

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May 1,~~July 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number 1-6049

TARGET CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of incorporation or organization)

1000 Nicollet Mall, Minneapolis, Minnesota

(Address of principal executive offices)

41-0215170

(I.R.S. Employer Identification No.)

55403

(Zip Code)

Registrant’s telephone number, including area code: 612/304-6073

Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0833 per share

TGT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of registrant’s classes of common stock, as of the latest practicable date. Total shares of common stock, par value $0.0833, outstanding at ~~May 21,~~August 20, 2021, were ~~494,723,834.~~

488,039,053.


						Table of Contents
						Index to Notes

TARGET CORPORATION

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (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	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2224
Item 4.	Controls and Procedures	2224

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	2425
Item 3.	Defaults Upon Senior Securities	2425
Item 4.	Mine Safety Disclosures	2425
Item 5.	Other Information	2425
Item 6.	Exhibits	2526

Signature		2627


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Consolidated Statements of Operations	Consolidated Statements of Operations						Consolidated Statements of Operations
		Three Months Ended				Three Months Ended				Six Months Ended
(millions, except per share data) (unaudited)	(millions, except per share data) (unaudited)	May 1, 2021		May 2, 2020			(millions, except per share data) (unaudited)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Sales	Sales	$	23,879	$	19,371		Sales	$	24,826	$	22,696	$	48,705	$	42,067
Other revenue	Other revenue	318		244			Other revenue	334		279		652		523
Total revenue	Total revenue	24,197		19,615			Total revenue	25,160		22,975		49,357		42,590
Cost of sales	Cost of sales	16,716		14,510			Cost of sales	17,280		15,673		33,996		30,183
Selling, general and administrative expenses	Selling, general and administrative expenses	4,509		4,060			Selling, general and administrative expenses	4,849		4,460		9,358		8,520
Depreciation and amortization (exclusive of depreciation included in cost of sales)	Depreciation and amortization (exclusive of depreciation included in cost of sales)	598		577			Depreciation and amortization (exclusive of depreciation included in cost of sales)	564		542		1,162		1,119
Operating income	Operating income	2,374		468			Operating income	2,467		2,300		4,841		2,768
Net interest expense	Net interest expense	108		117			Net interest expense	104		122		212		239
Net other (income) / expense	Net other (income) / expense	(343)		22			Net other (income) / expense	(7)		(11)		(350)		11
Earnings before income taxes	Earnings before income taxes	2,609		329			Earnings before income taxes	2,370		2,189		4,979		2,518
Provision for income taxes	Provision for income taxes	512		45			Provision for income taxes	553		499		1,065		544

Net earnings	Net earnings	$	2,097	$	284		Net earnings	$	1,817	$	1,690	$	3,914	$	1,974

Basic earnings per share	Basic earnings per share	$	4.20	$	0.57		Basic earnings per share	$	3.68	$	3.38	$	7.89	$	3.94

Diluted earnings per share	Diluted earnings per share	$	4.17	$	0.56		Diluted earnings per share	$	3.65	$	3.35	$	7.82	$	3.91
Weighted average common shares outstanding	Weighted average common shares outstanding						Weighted average common shares outstanding
Basic	Basic	498.6		501.0			Basic	493.1		500.1		495.8		500.6
Diluted	Diluted	503.4		505.8			Diluted	497.5		504.4		500.4		505.1
Antidilutive shares	Antidilutive shares	0		0.2			Antidilutive shares	—		—		—		—

Note: Per share amounts may not foot due to rounding.

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			1


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Comprehensive Income	Consolidated Statements of Comprehensive Income					Consolidated Statements of Comprehensive Income
		Three Months Ended					Three Months Ended				Six Months Ended
(millions) (unaudited)	(millions) (unaudited)	May 1, 2021		May 2, 2020				(millions) (unaudited)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net earnings	Net earnings	$	2,097	$	284			Net earnings	$	1,817	$	1,690	$	3,914	$	1,974
Other comprehensive income / (loss), net of tax	Other comprehensive income / (loss), net of tax							Other comprehensive income / (loss), net of tax
Pension benefit liabilities	Pension benefit liabilities	22		22				Pension benefit liabilities	20		22		42		44
Currency translation adjustment and cash flow hedges	Currency translation adjustment and cash flow hedges	9		(8)				Currency translation adjustment and cash flow hedges	(8)		(1)		1		(9)
Other comprehensive income	Other comprehensive income	31		14				Other comprehensive income	12		21		43		35
Comprehensive income	Comprehensive income	$	2,128	$	298			Comprehensive income	$	1,829	$	1,711	$	3,957	$	2,009

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Financial Position	Consolidated Statements of Financial Position							Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)	(millions, except footnotes) (unaudited)	May 1, 2021		January 30, 2021		May 2, 2020		(millions, except footnotes) (unaudited)	July 31, 2021		January 30, 2021		August 1, 2020
Assets	Assets							Assets
Cash and cash equivalents	Cash and cash equivalents	$	7,816	$	8,511	$	4,566	Cash and cash equivalents	$	7,368	$	8,511	$	7,284
Inventory	Inventory	10,539		10,653		8,584		Inventory	11,259		10,653		8,876
Other current assets	Other current assets	1,576		1,592		1,465		Other current assets	1,604		1,592		1,463
Total current assets	Total current assets	19,931		20,756		14,615		Total current assets	20,231		20,756		17,623
Property and equipment	Property and equipment							Property and equipment
Land	Land	6,146		6,141		6,034		Land	6,148		6,141		6,027
Buildings and improvements	Buildings and improvements	31,710		31,557		30,756		Buildings and improvements	32,133		31,557		30,946
Fixtures and equipment	Fixtures and equipment	5,496		5,914		5,486		Fixtures and equipment	5,892		5,914		5,665
Computer hardware and software	Computer hardware and software	2,256		2,765		2,597		Computer hardware and software	2,260		2,765		2,631
Construction-in-progress	Construction-in-progress	973		780		803		Construction-in-progress	944		780		811
Accumulated depreciation	Accumulated depreciation	(19,777)		(20,278)		(19,087)		Accumulated depreciation	(20,133)		(20,278)		(19,341)
Property and equipment, net	Property and equipment, net	26,804		26,879		26,589		Property and equipment, net	27,244		26,879		26,739
Operating lease assets	Operating lease assets	2,362		2,227		2,235		Operating lease assets	2,503		2,227		2,233
Other noncurrent assets	Other noncurrent assets	1,374		1,386		1,367		Other noncurrent assets	1,407		1,386		1,405
Total assets	Total assets	$	50,471	$	51,248	$	44,806	Total assets	$	51,385	$	51,248	$	48,000
Liabilities and shareholders’ investment	Liabilities and shareholders’ investment							Liabilities and shareholders’ investment
Accounts payable	Accounts payable	$	11,637	$	12,859	$	9,625	Accounts payable	$	12,632	$	12,859	$	10,726
Accrued and other current liabilities	Accrued and other current liabilities	5,788		6,122		4,619		Accrued and other current liabilities	5,600		6,122		5,057
Current portion of long-term debt and other borrowings	Current portion of long-term debt and other borrowings	1,173		1,144		168		Current portion of long-term debt and other borrowings	1,190		1,144		109
Total current liabilities	Total current liabilities	18,598		20,125		14,412		Total current liabilities	19,422		20,125		15,892
Long-term debt and other borrowings	Long-term debt and other borrowings	11,509		11,536		14,073		Long-term debt and other borrowings	11,589		11,536		14,188
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	2,337		2,218		2,249		Noncurrent operating lease liabilities	2,462		2,218		2,241
Deferred income taxes	Deferred income taxes	1,169		990		1,122		Deferred income taxes	1,146		990		1,121
Other noncurrent liabilities	Other noncurrent liabilities	1,899		1,939		1,781		Other noncurrent liabilities	1,906		1,939		1,980
Total noncurrent liabilities	Total noncurrent liabilities	16,914		16,683		19,225		Total noncurrent liabilities	17,103		16,683		19,530
Shareholders’ investment	Shareholders’ investment							Shareholders’ investment
Common stock	Common stock	41		42		42		Common stock	41		42		42
Additional paid-in capital	Additional paid-in capital	6,271		6,329		6,206		Additional paid-in capital	6,332		6,329		6,248
Retained earnings	Retained earnings	9,372		8,825		5,775		Retained earnings	9,200		8,825		7,121
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(725)		(756)		(854)		Accumulated other comprehensive loss	(713)		(756)		(833)
Total shareholders’ investment	Total shareholders’ investment	14,959		14,440		11,169		Total shareholders’ investment	14,860		14,440		12,578
Total liabilities and shareholders’ investment	Total liabilities and shareholders’ investment	$	50,471	$	51,248	$	44,806	Total liabilities and shareholders’ investment	$	51,385	$	51,248	$	48,000

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; ~~496,093,160,~~489,651,196, 500,877,129 and ~~499,919,691~~500,252,831 shares issued and outstanding as of ~~May 1,~~July 31, 2021, January 30, 2021, and ~~May 2,~~August 1, 2020, respectively.

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; 0no shares were issued or outstanding during any period presented.

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			3


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Cash Flows	Consolidated Statements of Cash Flows					Consolidated Statements of Cash Flows
		Three Months Ended					Six Months Ended
(millions) (unaudited)	(millions) (unaudited)	May 1, 2021		May 2, 2020		(millions) (unaudited)	July 31, 2021		August 1, 2020
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	2,097	$	284	Net earnings	$	3,914	$	1,974

Adjustments to reconcile net earnings to cash provided by operating activities:	Adjustments to reconcile net earnings to cash provided by operating activities:					Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	667		641		Depreciation and amortization	1,300		1,245
Share-based compensation expense	Share-based compensation expense	79		49		Share-based compensation expense	138		104
Deferred income taxes	Deferred income taxes	170		(4)		Deferred income taxes	143		(12)
Gain on Dermstore sale	Gain on Dermstore sale	(335)		0		Gain on Dermstore sale	(335)		—

Noncash losses / (gains) and other, net	Noncash losses / (gains) and other, net	(30)		5		Noncash losses / (gains) and other, net	7		86
Changes in operating accounts:	Changes in operating accounts:					Changes in operating accounts:
Inventory	Inventory	114		408		Inventory	(606)		116
Other assets	Other assets	(5)		11		Other assets	3		(14)
Accounts payable	Accounts payable	(1,205)		(280)		Accounts payable	(311)		795
Accrued and other liabilities	Accrued and other liabilities	(413)		170		Accrued and other liabilities	(831)		822

Cash provided by operating activities	Cash provided by operating activities	1,139		1,284		Cash provided by operating activities	3,422		5,116
Investing activities	Investing activities					Investing activities
Expenditures for property and equipment	Expenditures for property and equipment	(540)		(751)		Expenditures for property and equipment	(1,338)		(1,414)
Proceeds from disposal of property and equipment	Proceeds from disposal of property and equipment	12		6		Proceeds from disposal of property and equipment	15		10
Proceeds from Dermstore sale	Proceeds from Dermstore sale	356		0		Proceeds from Dermstore sale	356		—
Other investments	Other investments	7		1		Other investments	(5)		2
Cash required for investing activities	Cash required for investing activities	(165)		(744)		Cash required for investing activities	(972)		(1,402)
Financing activities	Financing activities					Financing activities
Additions to long-term debt	Additions to long-term debt	0		2,480		Additions to long-term debt	—		2,480
Reductions of long-term debt	Reductions of long-term debt	(21)		(17)		Reductions of long-term debt	(72)		(126)
Dividends paid	Dividends paid	(340)		(332)		Dividends paid	(676)		(662)
Repurchase of stock	Repurchase of stock	(1,310)		(686)		Repurchase of stock	(2,850)		(706)

Stock option exercises	Stock option exercises	2		4		Stock option exercises	5		7
Cash (required for) / provided by financing activities	Cash (required for) / provided by financing activities	(1,669)		1,449		Cash (required for) / provided by financing activities	(3,593)		993
Net (decrease) / increase in cash and cash equivalents	Net (decrease) / increase in cash and cash equivalents	(695)		1,989		Net (decrease) / increase in cash and cash equivalents	(1,143)		4,707
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	8,511		2,577		Cash and cash equivalents at beginning of period	8,511		2,577
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	7,816	$	4,566	Cash and cash equivalents at end of period	$	7,368	$	7,284
Supplemental information	Supplemental information					Supplemental information
Leased assets obtained in exchange for new finance lease liabilities	Leased assets obtained in exchange for new finance lease liabilities	$	69	$	103	Leased assets obtained in exchange for new finance lease liabilities	$	182	$	246
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	189		97		Leased assets obtained in exchange for new operating lease liabilities	386		142

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			4


			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
Net earnings	—	—		—		1,380		—		1,380
Other comprehensive income	—	—		—		—		41		41
Dividends declared	—	—		—		(344)		—		(344)

Stock options and awards	0.1	—		44		—		—		44
January 30, 2021	500.9	$	42	$	6,329	$	8,825	$	(756)	$	14,440


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			5


			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes


Consolidated Statements of Shareholders’ Investment	Consolidated Statements of Shareholders’ Investment												Consolidated Statements of Shareholders’ Investment
		Common	Stock		Additional				Accumulated Other					Common	Stock		Additional				Accumulated Other
		Stock	Par		Paid-in		Retained		Comprehensive					Stock	Par		Paid-in		Retained		Comprehensive
(millions) (unaudited)	(millions) (unaudited)	Shares	Value		Capital		Earnings		(Loss) / Income		Total		(millions) (unaudited)	Shares	Value		Capital		Earnings		(Loss) / Income		Total
January 30, 2021	January 30, 2021	500.9	$	42	$	6,329	$	8,825	$	(756)	$	14,440	January 30, 2021	500.9	$	42	$	6,329	$	8,825	$	(756)	$	14,440
Net earnings	Net earnings	—	—		—		2,097		—		2,097		Net earnings	—	—		—		2,097		—		2,097
Other comprehensive income	Other comprehensive income	—	—		—		—		31		31		Other comprehensive income	—	—		—		—		31		31
Dividends declared	Dividends declared	—	—		—		(343)		—		(343)		Dividends declared	—	—		—		(343)		—		(343)
Repurchase of stock	Repurchase of stock	(6.1)	(1)		—		(1,207)		—		(1,208)		Repurchase of stock	(6.1)	(1)		—		(1,207)		—		(1,208)
Stock options and awards	Stock options and awards	1.3	—		(58)		—		—		(58)		Stock options and awards	1.3	—		(58)		—		—		(58)
May 1, 2021	May 1, 2021	496.1	$	41	$	6,271	$	9,372	$	(725)	$	14,959	May 1, 2021	496.1	$	41	$	6,271	$	9,372	$	(725)	$	14,959
Net earnings													Net earnings	—	—		—		1,817		—		1,817
Other comprehensive income													Other comprehensive income	—	—		—		—		12		12
Dividends declared													Dividends declared	—	—		—		(445)		—		(445)
Repurchase of stock													Repurchase of stock	(6.6)	—		—		(1,544)		—		(1,544)
Stock options and awards													Stock options and awards	0.2	—		61		—		—		61
July 31, 2021													July 31, 2021	489.7	$	41	$	6,332	$	9,200	$	(713)	$	14,860

We declared ~~$0.68~~$0.90 and ~~$0.66~~$0.68 dividends per share for the three months ended ~~May 1,~~July 31, 2021, and ~~May 2,~~August 1, 2020, respectively, and $2.70 per share for the fiscal year ended January 30, 2021.

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			6


			FINANCIAL STATEMENTS			Table of Contents
			INDEX			Index to Notes


TARGET CORPORATION						Q1Q2 2021 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 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 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 2020 Form 10-K.

We use the same accounting policies in preparing quarterly and annual financial statements. .

We operate as a single segment that is 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. Coronavirus (COVID-19)

The novel coronavirus (COVID-19) pandemic continues to evolve. In 2020, states and cities took various measures in response to COVID-19, including mandating the 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.

AsSince the onset of the COVID-19 pandemic, ~~has evolved,~~ we have experienced strong comparable sales growth and significant volatility in our sales category ~~mix.~~and channel mix, including same-day fulfillment options. Note 4 presents sales by category. ~~Since the pandemic started in March 2020, we took~~We have taken various actions, including accelerating purchases of certain merchandise in our core categories and slowing or canceling purchase orders, primarily for Apparel and Accessories. As a result, during the quarter ended May 2, 2020, we recorded $216 million of purchase order cancellation fees in Cost of Sales.

3. Dermstore Sale

In February 2021, we sold our wholly owned subsidiary Dermstore LLC (Dermstore) for $356 million in cash and recognized a $335 million pretax gain, which is included in Net Other (Income) / Expense. Dermstore has historically represented less than 1 percent of our consolidated revenues, operating income and net assets.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			8


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

4. Revenues

General merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably credit card profit-sharing income from our arrangement with TD Bank Group (TD).


Revenues	Revenues	Three Months Ended				Revenues	Three Months Ended				Six Months Ended
(millions)	(millions)	May 1, 2021		May 2, 2020				(millions)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Apparel and accessories (a)	Apparel and accessories (a)	$	4,269	$	2,619			Apparel and accessories (a)	$	4,751	$	4,084	$	9,020	$	6,703
Beauty and household essentials (b)	Beauty and household essentials (b)	6,364		5,911				Beauty and household essentials (b)	6,726		6,158		13,090		12,069
Food and beverage (c)	Food and beverage (c)	4,856		4,575				Food and beverage (c)	4,687		4,186		9,543		8,761
Hardlines (d)	Hardlines (d)	3,946		2,974				Hardlines (d)	3,867		3,608		7,813		6,582
Home furnishings and décor (e)	Home furnishings and décor (e)	4,410		3,264				Home furnishings and décor (e)	4,748		4,625		9,158		7,889
Other	Other	34		28				Other	47		35		81		63
Sales	Sales	23,879		19,371				Sales	24,826		22,696		48,705		42,067

Credit card profit sharing	Credit card profit sharing	171		166				Credit card profit sharing	172		158		343		324
Other	Other	147		78				Other	162		121		309		199
Other revenue	Other revenue	318		244				Other revenue	334		279		652		523

Total revenue	Total revenue	$	24,197	$	19,615			Total revenue	$	25,160	$	22,975	$	49,357	$	42,590

(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 our 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 and 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 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. As of ~~May 1,~~July 31, 2021, January 30, 2021, and ~~May 2,~~August 1, 2020, the accrual for estimated returns was ~~$196~~$176 million, $139 million, and ~~$398~~$201 million, respectively. ~~The accrual as of May 2, 2020, reflects the impact of the suspension of in-store merchandise returns and exchanges from March 26, 2020, to April 26, 2020, due to the COVID-19 pandemic.~~

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


Gift Card Liability Activity	Gift Card Liability Activity	January 30, 2021		Gift Cards Issued During Current Period But Not Redeemed (b)			Revenue Recognized From Beginning Liability			May 1, 2021	Gift Card Liability Activity	January 30, 2021			Gift Cards Issued During Current Period But Not Redeemed (b)			Revenue Recognized From Beginning Liability			July 31, 2021
(millions)	(millions)							(millions)
Gift card liability (a)	Gift card liability (a)	$	1,035		$	234		$	(374)				$	895	Gift card liability (a)	$	1,035		$	378		$	(533)	$	880

(a)Included in Accrued and Other Current Liabilities.

(b)Net of estimated breakage.


~~TARGET CORPORATION~~						~~Q1 2021 Form 10-Q~~			9


			~~FINANCIAL STATEMENTS~~			~~Table of Contents~~
			~~NOTES~~			~~Index to Notes~~

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 performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance.


TARGET CORPORATION						Q2 2021 Form 10-Q			9


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

5. Fair Value Measurements

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

Financial Instruments Measured On a Recurring Basis Fair Value
(millions) Classification Pricing Category May 1, 2021 January 30, 2021 May 2, 2020
Assets
Short-term investments Cash and Cash Equivalents Level 1 $ 6,895 $ 7,644 $ 3,605
Prepaid forward contracts Other Current Assets Level 1 37 38 23
Equity securities Other Current Assets Level 1 0 0 18
Interest rate swaps Other Noncurrent Assets Level 2 149 188 228
Liabilities
Interest rate swaps Other Noncurrent Liabilities Level 2 0 0 10


Financial Instruments Measured On a Recurring Basis			Fair Value
(millions)	Classification	Pricing Category	July 31, 2021		January 30, 2021		August 1, 2020
Assets
Short-term investments	Cash and Cash Equivalents	Level 1	$	6,439	$	7,644	$	6,370
Prepaid forward contracts	Other Current Assets	Level 1	44		38		26
Equity securities	Other Current Assets	Level 1	—		—		27
Interest rate swaps	Other Noncurrent Assets	Level 2	160		188		239
Liabilities

Interest rate swaps	Other Noncurrent Liabilities	Level 2	—		—		12


Significant Financial Instruments Not Measured at Fair Value (a) (millions)	Significant Financial Instruments Not Measured at Fair Value (a) (millions)	May 1, 2021				January 30, 2021				May 2, 2020				Significant Financial Instruments Not Measured at Fair Value (a) (millions)	July 31, 2021				January 30, 2021				August 1, 2020
		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion (b)	Long-term debt, including current portion (b)	$	10,646	$	12,335	$	10,643	$	12,787	$	12,474	$	14,781	Long-term debt, including current portion (b)	$	10,620	$	12,594	$	10,643	$	12,787	$	12,384	$	15,457

(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 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 lease liabilities.

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, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable. We recognized impairment charges of ~~$41~~$39 million and ~~$35~~$81 million during the three and six months ended ~~May~~July 31, 2021, respectively. We recognized impairment charges of $25 million and $60 million during the three and six months ended August 1, ~~2021, and May 2,~~ 2020, respectively. These impairment charges are included in Selling, General and Administrative Expenses (SG&A).

7. Derivative Financial Instruments

Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk. As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis. Note 5 to the Consolidated Financial Statements provides the fair value and classification of these instruments.

As of ~~May 1,~~July 31, 2021, January 30, 2021, and ~~May 2,~~August 1, 2020, we were party to interest rate swaps with notional amounts totaling $1.5 billion. We pay a floating rate and receive a fixed rate under each of these agreements. All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three and six months ended ~~May 1,~~July 31, 2021, and ~~May 2,~~August 1, 2020.

As of July 31, 2021, January 30, 2021, and August 1, 2020, we were party to forward-starting interest rate swaps with notional amounts totaling $250 million. We use these derivative financial instruments, which have been designated as cash flow hedges, to hedge the interest rate exposure of anticipated future debt issuances. As of July 31, 2021, Accumulated Other Comprehensive Loss (AOCI) included $6 million that will be reclassified and reduce Net Interest Expense when the forecasted transaction affects earnings.

During August 2021, we entered into additional forward-starting interest rate swaps with notional amounts totaling $675 million.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			10


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

As of May 1, 2021, January 30, 2021, and May 2, 2020, we were party to forward-starting interest rate swaps with notional amounts totaling $250 million. We use these derivative financial instruments, which have been designated as cash flow hedges, to hedge the interest rate exposure of anticipated future debt issuances. As of May 1, 2021, Accumulated Other Comprehensive Loss (AOCI) included $17 million that will be reclassified and reduce Net Interest Expense when the forecasted transaction affects earnings.


Effect of Hedges on Debt (millions)	July 31, 2021		January 30, 2021		August 1, 2020



Long-term debt and other borrowings
Carrying amount of hedged debt	$	1,649	$	1,677	$	1,732
Cumulative hedging adjustments, included in carrying amount	154		183		239

Effect of Hedges on Debt
(millions)
May 1, 2021 January 30, 2021 May 2, 2020
Long-term debt and other borrowings
Carrying amount of hedged debt $ 1,627 $ 1,677 $ 1,721
Cumulative hedging adjustments, included in carrying amount 132 183 228


Effect of Hedges on Net Interest Expense	Effect of Hedges on Net Interest Expense	Three Months Ended				Effect of Hedges on Net Interest Expense	Three Months Ended				Six Months Ended
(millions)	(millions)	May 1, 2021		May 2, 2020				(millions)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020

Gain (loss) on fair value hedges recognized in Net Interest Expense	Gain (loss) on fair value hedges recognized in Net Interest Expense							Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swap designated as fair value hedges	Interest rate swap designated as fair value hedges	$	(51)	$	91			Interest rate swap designated as fair value hedges	$	22	$	11	$	(29)	$	102
Hedged debt	Hedged debt	51		(91)				Hedged debt	(22)		(11)		29		(102)
Total	Total	$	0	$	0			Total	$	—	$	—	$	—	$	—

8. Income Taxes

For the three and six months ended ~~May 1,~~July 31, 2021, our effective tax rate was ~~19.6~~23.4 percent and 21.4 percent, respectively, compared with ~~13.9~~22.8 percent and 21.6 percent for the three and six months ended ~~May 2,~~August 1, 2020, as higher pretax earnings diluted the tax-rate benefit from fixed and discrete items, such as employee share-based compensation and the ~~sale of Dermstore. Additionally,~~Dermstore sale. Additionally, for the six months ended July 31, 2021, the favorable resolution of certain income tax matters resulted in a $44 million discrete tax benefit.

9. Share Repurchase

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


Share Repurchase Activity	Share Repurchase Activity	Three Months Ended				Share Repurchase Activity	Three Months Ended				Six Months Ended
(millions, except per share data)	(millions, except per share data)	May 1, 2021		May 2, 2020				(millions, except per share data)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Number of shares purchased	Number of shares purchased	6.1		5.7				Number of shares purchased	6.6		—		12.7		5.7
Average price paid per share	Average price paid per share	$	190.77	$	107.58			Average price paid per share	$	233.81	$	—	$	213.06	$	107.58
Total investment	Total investment	$	1,165	$	609			Total investment	$	1,535	$	—	$	2,700	$	609


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			11


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

10. Pension Benefits

We provide pension plan benefits to eligible team members.


Net Pension Benefits Expense	Net Pension Benefits Expense		Three Months Ended				Net Pension Benefits Expense	Three Months Ended					Six Months Ended
(millions)	(millions)	Classification	May 1, 2021		May 2, 2020				(millions)	Classification	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Service cost benefits earned	Service cost benefits earned	SG&A	$	24	$	26			Service cost benefits earned	SG&A	$	24	$	25	$	48	$	51
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	Net Other (Income) / Expense	24		30				Interest cost on projected benefit obligation	Net Other (Income) / Expense	24		29		48		59
Expected return on assets	Expected return on assets	Net Other (Income) / Expense	(59)		(61)				Expected return on assets	Net Other (Income) / Expense	(59)		(60)		(118)		(121)
Amortization of losses	Amortization of losses	Net Other (Income) / Expense	29		32				Amortization of losses	Net Other (Income) / Expense	28		32		57		64
Amortization of prior service cost	Amortization of prior service cost	Net Other (Income) / Expense	0		(3)				Amortization of prior service cost	Net Other (Income) / Expense	(1)		(3)		(1)		(6)

Total	Total		$	18	$	24			Total		$	16	$	23	$	34	$	47

11. Accumulated Other Comprehensive Loss

Change in Accumulated Other Comprehensive Loss Cash Flow
Hedges Currency Translation Adjustment Pension Total
(millions)
January 30, 2021 $ (3) $ (18) $ (735) $ (756)
Other comprehensive income before reclassifications, net of tax 9 0 0 9
Amounts reclassified from AOCI, net of tax 0 0 22 22
May 1, 2021 $ 6 $ (18) $ (713) $ (725)


Change in Accumulated Other Comprehensive Loss	Cash Flow Hedges		Currency Translation Adjustment		Pension		Total
(millions)
January 30, 2021	$	(3)	$	(18)	$	(735)	$	(756)
Other comprehensive income before reclassifications, net of tax	1		—		—		1
Amounts reclassified from AOCI, net of tax	—		—		42		42
July 31, 2021	$	(2)	$	(18)	$	(693)	$	(713)


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			12


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

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

Financial Summary

~~First~~Second quarter 2021 included the following notable items:

•GAAP diluted earnings per share was ~~$4.17.~~$3.65.

•Adjusted diluted earnings per share was ~~$3.69.~~$3.64.

•Total revenue increased ~~23.4~~9.5 percent, driven by an increase in comparable sales.

•Comparable sales increased ~~22.9~~8.9 percent, driven by a ~~17.1~~12.7 percent increase in traffic.

◦Comparable stores originated sales grew ~~18.0~~8.7 percent.

◦Comparable digitally originated sales increased ~~50.2~~ 9.9 percent.

•Operating income of ~~$2.4~~$2.5 billion was ~~407~~7.2 percent higher than the comparable prior-year period.

•~~We recognized a $335 million pretax gain on the sale of Dermstore.~~

Sales were ~~$23.9~~$24.8 billion for the three months ended ~~May 1,~~July 31, 2021, an increase of ~~$4.5~~$2.1 billion, or ~~23.3~~9.4 percent, from the comparable prior-year period. Cash flow provided by operating activities was ~~$1.1~~$3.4 billion for the ~~three~~six months ended ~~May 1,~~July 31, 2021, a decrease of ~~$0.1~~$1.7 billion, or ~~(11.3)~~(33.1) percent, from ~~$1.3~~$5.1 billion for the ~~three~~six months ended ~~May 2,~~August 1, 2020. The drivers of the operating cash flow decrease are described on page 22.

Earnings Per Share Three Months Ended
May 1, 2021 May 2, 2020 Change
GAAP diluted earnings per share $ 4.17 $ 0.56 643.2 %
Adjustments (0.47) 0.03
Adjusted diluted earnings per share $ 3.69 $ 0.59 525.0 %


Earnings Per Share	Three Months Ended						Six Months Ended
	July 31, 2021		August 1, 2020		Change		July 31, 2021		August 1, 2020		Change
GAAP diluted earnings per share	$	3.65	$	3.35	8.9	%	$	7.82	$	3.91	100.1	%
Adjustments	(0.01)		0.03				(0.48)		0.06
Adjusted diluted earnings per share	$	3.64	$	3.38	7.9	%	$	7.34	$	3.96	85.1	%

Note: Amounts may not foot due to rounding. Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 1819.

We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital allocation effectiveness over time. For the trailing twelve months ended ~~May 1,~~July 31, 2021, after-tax ROIC was ~~30.7~~31.7 percent, compared with ~~13.4~~17.2 percent for the trailing twelve months ended ~~May 2,~~August 1, 2020. The calculation of ROIC is provided onon page 1921.

COVID-19

AsSince the onset of the COVID-19 pandemic, ~~has evolved,~~ we have experienced ~~unusually~~ strong comparable sales ~~as guests rely on Target for essential items like food, medicine, cleaning products,~~growth and ~~household stock-up items, as well as merchandise associated with guests spending more time at home. Underlying this trend, we have seen~~ significant volatility in our sales category and channel mix, including same-day fulfillment options.

During the first quarter of 2021, strength in comparable sales growth continued across our multi-category portfolio, with significantly higher growth in our higher-margin Apparel & Accessories and Home Furnishings & Décor core merchandise categories. Comparable sales growth was strongest in Apparel & Accessories, which experienced a significant decline during the first quarter of 2020, Additionally, strength above the chain average continued in Hardlines. During the first quarter of 2020, comparable sales growth was strongest in our lower-margin Hardlines, Food & Beverage and Beauty & Household Essentials categories. Note 4 to the Financial Statements presents sales by category.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			13


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

Analysis of Results of Operations


Summary of Operating Income	Summary of Operating Income	Three Months Ended						Summary of Operating Income	Three Months Ended						Six Months Ended
(dollars in millions)	(dollars in millions)	May 1, 2021		May 2, 2020		Change				(dollars in millions)	July 31, 2021		August 1, 2020		Change		July 31, 2021		August 1, 2020		Change
Sales	Sales	$	23,879	$	19,371	23.3	%			Sales	$	24,826	$	22,696	9.4	%	$	48,705	$	42,067	15.8	%
Other revenue	Other revenue	318		244		30.4				Other revenue	334		279		20.0		652		523		24.8
Total revenue	Total revenue	24,197		19,615		23.4				Total revenue	25,160		22,975		9.5		49,357		42,590		15.9
Cost of sales	Cost of sales	16,716		14,510		15.2				Cost of sales	17,280		15,673		10.3		33,996		30,183		12.6
Selling, general and administrative expenses	Selling, general and administrative expenses	4,509		4,060		11.0				Selling, general and administrative expenses	4,849		4,460		8.8		9,358		8,520		9.8
Depreciation and amortization (exclusive of depreciation included in cost of sales)	Depreciation and amortization (exclusive of depreciation included in cost of sales)	598		577		3.9				Depreciation and amortization (exclusive of depreciation included in cost of sales)	564		542		4.0		1,162		1,119		3.9
Operating income	Operating income	$	2,374	$	468	407.0	%			Operating income	$	2,467	$	2,300	7.2	%	$	4,841	$	2,768	74.9	%


Rate Analysis	Rate Analysis	Three Months Ended				Rate Analysis	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Gross margin rate	Gross margin rate	30.0	%	25.1	%			Gross margin rate	30.4	%	30.9	%	30.2	%	28.3	%
SG&A expense rate	SG&A expense rate	18.6		20.7				SG&A expense rate	19.3		19.4		19.0		20.0
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)	Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)	2.5		2.9				Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)	2.2		2.4		2.4		2.6
Operating income margin rate	Operating income margin rate	9.8		2.4				Operating income margin rate	9.8		10.0		9.8		6.5

Note: Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales. All other rates are calculated by dividing the applicable amount by total revenue.

Sales

Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage. We use comparable sales to evaluate the performance of our stores and digital 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—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 Pickup 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 —~~ growth—from both comparable sales and new ~~stores —~~ 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).


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			14


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

The increase in sales during the three and six months ended ~~May 1,~~July 31, 2021, is due to a comparable sales increase of ~~22.9~~8.9 percent and 15.3 percent, respectively, and the contribution from new stores. The COVID-19 pandemic has affected the amount and mix of sales across channels and categories.


Comparable Sales	Comparable Sales	Three Months Ended				Comparable Sales	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Comparable sales change	Comparable sales change	22.9	%	10.8	%			Comparable sales change	8.9	%	24.3	%	15.3	%	17.7	%
Drivers of change in comparable sales	Drivers of change in comparable sales							Drivers of change in comparable sales
Number of transactions	Number of transactions	17.1		(1.5)				Number of transactions	12.7		4.6		14.8		1.6
Average transaction amount	Average transaction amount	5.0		12.5				Average transaction amount	(3.4)		18.8		0.5		15.8


Comparable Sales by Channel	Comparable Sales by Channel	Three Months Ended				Comparable Sales by Channel	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Stores originated comparable sales change	Stores originated comparable sales change	18.0	%	0.9	%			Stores originated comparable sales change	8.7	%	10.9	%	13.0	%	6.0	%
Digitally originated comparable sales change	Digitally originated comparable sales change	50.2		140.6				Digitally originated comparable sales change	9.9		195.4		27.3		168.9


Sales by Channel	Sales by Channel	Three Months Ended				Sales by Channel	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Stores originated	Stores originated	81.7	%	84.7	%			Stores originated	83.0	%	82.8	%	82.3	%	83.7	%
Digitally originated	Digitally originated	18.3		15.3				Digitally originated	17.0		17.2		17.7		16.3
Total	Total	100	%	100	%			Total	100	%	100	%	100	%	100	%


Sales by Fulfillment Channel	Sales by Fulfillment Channel	Three Months Ended				Sales by Fulfillment Channel	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Stores	Stores	96.3	%	96.7	%			Stores	96.6	%	96.0	%	96.4	%	96.3	%
Other	Other	3.7		3.3				Other	3.4		4.0		3.6		3.7
Total	Total	100	%	100	%			Total	100	%	100	%	100	%	100	%

Note: Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Shipt.


Sales by Product Category	Sales by Product Category	Three Months Ended				Sales by Product Category	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Apparel and accessories	Apparel and accessories	18	%	14	%			Apparel and accessories	19	%	18	%	18	%	16	%
Beauty and household essentials	Beauty and household essentials	27		30				Beauty and household essentials	27		27		27		29
Food and beverage	Food and beverage	20		24				Food and beverage	19		19		20		21
Hardlines	Hardlines	17		15				Hardlines	16		16		16		15
Home furnishings and décor	Home furnishings and décor	18		17				Home furnishings and décor	19		20		19		19
Total	Total	100	%	100	%			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 the transfer of sales to new stores, makes further analysis of sales metrics infeasible.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			15


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

We monitor the percentage of purchases that are paid for using RedCards (RedCard Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on RedCards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a RedCard at Target. RedCard sales increased for the three and six months ended ~~May 1,~~July 31, 2021, and ~~May 2,~~August 1, 2020; however, RedCard penetration declined as total Sales increased at a faster pace.


RedCard Penetration	RedCard Penetration	Three Months Ended				RedCard Penetration	Three Months Ended				Six Months Ended
		May 1, 2021		May 2, 2020					July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Target Debit Card	Target Debit Card	12.1	%	12.7	%			Target Debit Card	11.6	%	11.8	%	11.9	%	12.2	%
Target Credit Cards	Target Credit Cards	8.4		9.7				Target Credit Cards	8.7		8.7		8.6		9.2
Total RedCard Penetration	Total RedCard Penetration	20.5	%	22.4	%			Total RedCard Penetration	20.3	%	20.5	%	20.4	%	21.4	%

~~Gross Margin Rate~~

~~For the three months ended May 1, 2021, our gross margin rate was 30.0 percent compared with 25.1 percent in the comparable prior-year period. This increase reflected:~~

•The benefit of merchandising actions, including exceptionally low promotional and clearance markdown rates, in this year’s results and purchase order cancellation fees and inventory impairments in last year’s results;

•~~Favorable category mix driven by strength in higher margin categories including Apparel & Accessories and~~ ~~Home Furnishings & Décor; and~~

•~~The net impact of other factors, most notably the margin impact of our returns estimate for sales during the temporary returns suspension period in the first quarter of 2020.~~

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

~~For the three months ended May 1, 2021, our SG&A expense rate was 18.6 percent~~ compared with 20.7 percent in the comparable prior-year period. Incremental team member pay and benefits, including higher wages and bonus expense, represented the vast majority of the $449 million increase in SG&A expenses compared with the prior-year period. From a rate perspective, these increased costs were more than offset by leverage resulting from strong revenue growth.Note: Amounts may not foot due to rounding.


TARGET CORPORATION						Q1Q2 2021 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 July 31, 2021, our gross margin rate was 30.4 percent compared with 30.9 percent in the comparable prior-year period. This decrease reflected the net impact of

•pressure from higher merchandise and freight costs, partially offset by the benefit of low promotional and clearance markdown rates;

•the prior-year rate benefit from a second quarter 2020 change in our returns estimate for sales during the temporary returns suspension period;

•favorable category mix, reflecting strength in our higher-margin categories relative to our lower-margin categories; and

•the benefit of a higher percentage of digital sales fulfilled through our lower-cost same-day fulfillment options.

For the six months ended July 31, 2021, our gross margin rate was 30.2 percent compared with 28.3 percent in the comparable prior-year period. This increase reflected

•merchandising benefits, including exceptionally low promotional and clearance markdown rates, partially offset by higher merchandise and freight costs;

•favorable category mix, reflecting strength in our higher-margin categories relative to our lower-margin categories; and

•the benefit of a higher percentage of digital sales fulfilled through our lower-cost same-day fulfillment options.


TARGET CORPORATION						Q2 2021 Form 10-Q			17


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

Selling, General, and Administrative Expense Rate

For the three months ended July 31, 2021, our SG&A expense rate was 19.3 percent compared with 19.4 percent for the three months ended August 1, 2020. For the six months ended July 31, 2021, our SG&A expense rate was 19.0 percent compared with 20.0 percent for the six months ended August 1, 2020. The decreases reflect the continued leverage benefit from strong revenue growth, offset by pressure from increases in some expense categories—such as marketing—from lower-than-normal levels in 2020.

Store Data


Change in Number of Stores	Change in Number of Stores	Three Months Ended		Change in Number of Stores	Three Months Ended			Six Months Ended
		May 1, 2021	May 2, 2020
Change in Number of Stores						Change in Number of Stores	July 31, 2021	August 1, 2020	July 31, 2021	August 1, 2020
	Beginning store count	1,897	1,868				1,909	1,871	1,897	1,868
Opened	Opened	12	3			Opened	2	—	14	3
Closed	Closed	—	—			Closed	(2)	—	(2)	—

Ending store count	Ending store count	1,909	1,871			Ending store count	1,909	1,871	1,909	1,871


Number of Stores and Retail Square Feet	Number of Stores and Retail Square Feet	Number of Stores			Retail Square Feet (a)			Number of Stores and Retail Square Feet	Number of Stores			Retail Square Feet (a)
		May 1, 2021	January 30, 2021	May 2, 2020	May 1, 2021	January 30, 2021	May 2, 2020		July 31, 2021	January 30, 2021	August 1, 2020	July 31, 2021	January 30, 2021	August 1, 2020
170,000 or more sq. ft.	170,000 or more sq. ft.	273	273	272	48,798	48,798	48,613	170,000 or more sq. ft.	273	273	272	48,798	48,798	48,613
50,000 to 169,999 sq. ft.	50,000 to 169,999 sq. ft.	1,510	1,509	1,505	189,618	189,508	189,226	50,000 to 169,999 sq. ft.	1,510	1,509	1,505	189,624	189,508	189,224
49,999 or less sq. ft.	49,999 or less sq. ft.	126	115	94	3,690	3,342	2,745	49,999 or less sq. ft.	126	115	94	3,709	3,342	2,745
Total	Total	1,909	1,897	1,871	242,106	241,648	240,584	Total	1,909	1,897	1,871	242,131	241,648	240,582

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

Other Performance Factors

Net Interest Expense

Net interest expense was ~~$108~~$104 million and $212 million for the three and six months ended ~~May 1,~~July 31, 2021, respectively, compared with $122 million and ~~$117~~$239 million, ~~for~~respectively, in the ~~three months ended May 2, 2020.~~comparable prior-year period. The decrease in net interest expense was primarily due to a lower ~~weighted-average interest rate on our long-term~~average debt balances for the three and six months ended ~~May 1,~~July 31, 2021, compared with the ~~three months ended May 2, 2020.~~prior-year periods.

Net Other (Income) / Expense

Net Other (Income) / Expense was ~~$(343)~~$(7) million and $(350) million for the three and six months ended ~~May 1,~~July 31, 2021, respectively, compared with $(11) million and ~~$22~~$11 million, respectively, in the comparable prior-year periods. The increase for the ~~three~~six months ended ~~May 2, 2020. The increase~~July 31, 2021, was due to the $335 million gain on the February 2021 sale of Dermstore. Note 3 to the Financial Statements provides additional information.

Provision for Income Taxes

Our effective income tax rate for the three and six months ended ~~May 1,~~July 31, 2021, was ~~19.6~~23.4 percent and 21.4 percent, respectively, compared with ~~13.9~~22.8 percent and 21.6 percent, respectively, in the comparable prior-year ~~period. The increase reflects~~periods, reflecting significantly higher earnings ~~partially~~during the current-year periods which diluted the tax rate impact of fixed deductions and discrete items. The effective tax rate impact of higher earnings for the six months ended July 31, 2021, was offset by ~~the impact of discrete tax benefits in the quarter, including a $44 million benefit resulting from~~ the resolution of certain income tax ~~matters.~~matters during the first quarter.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			1718


			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 (Adjusted EPS). This metric excludes certain items presented below. We believe this information is useful in providing period-to-period comparisons of the results of our operations. This measure is not in accordance with, or an alternative to, U.S. GAAP. The most comparable GAAP measure is diluted earnings per share. Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate Adjusted EPS differently, limiting the usefulness of the measure for comparisons with other companies.


Reconciliation of Non-GAAP Adjusted EPS	Reconciliation of Non-GAAP Adjusted EPS	Three Months Ended												Reconciliation of Non-GAAP Adjusted EPS	Three Months Ended
		May 1, 2021						May 2, 2020							July 31, 2021						August 1, 2020
(millions, except per share data)	(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	GAAP diluted earnings per share					$	4.17					$	0.56	GAAP diluted earnings per share					$	3.65					$	3.35
Adjustments	Adjustments													Adjustments

Gain on Dermstore sale		$	(335)	$	(269)	$	(0.53)	$	—	$	—	$	—
Loss on investment (a)		—		—		—		21		15		0.03

Gain on investment (a)														Gain on investment (a)	$	—	$	—	$	—	$	(9)	$	(6)	$	(0.01)

Other (b)	Other (b)	41		30		0.06		—		—		—		Other (b)	(5)		(4)		(0.01)		25		18		0.04
Adjusted diluted earnings per share	Adjusted diluted earnings per share					$	3.69					$	0.59	Adjusted diluted earnings per share					$	3.64					$	3.38


Reconciliation of Non-GAAP Adjusted EPS	Six Months Ended
	July 31, 2021						August 1, 2020
(millions, except per share data)	Pretax		Net of Tax		Per Share Amounts		Pretax		Net of Tax		Per Share Amounts
GAAP diluted earnings per share					$	7.82					$	3.91
Adjustments

Gain on Dermstore sale	$	(335)	$	(269)	$	(0.54)	$	—	$	—	$	—
Loss on investment (a)	—		—		—		12		9		0.02

Other (b)	36		27		0.05		25		18		0.04
Adjusted diluted earnings per share					$	7.34					$	3.96

Note: Amounts may not foot due to rounding.

(a)Represented ~~an unrealized~~a (gain) / loss on our investment in Casper Sleep Inc., which was not core to our operations. We sold this investment during the fourth quarter of 2020.

(b)~~Represents asset impairment charges resulting from the consolidation~~Includes civil unrest-related losses, net of ~~our~~associated insurance recoveries, and headquarters office ~~space.~~space impairments, none of which were individually significant.


TARGET CORPORATION						Q2 2021 Form 10-Q			19


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

Earnings before interest expense and income taxes (EBIT) and earnings before interest expense, income taxes, depreciation, and amortization (EBITDA) are non-GAAP financial measures. We believe these measures provide meaningful information about our operational efficiency compared with our competitors by excluding the impact of differences in tax jurisdictions and structures, debt levels, and, for EBITDA, capital investment. These measures are not in accordance with, or an alternative to, GAAP. The most comparable GAAP measure is net earnings. EBIT and EBITDA should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate EBIT and EBITDA differently, limiting the usefulness of the measures for comparisons with other companies.


EBIT and EBITDA	EBIT and EBITDA	Three Months Ended						EBIT and EBITDA	Three Months Ended						Six Months Ended
(dollars in millions)	(dollars in millions)	May 1, 2021		May 2, 2020		Change				(dollars in millions)	July 31, 2021		August 1, 2020		Change		July 31, 2021		August 1, 2020		Change
Net earnings	Net earnings	$	2,097	$	284	639.8	%			Net earnings	$	1,817	$	1,690	7.4	%	$	3,914	$	1,974	98.2	%
+ Provision for income taxes	+ Provision for income taxes	512		45		1,017.1				+ Provision for income taxes	553		499		11.3		1,065		544		95.9
+ Net interest expense	+ Net interest expense	108		117		(7.6)				+ Net interest expense	104		122		(15.5)		212		239		(11.7)
EBIT	EBIT	$	2,717	$	446	508.7	%			EBIT	$	2,474	$	2,311	7.1	%	$	5,191	$	2,757	88.2	%
+ Total depreciation and amortization (a)	+ Total depreciation and amortization (a)	667		641		4.1				+ Total depreciation and amortization (a)	633		604		4.9		1,300		1,245		4.5
EBITDA	EBITDA	$	3,384	$	1,087	211.3	%			EBITDA	$	3,107	$	2,915	6.6	%	$	6,491	$	4,002	62.2	%

(a)Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			1820


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

We have also disclosed after-tax ROIC, which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies.


After-Tax Return on Invested Capital	After-Tax Return on Invested Capital					After-Tax Return on Invested Capital
(dollars in millions)	(dollars in millions)					(dollars in millions)
		Trailing Twelve Months					Trailing Twelve Months
Numerator	Numerator	May 1, 2021		May 2, 2020		Numerator	July 31, 2021		August 1, 2020
Operating income	Operating income	$	8,444	$	3,992	Operating income	$	8,611	$	4,968
+ Net other income / (expense)	+ Net other income / (expense)	350		(26)		+ Net other income / (expense)	346		(28)
EBIT	EBIT	8,794		3,966		EBIT	8,957		4,940
+ Operating lease interest (a)	+ Operating lease interest (a)	85		87		+ Operating lease interest (a)	84		87
- Income taxes (b)	- Income taxes (b)	1,864		855		- Income taxes (b)	1,918		1,076
Net operating profit after taxes	Net operating profit after taxes	$	7,015	$	3,198	Net operating profit after taxes	$	7,123	$	3,951


Denominator	Denominator	May 1, 2021			May 2, 2020			May 4, 2019		Denominator	July 31, 2021			August 1, 2020			August 3, 2019
Current portion of long-term debt and other borrowings	Current portion of long-term debt and other borrowings	$	1,173		$	168		$	1,056	Current portion of long-term debt and other borrowings	$	1,190		$	109		$	1,153
+ Noncurrent portion of long-term debt	+ Noncurrent portion of long-term debt	11,509			14,073			11,357		+ Noncurrent portion of long-term debt	11,589			14,188			10,365
+ Shareholders' investment	+ Shareholders' investment	14,959			11,169			11,117		+ Shareholders' investment	14,860			12,578			11,836
+ Operating lease liabilities (c)	+ Operating lease liabilities (c)	2,563			2,448			2,231		+ Operating lease liabilities (c)	2,695			2,448			2,285
- Cash and cash equivalents	- Cash and cash equivalents	7,816			4,566			1,173		- Cash and cash equivalents	7,368			7,284			1,656
Invested capital	Invested capital	$	22,388		$	23,292		$	24,588	Invested capital	$	22,966		$	22,039		$	23,983
Average invested capital (d)	Average invested capital (d)	$	22,840		$	23,940				Average invested capital (d)	$	22,502		$	23,011

After-tax return on invested capital	After-tax return on invested capital	30.7		%	13.4		%			After-tax return on invested capital	31.7		%	17.2		%

(a)Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within SG&A. Operating lease interest is added back to operating income in the ROIC calculation to control for differences in capital structure between us and our competitors.

(b)Calculated using the effective tax rates, which were ~~21.0~~21.2 percent and ~~21.1~~21.4 percent for the trailing twelve months ended ~~May 1,~~July 31, 2021, and ~~May 2,~~August 1, 2020, respectively. For the trailing twelve months ended ~~May 1,~~July 31, 2021, and ~~May 2,~~August 1, 2020, includes tax effect of ~~$1.8~~$1.9 billion and ~~$837 million,~~$1.1 billion, respectively, related to EBIT, and $18 million and $19 million, respectively, related to operating lease interest.

(c)Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.

(d)Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			1921


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

Analysis of Financial Condition

Liquidity and Capital Resources

Capital Allocation

We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals.

Our cash and cash equivalents balance was ~~$7.8~~$7.4 billion, $8.5 billion, and ~~$4.6~~$7.3 billion as of ~~May 1,~~July 31, 2021, January 30, 2021, and ~~May 2,~~August 1, 2020, respectively. Our cash and cash equivalents balance includes short-term investments of ~~$6.9~~$6.4 billion, $7.6 billion, and ~~$3.6~~$6.4 billion as of ~~May 1,~~July 31, 2021, January 30, 2021, and ~~May 2,~~August 1, 2020, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.

Operating Cash Flows

Cash flows provided by operating activities were ~~$1.1~~$3.4 billion for the ~~three~~six months ended ~~May 1,~~July 31, 2021, compared with ~~$1.3~~$5.1 billion for the ~~three~~six months ended ~~May 2, 2020.~~August 1, 2020. For the ~~three~~six months ended ~~May 1,~~July 31, 2021, operating cash flows reflect stronger operating results, offset by increased inventory investment and higher net settlement of accounts payable, ~~and incentive compensation payments,~~ compared with the ~~three~~six months ended ~~May 2,~~August 1, 2020. Additionally, operating cash flows for 2021 reflect a $1.2 billion increase in income tax payments.

Inventory

Inventory was ~~$10.5~~$11.3 billion as of ~~May 1,~~July 31, 2021, compared with $10.7 billion and ~~$8.6~~$8.9 billion at January 30, 2021, and ~~May 2,~~August 1, 2020, respectively. The increase over the balance as of ~~May 2,~~August 1, 2020, reflects efforts to align inventory with sales trends. Additionally, the lower inventory balance as of ~~May 2,~~August 1, 2020, reflected the impact of elevated sell-through rates in ~~high-demand~~longer lead-time merchandise ~~categories and efforts to reduce inventory levels in certain discretionary categories to align with evolving sales trends early in the pandemic.~~categories.

Investing Cash Flows

Investing cash flows included capital investments of ~~$540 million~~$1.3 billion and ~~$751 million~~$1.4 billion for the ~~three~~six months ended ~~May 1,~~July 31, 2021, and ~~May 2,~~August 1, 2020, respectively. We ~~continue to~~now expect full-year capital investments of approximately $3.5 billion compared with our previous expectation of $4 billion, ~~with~~reflecting the ~~majority~~re-timing of ~~those investments occurring in~~some projects into next year. For the ~~second half of this year. For the three~~six months ended ~~May 1,~~July 31, 2021, investing cash flows includes $356 million of proceeds from the sale of Dermstore.

Dividends

We paid dividends totaling ~~$340~~$336 million ($0.68 per share) and $676 million ($1.36 per share) for the three and six months ended ~~May 1,~~July 31, 2021, respectively, and ~~$332~~$330 million ($0.66 per share) and $662 million ($1.32 per share) for the three and six months ended ~~May 2,~~August 1, 2020, respectively, a per share increase of 3.0 percent. We declared dividends totaling ~~$343~~$445 million ($0.90 per share) during the second quarter of 2021 and $344 million ($0.68 per share) during the ~~first quarter of 2021 and $333 million ($0.66 per share) during the first~~second quarter of 2020, a per share increase of ~~3.0~~32.4 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.

Share Repurchase

We returned ~~$1.2~~$2.7 billion to shareholders through share repurchase during the ~~three~~six months ended ~~May 1,~~July 31, 2021. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 9 to the Financial Statements for more information.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2022


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

Financing

Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of ~~May 1,~~July 31, 2021, our credit ratings were as follows:


Credit Ratings	Moody’s	Standard and Poor’s	Fitch
Long-term debt	A2	A	A-A
Commercial paper	P-1	A-1	F1

If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically and there is no guarantee our current credit ratings will remain the same as described above. Fitch raised our long-term debt rating from A- to A during the three months ended July 31, 2021.

We obtain short-term financing from time to time under our commercial paper program. No balances were outstanding at any time during the ~~three~~six months ended ~~May~~July 31, 2021, and August 1, ~~2021, and May 2,~~ 2020. We have additional liquidity through a committed $2.5 billion revolving credit facility that expires in October 2023. No balances were outstanding at any time during 2021 or 2020.

Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facility also contains a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of ~~May 1,~~July 31, 2021, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

We believe our sources of liquidity will continue to be adequate to maintain operations, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future. We continue to anticipate ample access to commercial paper and long-term financing.

New Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2123


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

Forward-Looking Statements

This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words “expect,” “may,” “could,” “believe,” “would,” “might,” “anticipates,” or similar words. The principal forward-looking statements in this report include: our financial performance, statements regarding the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the continued execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation and the resolution of tax matters, the expected impact of changes in information technology systems, future responses to and effects of the COVID-19 pandemic, and changes in our assumptions and expectations.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 30, 2021, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk of our Form 10-K for the fiscal year ended January 30, 2021.

Item 4. Controls and Procedures

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, the following changes materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

•We are in the process of a broad multi-year migration of many mainframe-based systems and middleware products to a modern platform, including systems and processes supporting inventory, sales, and supply chain-related transactions.

•During the first quarter of 2021, we resumed our normal practice of annual physical inventory counts at our stores and are no longer using the statistical sampling method implemented during 2020 due to the COVID-19 pandemic. We have recorded estimated losses related to shrink and markdowns based upon the results of the counts.

During the most recently completed fiscal quarter, no other changes in our internal control over financial reporting materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


~~TARGET CORPORATION~~						~~Q1 2021 Form 10-Q~~			22


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

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2324


			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

No response is required under Item 103 of Regulation S-K, nor have there been any material developments for any previously reported legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 30, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 19, 2019, our Board of Directors authorized a $5 billion share repurchase program with no stated ~~expiration.~~expiration (2019 Program). We began repurchasing shares under the authorization during the first quarter of 2020. On August 11, 2021, our Board of Directors authorized a new, $15 billion share repurchase program with no stated expiration (2021 Program). We expect to begin repurchasing shares under the 2021 Program upon completion of the 2019 Program. Under the ~~program,~~2019 Program, we have repurchased ~~10.7~~17.2 million shares of common stock at an average price of $~~154.39~~184.62, for a total investment of $~~1.6~~3.2 billion. The table below presents information with respect to Target common stock purchases made during the three months ended ~~May 1,~~July 31, 2021, by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.


Share Repurchase Activity	Share Repurchase Activity	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				Share Repurchase Activity	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
Period	Period										Period
January 31, 2021 through February 27, 2021
May 2, 2021 through May 29, 2021													May 2, 2021 through May 29, 2021
Open market and privately negotiated purchases	Open market and privately negotiated purchases	1,643,873			$	187.16		1,643,873			$	4,208,486,088			Open market and privately negotiated purchases	1,548,804			$	211.66		1,548,804			$	3,023,026,963
February 28, 2021 through April 3, 2021
May 30, 2021 through July 3, 2021													May 30, 2021 through July 3, 2021
Open market and privately negotiated purchases	Open market and privately negotiated purchases	2,381,931	180.85				2,381,931		3,777,714,147				Open market and privately negotiated purchases	2,934,662			233.31				2,934,662		2,338,345,656
April 4, 2021 through May 1, 2021
July 4, 2021 through July 31, 2021													July 4, 2021 through July 31, 2021
Open market and privately negotiated purchases	Open market and privately negotiated purchases	2,082,677	204.96				2,082,677		3,350,843,436				Open market and privately negotiated purchases	2,081,640			250.98				2,081,640		1,815,885,962
Total	Total	6,108,481	$	190.77			6,108,481		$	3,350,843,436			Total	6,565,106			$	233.81			6,565,106		$	1,815,885,962

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2425


			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

Item 6. Exhibits


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

(3)B						Bylaws (as amended through March 27, 2020) (2)

(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)

(1) Incorporated by reference to Exhibit (3)A to the Registrant’s Form 8-K Report filed June 10, 2010.

(2) Incorporated by reference to Exhibit (3)B to the Registrant’s Form 8-K Report filed April 2, 2020.


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2526


			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TARGET CORPORATION



Dated: ~~May 28,~~August 27, 2021	By:	/s/ Michael J. Fiddelke
			Michael J. Fiddelke
			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


TARGET CORPORATION						Q1Q2 2021 Form 10-Q			2627


INDEX TO NOTES

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