $ 2,725
$ 2,512
$ 1,231

^(a) ~~Amounts may be subject to tax if repatriated.~~

6. Property and Equipment

We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store or distribution center, discontinue projects, or make significant software ~~changes or discontinue projects—~~changes—indicate that the asset’s carrying value may not be recoverable. We recognized impairment ~~losses~~charges of $1$2 million and ~~$89~~$62 million during the three and nine months ended October 28, 2017, respectively, primarily resulting from planned or completed store closures and supply chain changes for the nine month period. Storm-related write-offs of property and equipment, net of insurance recoveries, were immaterial.31, 2020, respectively. We recognized impairment ~~losses~~charges of $9$7 million and ~~$37~~$21 million during the three and nine months ended October 29, 2016, respectively, primarily resulting from planned or completed store closures. The impairments are recorded in selling, general and administrative expense on the Consolidated Statements of Operations andNovember 2, 2019, respectively. These impairment charges are included in ~~segment results.~~Selling, General and Administrative Expenses (SG&A).

~~7. Notes Payable~~6. Commercial Paper and Long-Term Debt

In ~~October 2017,~~March 2020, we issued unsecured fixed rate debt of ~~$750 million~~$1.5 billion at ~~3.9%~~2.250 percent that matures in ~~November 2047. During the three months ended~~April 2025 and $1.0 billion at 2.650 percent that matures in September 2030. In October ~~28, 2017,~~2020, we repurchased ~~$344 million~~$1.77 billion of debt before its maturity at a market value of ~~$463 million.~~$2.25 billion. We recognized a loss on early retirement of ~~approximately $123~~$512 million, which was recorded in ~~net interest expense in our Consolidated Statements of Operations.~~Net Interest Expense.

~~In May 2017, we used cash on hand to repay $598 million of debt at its maturity.~~

In April 2016, we issued unsecured fixed rate debt of $1 billion at 2.5% that matures in April 2026 and $1 billion at 3.625% that matures in April 2046. During the first and second quarter of 2016, we repurchased $565 million and $824 million of debt, respectively, before its maturity at a market value of $820 million ~~and $981 million~~, respectively. We recognized a loss on early retirement of approximately $261 million and $161 million in first and second quarter of 2016, respectively, which was recorded in net interest expense in our Consolidated Statements of Operations.

We obtain short-term financing from time to time under our commercial paper ~~program, a form of notes payable. No~~program. NaN balances were outstanding at any time during the nine months ended October ~~28, 2017.~~31, 2020. For the ~~three and~~ nine months ended ~~October 29, 2016,~~November 2, 2019, the maximum amount outstanding was ~~$89~~$744 million, and the average daily ~~amounts~~amount outstanding ~~were $3~~was $55 million ~~and $1 million, respectively,~~ at a weighted average annual interest rate of ~~0.43 percent. At~~2.4 percent, with 0 balance outstanding as of November 2, 2019.

In April 2020, we obtained a committed $900 million 364-day unsecured revolving credit facility. This new facility was in addition to our $2.5 billion unsecured revolving credit facility that expires in October ~~29, 2016, $89 million was outstanding.~~2023. We terminated the 364-day facility in November 2020. NaN balances were outstanding under either credit facility at any time during 2020 or 2019.


TARGET CORPORATION						Q3 2020 Form 10-Q			10


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

7. Derivative Financial Instruments

Our derivative instruments ~~primarily~~ consist of interest rate swaps ~~which we use~~used to mitigate interest rate risk. As a result, ~~of our use of derivative instruments,~~ we have counterparty credit exposure to large global financial ~~institutions. We~~institutions, which we monitor ~~this concentration of counterparty credit risk~~ on an ongoing basis. ~~See~~ Note 4 ~~for a description of~~ to the Consolidated Financial Statements provides the fair value ~~measurement~~and classification of ~~our derivative instruments and their classification on the Consolidated Statements of Financial Position.~~these instruments.

As of October ~~28, 2017~~31, 2020, and ~~October 29, 2016,~~November 2, 2019, we were party to interest rate swaps with notional amounts totaling ~~$1,000 million were~~$1.5 billion. We pay a variable rate and receive a fixed rate under each of these agreements. All of the agreements are designated as fair value ~~hedges.No ineffectiveness was recognized~~hedges, and all were perfectly effective during the three and nine months ended October ~~28, 2017 or October 29, 2016.~~31, 2020, and November 2, 2019.

As of October ~~28, 2017 and October 29, 2016, one~~31, 2020, we were party to forward-starting interest rate ~~swap~~swaps with a notional ~~amount of~~amounts totaling $250 million ~~was not designated a fair value~~to hedge ~~because it was de-designated concurrent with~~ the ~~repurchase of debt during the first half of 2016.~~

We recorded income of $2 million and $8 million during the three and nine months ended October 28, 2017, respectively, and $5 million and $21 million during the three and nine months ended October 29, 2016, respectively, within net interest expense on our Consolidated Statements of Operations related to periodic payments, valuation adjustments, and amortization of gains or losses on our interest rate ~~swaps.~~

~~9. Leases~~

~~In February 2016,~~exposure of anticipated future debt issuances. We designated these derivative financial instruments as cash flow hedges. We assess, both at inception and on an ongoing basis, whether the ~~FASB issued ASU No. 2016-02,~~ ~~Leases.~~ ~~The new standard requires lessees to record assets~~derivative financial instrument is highly effective in offsetting changes in cash flows of the hedged item and ~~liabilities on~~whether it is probable that the ~~balance sheet for all leases with terms longer than 12 months. Leases~~hedged forecasted transaction will occur. As of October 31, 2020, a $1 million loss was recorded in Accumulated Other Comprehensive Loss and will be ~~classified as either finance or operating, with classification affecting~~reclassified to Net Interest Expense when the ~~pattern of expense recognition in the income statement.~~forecasted transaction affects earnings.

We must adopt the standard no later than the first quarter of 2019, which begins on February 3, 2019. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.


Effect of Hedges on Debt (millions)	October 31, 2020		February 1, 2020		November 2, 2019



Long-term debt and other borrowings
Carrying amount of hedged debt	$	1,696	$	1,630	$	1,614
Cumulative hedging adjustments, included in carrying amount	203		137		122


Effect of Hedges on Net Interest Expense	Three Months Ended				Nine Months Ended
(millions)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019


Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swap designated as fair value hedges	$	(36)	$	14	$	66	$	115
Hedged debt	36		(14)		(66)		(115)
Total	$	0	$	0	$	0	$	0

We plan to adopt the standard in the first quarter of 2018. We will take advantage of the transition package of practical expedients permitted within the new standard, which among other things, allows us to carryforward the historical lease classification. In addition, we are electing the hindsight practical expedient to determine the reasonably certain lease term for existing leases. While lease classification will remain unchanged, hindsight will result in generally shorter accounting lease terms and useful lives of the corresponding leasehold improvements. We will make an accounting policy election that will keep leases with an initial term of 12 months or less off of the balance sheet and will result in recognizing those lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term.

While we are continuing to assess all potential impacts of the standard, we expect total liabilities to increase by $1.3-$1.5 billion, with an offsetting increase to leased assets of $1.2-$1.4 billion as of the date of adoption. The difference between these amounts will be recorded as an adjustment to retained earnings. We do not believe the standard will materially affect our consolidated net earnings. These estimates — based on our current lease portfolio — may change as we continue to evaluate the new standard and as we implement a new lease accounting information system. The estimates could also change due to changes in the lease portfolio, which could include (a) lease volume, (b) lease commencement dates, and (c) renewal option and lease termination expectations. We will update our estimates each quarter as changes occur.

~~We do not believe the new standard will have a notable impact on our liquidity. The standard will have no impact on our debt-covenant compliance under our current agreements.~~

~~10. Income Taxes~~

Three Months Ended Nine Months Ended
(dollars in millions) October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Income tax expense $ 137
$ 311
$ 802
$ 910
Effective tax rate ^(a)
22.3 % 33.8 % 30.5 % 33.0 %

^(a) For the three months ended October 28, 2017, the income tax rate decreased 11.5% compared with the three months ended October 29, 2016. Benefits from our global sourcing operations drove 9.6 percentage points of the decline (3.7 percentage points of which is due to lower earnings before income taxes). This includes $55 million of prior-period discrete tax benefits primarily related to our global sourcing operations. For the nine months ended October 28, 2017, the income tax rate decreased 2.5% compared with the nine months ended October 29, 2016. Benefits from our global sourcing operations drove 2.7 percentage points of rate decline. This includes $56 million of prior-period discrete tax benefits primarily related to our global sourcing operations.

~~11.~~8. Share Repurchase

Nine Months Ended
(millions, except per share data) October 28,
2017
October 29,
2016
Total number of shares purchased 10.8
38.5
Average price paid per share $ 56.80
$ 72.87
Total investment $ 611
$ 2,807

~~Note: Accelerated~~We periodically repurchase shares of our common stock under a board-authorized repurchase program through a combination of open market transactions, accelerated share repurchase (ASR) arrangements, and other privately negotiated transactions with financial institutions.


Share Repurchase Activity	Three Months Ended				Nine Months Ended
(millions, except per share data)	October 31, 2020		November 2, 2019 (a)		October 31, 2020		November 2, 2019 (a)
Number of shares purchased	0		3.0		5.7		10.8
Average price paid per share	$	0	$	99.25	$	107.58	$	84.28
Total investment	$	0	$	294	$	609	$	912

(a)This table excludes activity ~~in 2017 and 2016 is omitted~~related to the ASR arrangement described below because ~~the transactions were~~final settlement had not ~~fully settled~~occurred as of ~~October 28, 2017 and October 29, 2016.~~November 2, 2019.

During the third quarter of ~~2017,~~2019, we entered into an ASR arrangement to repurchase ~~$150~~$300 to ~~$250~~$450 million of our common ~~stock under the existing $5 billion share repurchase program.~~stock. Under the agreement, we ~~prepaid $250~~paid $450 million and received an initial delivery of 2.5 million shares, which were retired, resulting in a ~~$139~~$272 million reduction to ~~shareholders' investment.~~Retained Earnings. As of ~~October 28, 2017, $11~~November 2, 2019, $178 million iswas included as a reduction to Additional Paid-in Capital. Upon final settlement in the ~~Consolidated Statement~~fourth quarter of Financial Position as an additional reduction to shareholders' investment because the minimum repurchase will be $150 million. The remaining $100 million is included in other current assets. The ASR is not accounted for as a derivative instrument.

~~In November 2017, the ASR settled. We~~2019, we received an additional ~~0.3~~0.2 million shares, which were retired, and ~~$89~~$127 million for the remaining amount not settled in shares. In total, we repurchased ~~2.8~~2.7 million shares under the ASR arrangement for a total cash investment of ~~$161~~$323 million ($~~57.78~~117.64 per share).


TARGET CORPORATION						Q3 2020 Form 10-Q			11


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

During the third quarter of 2016, we entered into an ASR to repurchase $250 to $350 million of our common stock. Under the agreement, we prepaid $350 million and received an initial delivery of 3.4 million shares, which were retired, resulting in a $230 million reduction to shareholders' investment. As of October 29, 2016, $20 million was included in the Consolidated Statement of Financial Position as an additional reduction to shareholders' investment because the minimum repurchase was $250 million. The remaining $100 million was included in other current assets. The ASR was not accounted for as a derivative instrument.

In November 2016, the ASR settled. We received an additional 1.3 million shares, which were retired, and $36 million for the remaining amount not settled in shares. In total, we repurchased 4.6 million shares under the ASR for a total cash investment of $314 million ($67.67 per share).

~~12.~~9. Pension Benefits

We provide pension plan benefits to ~~certain~~ eligible team members.

Net Pension Benefits Expense Three Months Ended Nine Months Ended
(millions) October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Service cost $ 21
$ 20
$ 63
$ 61
Interest cost 34
34
103
103
Expected return on assets (61 ) (64 ) (184 ) (193 )
Amortization of losses 15
12
45
37
Amortization of prior service cost (3 ) (2 ) (8 ) (8 )
Total $ 6
$ —
$ 19
$ —

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation – Retirement Benefits (Topic 715)~~, which requires employers to disaggregate and present separately the current service cost component from the other components of net benefit cost within the Consolidated Statement of Operations. We plan to adopt the standard in the first quarter of fiscal 2018. We expect to reclassify the other components of net benefit cost to an other income and expense line on our Consolidated Statements of Operations upon adoption.


Net Pension Benefits Expense		Three Months Ended				Nine Months Ended
(millions)	Classification	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Service cost benefits earned	SG&A Expenses	$	25	$	23	$	76	$	69
Interest cost on projected benefit obligation	Net Other (Income) / Expense	30		37		89		111
Expected return on assets	Net Other (Income) / Expense	(61)		(62)		(182)		(186)
Amortization of losses	Net Other (Income) / Expense	32		16		96		47
Amortization of prior service cost	Net Other (Income) / Expense	(3)		(3)		(9)		(8)
Settlement charges	Net Other (Income) / Expense	1		0		1		0
Total		$	24	$	11	$	71	$	33

~~13.~~10. Accumulated Other Comprehensive ~~(Loss)/ Income~~Loss


Change in Accumulated Other Comprehensive Loss	Cash Flow Hedges		Currency Translation Adjustment		Pension		Total
(millions)
February 1, 2020	$	(12)	$	(19)	$	(837)	$	(868)
Other comprehensive loss before reclassifications, net of tax	(1)		0		0		(1)
Amounts reclassified from AOCI, net of tax	6		0		66		72
October 31, 2020	$	(7)	$	(19)	$	(771)	$	(797)


TARGET CORPORATION						Q3 2020 Form 10-Q			12

(millions)
Cash Flow
Hedges

Currency
Translation
Adjustment

Pension and
Other
Benefits

Total
January 28, 2017 $ (16 ) $ (21 ) $ (601 ) $ (638 )
Other comprehensive income before reclassifications —
3
1
4
Amounts reclassified from AOCI 3
^(a)
—
21
^(b)
24
October 28, 2017 $ (13 ) $ (18 ) $ (579 ) $ (610 )


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			FINANCIAL SUMMARY			Index to Notes

^(a)~~Represents amortization of gains and losses on cash flow hedges, net of $2 million of taxes.~~

^(b)~~Represents amortization of pension and other benefit liabilities, net of $15 million of taxes.~~

~~14. Segment Reporting~~

Our segment measure of profit (segment earnings before interest expense and income taxes) is used by management to evaluate performance and make operating decisions. We operate as a single segment that includes all of our continuing operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Virtually all of our consolidated revenues are generated in the United States. The vast majority of our long–lived assets are located within the United States.

Business Segment Results Three Months Ended Nine Months Ended
(millions) October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Sales $ 16,667
$ 16,441
$ 49,113
$ 48,805
Cost of sales ^(a)
11,712
11,536
34,330
33,957
Gross margin 4,955
4,905
14,783
14,848
Selling, general, and administrative expenses ^(c)
3,512
3,343
10,027
9,741
Depreciation and amortization (exclusive of depreciation included in cost of sales) ^(a)
574
505
1,596
1,486
Segment earnings before interest expense and income taxes 869
1,057
3,160
3,621
Pharmacy Transaction-related costs ^(b)(c)
—
4
—
—
Earnings from continuing operations before interest expense and income taxes 869
1,061
3,160
3,621
Net interest expense 254
142
532
864
Earnings from continuing operations before income taxes $ 615
$ 919
$ 2,628
$ 2,757

~~Note: Amounts may not foot due to rounding.~~

^(a) ~~Refer to Note 3 for information about the impact of a reclassification of supply chain-related depreciation expense.~~

^(b) ~~Represents items related to the December 2015 sale of our former pharmacy and clinic businesses to CVS (Pharmacy Transaction).~~

^(c) ~~The sum of segment SG&A expenses and Pharmacy Transaction-related costs equal consolidated SG&A expenses.~~

Reconciliation of Segment Assets to Total Assets
(millions)
October 28,
2017
January 28,
2017
October 29,
2016
Segment assets $ 40,693
$ 37,350
$ 38,524
Assets of discontinued operations 15
81
79
Total assets $ 40,708
$ 37,431
$ 38,603

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Executive~~Financial Summary

Third quarter ~~2017~~2020 includes the following notable items:

•GAAP diluted earnings per share ~~from continuing operations~~ were ~~$0.87.~~$2.01.

•Adjusted diluted earnings per share ~~from continuing operations~~ were ~~$0.91.~~$2.79.

•Total revenue increased 21.3 percent, driven by an increase in comparable sales.

•Comparable sales increased ~~0.9~~20.7 percent, driven by a ~~1.4~~15.6 percent increase in ~~traffic.~~average transaction amount.

◦Comparable ~~digital~~store sales grew 9.9 percent.

◦Digital channel sales increased ~~24 percent.~~155 percent, contributing 10.9 percentage points to comparable sales growth.

•Operating income of $1.9 billion was 93.1 percent higher than the comparable prior-year period.

•We ~~devoted $847 million to capital investment, paid dividends~~repurchased $1.77 billion of ~~$339 million, and returned $171 million through share repurchases, including ASR transactions initiated during the quarter and settled~~debt before its maturity at a market value of $2.25 billion, resulting in ~~November 2017.~~a loss of $512 million.

Sales were ~~$16,667 million~~$22.3 billion for the three months ended October ~~28, 2017,~~31, 2020, an increase of ~~$226 million~~$3.9 billion, or ~~1.4~~21.3 percent, from the same period in the prior year. During the third quarter of 2017, Hurricanes Harvey and Irma caused widespread damage in Texas and Florida and resulted in temporary closure of some of our stores. The net sales impact and storm-related costs, net of insurance recoveries, was immaterial. Operating cash flow provided by continuing operations was ~~$4,414 million and $2,770 million~~$7.0 billion for the nine months ended October ~~28, 2017 and October 29, 2016, respectively. The operating cash flow~~ 31, 2020, an increase ~~is primarily due to increased payables leverage driven by changes in vendor payment terms during~~ of $2.9 billion, or 70.1 percent, from $4.1 billion for the nine months ended October 28, 2017, compared to the nine months ended October 29, 2016. The operating cash flow increase is also partially due to the payment of approximately $500 million of taxes during the first quarter of 2016, primarily related to the December 2015 sale of our pharmacy and clinic businesses (Pharmacy Transaction). These increases were partially offset by a larger inventory increase during the nine months ended October 28, 2017 compared to the nine months ended October 29, 2016, due to an earlier increase for the holiday season.November 2, 2019.


Earnings Per Share from Continuing Operations	Three Months Ended						Nine Months Ended
	October 31, 2020		November 2, 2019		Change		October 31, 2020		November 2, 2019		Change
GAAP diluted earnings per share	$	2.01	$	1.37	46.3	%	$	5.91	$	4.71	25.5	%
Adjustments	0.78		(0.01)				0.83		(0.01)
Adjusted diluted earnings per share	$	2.79	$	1.36	105.1	%	$	6.75	$	4.70	43.5	%

Earnings Per Share from Continuing Operations Three Months Ended
Nine Months Ended
October 28,
2017
October 29,
2016
Change
October 28,
2017
October 29,
2016
Change
GAAP diluted earnings per share $ 0.87
$ 1.06
(17.7 )% $ 3.31
$ 3.14
5.4 %
Adjustments 0.04
(0.01 ) 0.03
0.42

Adjusted diluted earnings per share $ 0.91
$ 1.04
(13.1 )% $ 3.34
$ 3.56
(6.2 )%

Note: Amounts may not foot due to rounding. Adjusted diluted earnings per share from continuing operations (Adjusted EPS), a non-GAAP metric, excludes the impact of certain ~~items not related to our routine retail operations.~~items. Management believes that Adjusted EPS is ~~meaningful to provide~~useful in providing period-to-period comparisons of the results of our ~~operating results.~~continuing operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page ~~18.~~19.

We report after-tax return on invested capital (ROIC) from continuing operations because we believe ROIC provides a meaningful measure of ~~the~~our capital-allocation effectiveness ~~of our capital allocation~~ over time. For the trailing twelve months ended October ~~28, 2017,~~31, 2020, after-tax ROIC was ~~13.7~~19.9 percent, compared with ~~16.3~~15.0 percent for the trailing twelve months ended ~~October 29, 2016. Excluding the net gain on the Pharmacy Transaction, ROIC was 14.3 percent for the trailing twelve months ended October 29, 2016. A reconciliation~~November 2, 2019. The calculation of ROIC is provided on page 21.

COVID-19

On March 11, 2020, the World Health Organization declared the novel coronavirus disease (COVID-19) a pandemic, and on ~~page 20.~~March 13, 2020, the United States declared a national emergency. The rapid development and fluidity of this situation limits our ability to predict the ultimate impact of COVID-19 on our business, financial condition and financial performance, which could be material. States and cities have taken various measures in response to COVID-19, including mandating the closure of certain businesses and encouraging or requiring citizens to avoid large gatherings. We have implemented numerous safety measures to protect our guests and team members — such as mandating face masks for all team members and guests in our stores, more rigorous cleaning processes, providing disposable face masks, gloves and thermometers for team members, installing distancing markers, limiting guest levels within our stores, and installing partitions at all stores. To date, virtually all of our stores, digital channels, and distribution centers have remained open.

As the pandemic has evolved, we have experienced unusually strong sales, as guests rely on Target for essential items like food, medicine, cleaning products, and household stock-up items, as well as merchandise associated with guests spending more time at home. Underlying this trend, we saw significant volatility in our sales mix, including both category sales mix and the mix of sales in our stores and digital channels, including same-day fulfillment options.


TARGET CORPORATION						Q3 2020 Form 10-Q			13


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			FINANCIAL SUMMARY			Index to Notes

•During the first quarter, comparable sales increased 10.8 percent, reflecting a 0.9 percent increase in store originated comparable sales and a 141 percent increase in digitally originated comparable sales. The quarter began with strength across our multi-category portfolio, followed by a shift to strong comparable sales growth in our Food and Beverage and Beauty and Household Essentials core merchandising categories and significant comparable sales declines in Apparel and Accessories. Comparable sales in Apparel and Accessories recovered notably beginning mid-April.

•During the second quarter, comparable sales increased 24.3 percent, reflecting a 10.9 percent increase in store originated comparable sales and a 195 percent increase in digitally originated comparable sales. Comparable sales growth was strong across our multi-category portfolio, with slightly higher growth in lower-margin categories.

•During the third quarter, comparable sales increased 20.7 percent, reflecting a 9.9 percent increase in store originated comparable sales and a 155 percent increase in digitally originated comparable sales. Comparable sales growth strength continued across our multi-category portfolio, with slightly higher growth in lower-margin categories.

For the nine months ended October 31, 2020, gross margin has been negatively impacted by changes in both our category and channel sales mix, as well as actions that we have taken to allow us to better fulfill guest demand for essentials. Additionally, gross margin reflects the portion of investments in pay and benefits classified within Cost of Sales. Exceptionally low clearance and promotional markdown rates partially offset these pressures.

Our SG&A expenses include significant incremental costs related to investments in pay and benefits for store team members, the spikes in merchandise volume in stores and the supply chain, incremental safety and cleaning supplies, and the impact of additional team member hours dedicated to more rigorous cleaning routines in our facilities. From an SG&A expense rate perspective, these incremental costs were more than offset by cost leverage resulting from exceptionally strong sales growth.

To support our team and minimize potential disruptions in their work to serve our guests, we have modified our plans for some of our strategic initiatives, including our previously announced remodel program. We have completed approximately 130 remodels in 2020, down from the previous expectation of approximately 300. Similarly, we opened 29 new small format stores in 2020, rather than the 36 previously announced.

During the first quarter 2020, we issued $2.5 billion of 5-year and 10-year notes in an effort to increase our cash on hand. Additionally, we entered into a $900 million 364-day credit facility, increasing our total undrawn committed credit facilities to $3.4 billion. Our operating performance during the second and third quarters of 2020 and current financial position allowed us to repurchase $1.77 billion of debt before its maturity at a market value of $2.25 billion in October 2020 and terminate the 364-day credit facility in November 2020. Note 6 to the Consolidated Financial Statements and the Liquidity and Capital Resources section provide additional information.


TARGET CORPORATION						Q3 2020 Form 10-Q			14


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF OPERATIONS			Index to Notes

Analysis of Results of Operations

~~Segment Results~~


Summary of Operating Income	Three Months Ended						Nine Months Ended
(dollars in millions)	October 31, 2020		November 2, 2019		Change		October 31, 2020		November 2, 2019		Change
Sales	$	22,336	$	18,414	21.3	%	$	64,403	$	53,997	19.3	%
Other revenue	296		251		18.1		819		716		14.3
Total revenue	22,632		18,665		21.3		65,222		54,713		19.2
Cost of sales	15,509		12,935		19.9		45,692		37,808		20.9
Selling, general and administrative expenses	4,647		4,153		11.9		13,167		11,728		12.3
Depreciation and amortization (exclusive of depreciation included in cost of sales)	541		575		(5.8)		1,660		1,717		(3.3)
Operating income	$	1,935	$	1,002	93.1	%	$	4,703	$	3,460	35.9	%

Three Months Ended
Nine Months Ended
(dollars in millions) October 28,
2017
October 29,
2016
Change
October 28,
2017
October 29,
2016
Change
Sales $ 16,667
$ 16,441
1.4 % $ 49,113
$ 48,805
0.6 %
Cost of sales ^(a)
11,712
11,536
1.5
34,330
33,957
1.1
Gross margin 4,955
4,905
1.0
14,783
14,848
(0.4 )
SG&A expenses ^(b)
3,512
3,343
5.1
10,027
9,741
2.9
Depreciation and amortization (exclusive of depreciation included in cost of sales) ^(a)
574
505
13.7
1,596
1,486
7.4
EBIT $ 869
$ 1,057
(17.8 )% $ 3,160
$ 3,621
(12.7 )%


Rate Analysis	Three Months Ended				Nine Months Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Gross margin rate	30.6	%	29.8	%	29.1	%	30.0	%
SG&A expense rate	20.5		22.3		20.2		21.4
Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate	2.4		3.1		2.5		3.1
Operating income margin rate	8.5		5.4		7.2		6.3

Note: ~~See Note 14 of our Financial Statements for a reconciliation of our segment results to earnings before income taxes.~~

^(a) ~~Refer to Note 3 of the Financial Statements for information about a reclassification of supply chain-related depreciation expense to~~Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales.

^(b)SG&A expenses include $170 million and $512 million net profit-sharing income under our credit card program agreement for the three and nine months ended October 28, 2017, respectively, and $168 million and $489 million for the three and nine months ended October 29, 2016, respectively.

Rate Analysis Three Months Ended Nine Months Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Gross margin rate ^(a)
29.7 % 29.8 % 30.1 % 30.4 %
SG&A expense rate 21.1
20.3
20.4
20.0
Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate ^(a)
3.4
3.1
3.2
3.0
EBIT margin rate 5.2
6.4
6.4
7.4

~~Note: Rate analysis metrics~~ All other rates are ~~computed~~calculated by dividing the applicable amount by ~~sales.~~total revenue.

^(a)~~Reclassifying supply chain-related depreciation expense to cost of sales reduced the gross margin and depreciation and amortization rates by 0.4 percentage points for all periods presented.~~

Sales

Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage. ~~Digital channel~~We use comparable sales ~~include all sales initiated through mobile applications and our conventional websites. Digital channel sales may be fulfilled through our distribution centers, our vendors, or our stores.~~

Sales by Channel Three Months Ended Nine Months Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Stores 95.7 % 96.5 % 95.7 % 96.5 %
Digital 4.3
3.5
4.3
3.5
Total 100 % 100 % 100 % 100 %

Sales by Product Category Three Months Ended Nine Months Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Household essentials ^(a)
25 % 25 % 25 % 25 %
Apparel and accessories 21
21
21
21
Food and beverage ^(a)
20
21
21
21
Home furnishings and décor 20
19
18
19
Hardlines 14
14
15
14
Total 100 % 100 % 100 % 100 %

^(a) ~~For all periods presented, pet supplies, which represented approximately 2 percent of total sales, has been reclassified from food and beverage~~ to ~~household essentials.~~

~~Comparable sales is a measure that highlights~~evaluate the performance of our stores and digital ~~channels~~channel sales by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales include all sales, except sales from stores open less than 13 months, digital acquisitions we have owned less than 13 months, stores that have been closed, and digital acquisitions that we no longer operate. Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies. Digitally originated sales include all sales initiated through mobile applications and our websites. Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pick Up or Drive Up, and delivery via our wholly owned subsidiary, Shipt. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.

Sales growth – from both comparable sales and new stores – represents an important driver of our long-term profitability. We expect that comparable sales growth will drive the majority of our total sales growth. We believe that our ability to successfully differentiate our guests’ shopping experience through a careful combination of merchandise assortment, price, convenience, guest experience, and other factors will over the long-term drive both increasing shopping frequency (traffic) and the amount spent each visit (average transaction amount).

The increase in sales during the three and nine months ended October 31, 2020, is due to a comparable sales increase of 20.7 percent and 18.7 percent, respectively, and the contribution from new stores.


Comparable Sales	Three Months Ended				Nine Months Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Comparable sales change	20.7	%	4.5	%	18.7	%	4.2	%
Drivers of change in comparable sales
Number of transactions	4.5		3.1		2.6		3.3
Average transaction amount	15.6		1.4		15.7		0.9


TARGET CORPORATION						Q3 2020 Form 10-Q			15

Comparable Sales Three Months Ended Nine Months Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Comparable sales change 0.9 % (0.2 )% 0.3 % — %
Drivers of change in comparable sales

Number of transactions 1.4
(1.2 ) 0.9
(1.0 )
Average transaction amount (0.5 ) 1.0
(0.6 ) 1.0


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF OPERATIONS			Index to Notes


Contribution to Comparable Sales Change	Three Months Ended				Nine Months Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Stores originated channel comparable sales change	9.9	%	2.8	%	7.3	%	2.3	%
Contribution from digitally originated sales	10.9		1.7		11.4		1.9
Total comparable sales change	20.7	%	4.5	%	18.7	%	4.2	%

Note: Amounts may not foot due to rounding.


Sales by Channel	Three Months Ended				Nine Months Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Stores originated	84.3	%	92.5	%	83.9	%	92.7	%
Digitally originated	15.7		7.5		16.1		7.3
Total	100	%	100	%	100	%	100	%

Contribution to Comparable Sales Change Three Months Ended Nine Months Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Stores channel comparable sales change — % (1.0 )% (0.6 )% (0.7 )%
Digital channel contribution to comparable sales change 0.8
0.7
0.9
0.6
Total comparable sales change 0.9 % (0.2 )% 0.3 % — %

~~Note: Amounts may not foot due to rounding.~~


Sales by Product Category	Three Months Ended				Nine Months Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Apparel and accessories	18	%	20	%	17	%	19	%
Beauty and household essentials	27		28		28		28
Food and beverage	20		20		20		20
Hardlines	15		13		16		14
Home furnishings and décor	20		19		19		19
Total	100	%	100	%	100	%	100	%

The collective interaction of a broad array of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix, and transfer of sales to new stores makes further analysis of sales metrics infeasible. As previously discussed, we believe that COVID-19 has had a significant impact on the mix of sales amongst our sales channels and categories.

We monitor the percentage of ~~sales~~purchases that are paid for using ~~REDcards (REDcard~~RedCards (RedCard Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on ~~REDcards~~RedCards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a ~~REDcard~~RedCard at Target.


REDcard Penetration	Three Months Ended				Nine Months Ended
RedCard Penetration									RedCard Penetration	Three Months Ended				Nine Months Ended
	October 28, 2017		October 29, 2016		October 28, 2017		October 29, 2016			October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Target Debit Card	12.9	%	12.9	%	13.1	%	12.9	%	Target Debit Card	12.2	%	12.5	%	12.2	%	12.7	%
Target Credit Cards	11.4		11.4		11.3		11.0		Target Credit Cards	9.3		10.7		9.2		10.6
Total REDcard Penetration	24.2	%	24.3	%	24.4	%	23.9	%
Total RedCard Penetration									Total RedCard Penetration	21.5	%	23.1	%	21.4	%	23.3	%

Note: Amounts may not foot due to rounding.


TARGET CORPORATION						Q3 2020 Form 10-Q			16


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF OPERATIONS			Index to Notes

Gross Margin Rate

For the three months ended October 31, 2020, our gross margin rate was 30.6 percent compared with 29.8 percent in the comparable period last year. This increase reflected the net impact of merchandising actions, most notably the benefit of exceptionally low clearance and promotional markdown rates. The increase was partially offset by increased digital fulfillment and supply chain costs (stemming from unusually strong growth in digital volume and higher pay and benefit costs classified within Cost of Sales) and the impact of category sales mix, as sales growth was strongest in lower-margin categories.

For the nine months ended October 31, 2020, our gross margin rate was 29.1 percent compared with 30.0 percent in the comparable period last year. This decrease reflected increased digital fulfillment and supply chain costs (stemming from unusually strong growth in digital volume combined with the impact of higher pay and benefit costs classified within Cost of Sales) and the impact of category sales mix, as sales growth was strongest in lower-margin categories. The decrease was partially offset by the net impact of merchandising actions, most notably the benefit of exceptionally low clearance and promotional markdown rates.

Selling, General, and Administrative Expense Rate

For the three and nine months ended October ~~28, 2017,~~31, 2020, our ~~gross margin~~SG&A expense rate was ~~29.7~~20.5 percent and ~~30.1~~20.2 percent, respectively, compared with ~~29.8~~22.3 percent and ~~30.4~~21.4 percent, respectively, in the comparable periods last year. ~~For~~Incremental team member pay and benefits and investments to protect the health and safety of guests represented approximately $300 million of the $494 million increase in SG&A expenses for the three months ended October 31, 2020, and approximately $900 million of the $1.4 billion increase for the nine months ended October ~~28, 2017,~~31, 2020, compared with the ~~decrease was primarily due to~~prior year periods. From a rate perspective, these increased ~~digital fulfillment costs. The rate was also affected by other items, including benefits from cost savings initiatives, partially~~costs were more than offset by ~~the net impacts of our efforts to improve pricing and promotions.~~leverage resulting from strong revenue growth.


TARGET CORPORATION						Q3 2020 Form 10-Q			17

~~Selling, General, and Administrative Expense Rate~~

For the three and nine months ended October 28, 2017, our SG&A expense rate was 21.1 percent and 20.4 percent, respectively, compared to 20.3 percent and 20.0 percent in the comparable periods last year. The increase was primarily due to higher compensation due to both bonus expense and store wages, partially offset by cost savings driven by efficiency in our technology operations and, for the third quarter, timing of marketing campaigns.

~~Depreciation and Amortization Expense Rate~~

For the three and nine months ended October 28, 2017, our depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate was 3.4 percent and 3.2 percent, respectively, compared to 3.1 percent and 3.0 percent in the comparable periods last year. These increases were primarily due to higher accelerated depreciation for planned store remodels.


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF OPERATIONS			Index to Notes

Store Data


Change in Number of Stores	Three Months Ended		Nine Months Ended
	October 31, 2020	November 2, 2019	October 31, 2020	November 2, 2019
Beginning store count	1,871	1,853	1,868	1,844
Opened	27	9	30	20
Closed	(1)	—	(1)	(2)

Ending store count	1,897	1,862	1,897	1,862

Change in Number of Stores Three Months Ended Nine Months Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Beginning store count 1,816
1,797
1,802
1,792
Opened 12
5
26
11
Closed —
(2 ) —
(3 )
Ending store count 1,828
1,800
1,828
1,800


Number of Stores and Retail Square Feet	Number of Stores			Retail Square Feet (a)
	October 31, 2020	February 1, 2020	November 2, 2019	October 31, 2020	February 1, 2020	November 2, 2019
170,000 or more sq. ft.	273	272	272	48,798	48,619	48,619
50,000 to 169,999 sq. ft.	1,509	1,505	1,504	189,508	189,227	189,164
49,999 or less sq. ft.	115	91	86	3,342	2,670	2,475
Total	1,897	1,868	1,862	241,648	240,516	240,258

Number of Stores and
Retail Square Feet Number of Stores
Retail Square Feet ^(a)
October 28,
2017
January 28,
2017
October 29,
2016
October 28,
2017
January 28,
2017
October 29,
2016
170,000 or more sq. ft. 276
276
278
49,326
49,328
49,685
50,000 to 169,999 sq. ft. 1,508
1,504
1,503
190,038
189,620
189,496
49,999 or less sq. ft. 44
22
19
1,268
554
464
Total 1,828
1,802
1,800
240,632
239,502
239,645

^(a)In thousands, reflects total square feet less office, distribution center, and vacant space.

Other Performance Factors

Net Interest Expense

Net interest expense ~~from continuing operations~~ was ~~$254~~$632 million and ~~$532~~$871 million for the three and nine months ended October ~~28, 2017,~~31, 2020, respectively, ~~compared to $142~~and $113 million and ~~$864~~$359 million for the ~~comparable periods last year.~~three and nine months ended November 2, 2019, respectively. Net interest expense for the three and nine months ended October ~~28, 2017 included a net loss on early retirement of debt of $123 million. Net interest expense for the nine months ended October 29, 2016 included~~31, 2020, increased primarily due to a loss on early retirement of debt of ~~$422~~$512 million.

Provision for Income Taxes

Our effective income tax rate from continuing operations for the three and nine months ended October ~~28, 2017~~31, 2020, was ~~22.3~~21.9 percent and ~~30.5~~21.7 percent, respectively, compared with ~~33.8~~21.7 percent and ~~33.0~~22.4 percent, respectively, for the comparable periods last ~~year. For the three and nine months ended October 28, 2017, the decrease was primarily due to prior-period discrete~~year. The effective tax ~~benefits related to our global sourcing operations. The~~ rate decrease for both the three and nine months ended October 28, 2017, was also due to a benefit from our global sourcing operations related to our 2017 taxes, the rate impact of lower pretax earnings, and the resolution of other tax matters. For the nine months ended October 28, 2017, these items were partially offset by the recognition of excess tax benefits related to share-based payments for the nine months ended October ~~29, 2016.~~31, 2020, reflects a larger rate benefit from discrete items, primarily related to share-based payments, compared with the prior year.


TARGET CORPORATION						Q3 2020 Form 10-Q			18


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			RECONCILIATION OF NON-GAAP FINANCIAL MEASURES			Index to Notes

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share from continuing operations (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 continuing operations. This measure is not in accordance with, or an alternative ~~for,~~to, generally accepted accounting principles in the ~~United States~~U.S. (GAAP). The most comparable GAAP measure is diluted earnings per share from continuing operations. Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported ~~under~~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 31, 2020						November 2, 2019
(millions, except per share data)	Pretax		Net of Tax		Per Share Amounts		Pretax		Net of Tax		Per Share Amounts
GAAP diluted earnings per share from continuing operations					$	2.01					$	1.37
Adjustments
Loss on debt extinguishment	$	512	$	379	$	0.75	$	—	$	—	$	—
Loss on investment (a)	8		9		0.02		—		—		—

Other (b)	8		6		0.01		(9)		(6)		(0.01)
Adjusted diluted earnings per share from continuing operations					$	2.79					$	1.36

Three Months Ended
October 28, 2017 October 29, 2016
(millions, except per share data) Pretax
Net of Tax
Per Share Amounts
Pretax
Net of Tax
Per Share Amounts
GAAP diluted earnings per share from continuing operations $ 0.87
$ 1.06
Adjustments
Loss on early retirement of debt $ 123
$ 75
$ 0.14
$ —
$ —
$ —
Pharmacy Transaction-related costs —
—
—
(4 ) (3 ) —
Income tax matters ^(a)
—
(55 ) (0.10 ) —
(5 ) (0.01 )
Adjusted diluted earnings per share from continuing operations $ 0.91
$ 1.04


	Nine Months Ended
Reconciliation of Non-GAAP Adjusted EPS																	Reconciliation of Non-GAAP Adjusted EPS	Nine Months Ended
	October 28, 2017								October 29, 2016									October 31, 2020						November 2, 2019
(millions, except per share data)	Pretax		Net of Tax			Per Share Amounts			Pretax		Net of Tax			Per Share Amounts			(millions, except per share data)	Pretax		Net of Tax		Per Share Amounts		Pretax		Net of Tax		Per Share Amounts
GAAP diluted earnings per share from continuing operations						$	3.31							$	3.14		GAAP diluted earnings per share from continuing operations					$	5.91					$	4.71
Adjustments																	Adjustments
Loss on early retirement of debt	$	123	$	75		$	0.14		$	422	$	257		$	0.44
Pharmacy Transaction-related costs	—		—			—			—		—			—
Income tax matters ^(a)	—		(56		)	(0.10		)	—		(8		)	(0.01		)
Loss on debt extinguishment																	Loss on debt extinguishment	$	512	$	379	$	0.75	$	—	$	—	$	—
Loss on investment (a)																	Loss on investment (a)	19		18		0.03		—		—		—

Other (b)																	Other (b)	33		24		0.05		(9)		(6)		(0.01)
Adjusted diluted earnings per share from continuing operations						$	3.34							$	3.56		Adjusted diluted earnings per share from continuing operations					$	6.75					$	4.70



~~Minnesota~~		~~41-0215170~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~		~~(I.R.S. Employer~~ ~~Identification No.)~~
~~1000 Nicollet Mall, Minneapolis, Minnesota~~		~~55403~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited) ~~(unaudited)~~
	Consolidated Statements of Operations	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Financial Position	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of Shareholders’ Investment	5
	Notes to Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1213
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2324
Item 4.	Controls and Procedures	2324

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	2425
Item 1A.	Risk Factors	2425
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26

Signature		27


INDEX TO NOTES

Notes to Consolidated Financial Statements		7
Note 1	Accounting Policies	8
Note 2	Coronavirus (COVID-19)	8
Note 3	Revenues	9
Note 4	Fair Value Measurements	10
Note 5	Property and Equipment	10
Note 6	Commercial Paper and Long-Term Debt	10
Note 7	Derivative Financial Instruments	11
Note 8	Share Repurchase	11
Note 9	Pension Benefits	12
Note 10	Accumulated Other Comprehensive Loss	12



Significant Financial Instruments not Measured at Fair Value ^(a) (millions)	October 28, 2017				January 28, 2017				October 29, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Debt ^(b)	$	11,522	$	12,403	$	11,715	$	12,545	$	11,802	$	13,171



(millions)	October 28, 2017		January 28, 2017		October 29, 2016

Cash held by U.S. entities	$	242	$	257	$	247
Cash held by entities located outside the U.S. ^(a)	34		17		35
Short-term investments held by U.S. entities	953		1,110		—
Short-term investments held by entities located outside the U.S. ^(a)	1,050		762		514
Receivables from third-party financial institutions for credit and debit card transactions	446		366		435
Cash and cash equivalents	$	2,725	$	2,512	$	1,231



(millions)	Cash Flow Hedges				Currency Translation Adjustment			Pension and Other Benefits				Total
January 28, 2017	$	(16	)		$	(21	)	$	(601	)		$	(638	)
Other comprehensive income before reclassifications	—				3			1				4
Amounts reclassified from AOCI	3			^(a)	—			21			^(b)	24
October 28, 2017	$	(13	)		$	(18	)	$	(579	)		$	(610	)



Business Segment Results	Three Months Ended				Nine Months Ended
(millions)	October 28, 2017		October 29, 2016		October 28, 2017		October 29, 2016
Sales	$	16,667	$	16,441	$	49,113	$	48,805
Cost of sales ^(a)	11,712		11,536		34,330		33,957
Gross margin	4,955		4,905		14,783		14,848
Selling, general, and administrative expenses ^(c)	3,512		3,343		10,027		9,741
Depreciation and amortization (exclusive of depreciation included in cost of sales) ^(a)	574		505		1,596		1,486
Segment earnings before interest expense and income taxes	869		1,057		3,160		3,621
Pharmacy Transaction-related costs ^(b)(c)	—		4		—		—
Earnings from continuing operations before interest expense and income taxes	869		1,061		3,160		3,621
Net interest expense	254		142		532		864
Earnings from continuing operations before income taxes	$	615	$	919	$	2,628	$	2,757



Number of Stores and Retail Square Feet	Number of Stores			Retail Square Feet ^(a)
Number of Stores and Retail Square Feet	October 28, 2017	January 28, 2017	October 29, 2016	October 28, 2017	January 28, 2017	October 29, 2016
170,000 or more sq. ft.	276	276	278	49,326	49,328	49,685
50,000 to 169,999 sq. ft.	1,508	1,504	1,503	190,038	189,620	189,496
49,999 or less sq. ft.	44	22	19	1,268	554	464
Total	1,828	1,802	1,800	240,632	239,502	239,645


EBIT and EBITDA	Three Months Ended						Nine Months Ended						EBIT and EBITDA	Three Months Ended						Nine Months Ended
(millions) (unaudited)	October 28, 2017		October 29, 2016		Change		October 28, 2017		October 29, 2016		Change
(dollars in millions) (unaudited)													(dollars in millions) (unaudited)	October 31, 2020		November 2, 2019		Change		October 31, 2020		November 2, 2019		Change
Net earnings from continuing operations	$	478	$	608	(21.5	)%	$	1,826	$	1,847	(1.1	)%	Net earnings from continuing operations	$	1,014	$	706	43.6	%	$	2,988	$	2,436	22.6	%
+ Provision for income taxes	137		311		(55.8	)	802		910		(11.9	)	+ Provision for income taxes	284		195		45.7		828		703		17.8
+ Net interest expense	254		142		79.1		532		864		(38.4	)	+ Net interest expense	632		113		457.7		871		359		142.6
EBIT	869		1,061		(18.1	)	3,160		3,621		(12.7	)	EBIT	$	1,930	$	1,014	90.2	%	$	4,687	$	3,498	34.0	%
+ Total depreciation and amortization ^(a)	633		570		11.1		1,784		1,686		5.8		+ Total depreciation and amortization (a)	603		637		(5.1)		1,848		1,905		(2.9)
EBITDA	$	1,502	$	1,631	(7.9	)%	$	4,944	$	5,307	(6.8	)%	EBITDA	$	2,533	$	1,651	53.5	%	$	6,535	$	5,403	21.0	%


After-Tax Return on Invested Capital
(dollars in millions)
	Trailing Twelve Months
Numerator	October 31, 2020		November 2, 2019
Operating income	$	5,901	$	4,577
+ Net other income / (expense)	(46)		45
EBIT	5,855		4,622
+ Operating lease interest (a)	87		86
- Income taxes (b)	1,277		1,043
Net operating profit after taxes	$	4,665	$	3,665


Denominator	October 31, 2020			November 2, 2019			November 3, 2018
Current portion of long-term debt and other borrowings	$	131		$	1,159		$	1,535
+ Noncurrent portion of long-term debt	12,490			10,513			10,104
+ Shareholders' investment	13,319			11,545			11,080
+ Operating lease liabilities (c)	2,400			2,390			2,208
- Cash and cash equivalents	5,996			969			825
Invested capital	$	22,344		$	24,638		$	24,102
Average invested capital (d)	$	23,491		$	24,369

After-tax return on invested capital	19.9		%	15.0		%



Denominator (dollars in millions)	October 28, 2017		October 29, 2016		October 31, 2015
Current portion of long-term debt and other borrowings	$	1,354	$	729	$	825
+ Noncurrent portion of long-term debt	11,277		12,097		11,887
+ Shareholders' equity	11,137		11,069		13,256
+ Capitalized operating lease obligations ^(b)(d)	1,298		1,192		1,503
- Cash and cash equivalents	2,725		1,231		1,977
- Net assets of discontinued operations	4		60		197
Invested capital	$	22,337	$	23,796	$	25,298
Average invested capital ^(e)	$	23,067	$	24,547



UNITED STATES SECURITIES AND EXCHANGE COMMISSION



Reconciliation of Capitalized Operating Leases	Trailing Twelve Months
(dollars in millions)	October 28, 2017		October 29, 2016		October 31, 2015
Total rent expense	$	162	$	149	$	188
Capitalized operating lease obligations (total rent expense x 8)	1,298		1,192		1,503
Operating lease interest (capitalized operating lease obligations x 6%)	78		72		n/a


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF FINANCIAL CONDITION			Index to Notes



Credit Ratings	Moody’s	Standard and Poor’s	Fitch
Long-term debt	A2	A	A-
Commercial paper	P-1	A-1	F2F1


			MANAGEMENT'S DISCUSSION AND ANALYSIS & SUPPLEMENTAL INFORMATION			Table of Contents
			FORWARD LOOKING STATEMENTS & CONTROLS AND PROCEDURES			Index to Notes



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs	Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Programs
July 30, 2017 through August 26, 2017
August 2017 ASR ^(a)	2,500,000	TBD	2,500,000	$	3,884,046,448
August 27, 2017 through September 30, 2017
Open market and privately negotiated purchases	169,233	58.74	169,233	3,874,106,311
October 1, 2017 through October 28, 2017
Open market and privately negotiated purchases	—	—	—	3,874,106,311
Total	2,669,233	TBD	2,669,233	$	3,874,106,311



(3)A		Amended and Restated Articles of Incorporation (as amended through June 9, 2010)(1)

(3)B		Bylaws (as amended through ~~November 11, 2015)~~March 27, 2020)(2)

~~(10)LL~~(31)A		~~Extension Amendment dated August 7, 2017 to Five-Year Credit Agreement among Target Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein~~

~~(10)MM~~	~~Amendment dated October 25, 2017 to Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective January 1, 2009)~~

~~(12)~~	~~Statements of Computations of Ratios of Earnings to Fixed Charges~~

~~(31)A~~	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(31)B		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32)A		Certification of the Chief Executive Officer As Adopted Pursuant to 18 U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(32)B		Certification of the Chief Financial Officer As Adopted Pursuant to 18 U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


			TARGET CORPORATION



Dated: November 25, 2020			By:	/s/ Michael J. Fiddelke
					Michael J. Fiddelke
					Executive Vice President and
					Chief Financial Officer
					(Duly Authorized Officer and
					Principal Financial Officer)


			~~TARGET CORPORATION~~


~~Dated: November 20, 2017~~	~~By:~~	~~/s/ Cathy R. Smith~~
			~~Cathy R. Smith~~
			~~Executive Vice President and~~
			~~Chief Financial Officer~~
			~~(Duly Authorized Officer and~~
			~~Principal Financial Officer)~~

		/s/ Robert M. Harrison
					Robert M. Harrison
					Senior Vice President, Chief Accounting Officer
					and Controller