

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 ~~October~~April 29, ~~2022~~2023

☐ 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)

612-304-6073

(Registrant’s telephone number, including area code)

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

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, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" 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 ☒

Total shares of common stock, par value $0.0833, outstanding at ~~November 18, 2022~~May 19, 2023, were ~~460,310,088.~~461,559,612.


						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	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2322
Item 4.	Controls and Procedures	2322

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	2423
Item 1A.	Risk Factors	2423
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2423
Item 3.	Defaults Upon Senior Securities	2423
Item 4.	Mine Safety Disclosures	2423
Item 5.	Other Information	2423
Item 6.	Exhibits	2524

Signatures		2625


			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				Nine Months Ended					Three Months Ended
(millions, except per share data) (unaudited)	(millions, except per share data) (unaudited)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021		(millions, except per share data) (unaudited)	April 29, 2023		April 30, 2022
Sales	Sales	$	26,122	$	25,290	$	76,605	$	73,995	Sales	$	24,948	$	24,830
Other revenue	Other revenue	396		362		1,120		1,014		Other revenue	374		340
Total revenue	Total revenue	26,518		25,652		77,725		75,009		Total revenue	25,322		25,170
Cost of sales	Cost of sales	19,680		18,206		58,283		52,202		Cost of sales	18,386		18,461
Selling, general and administrative expenses	Selling, general and administrative expenses	5,219		4,859		14,983		14,217		Selling, general and administrative expenses	5,025		4,762
Depreciation and amortization (exclusive of depreciation included in cost of sales)	Depreciation and amortization (exclusive of depreciation included in cost of sales)	597		577		1,770		1,739		Depreciation and amortization (exclusive of depreciation included in cost of sales)	583		601
Operating income	Operating income	1,022		2,010		2,689		6,851		Operating income	1,328		1,346
Net interest expense	Net interest expense	125		105		349		317		Net interest expense	147		112
Net other (income) / expense		(12)		(6)		(35)		(356)
Net other income										Net other income	(23)		(15)
Earnings before income taxes	Earnings before income taxes	909		1,911		2,375		6,890		Earnings before income taxes	1,204		1,249
Provision for income taxes	Provision for income taxes	197		423		471		1,488		Provision for income taxes	254		240

Net earnings	Net earnings	$	712	$	1,488	$	1,904	$	5,402	Net earnings	$	950	$	1,009

Basic earnings per share	Basic earnings per share	$	1.55	$	3.07	$	4.11	$	10.97	Basic earnings per share	$	2.06	$	2.17

Diluted earnings per share	Diluted earnings per share	$	1.54	$	3.04	$	4.09	$	10.87	Diluted earnings per share	$	2.05	$	2.16
Weighted average common shares outstanding	Weighted average common shares outstanding									Weighted average common shares outstanding
Basic	Basic	460.3		484.8		462.6		492.2		Basic	460.9		464.0
Diluted	Diluted	462.5		489.4		465.3		496.8		Diluted	462.9		467.8
Antidilutive shares	Antidilutive shares	1.3		—		1.1		—		Antidilutive shares	1.2		—

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 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				Nine Months Ended					Three Months Ended
(millions) (unaudited)	(millions) (unaudited)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021		(millions) (unaudited)	April 29, 2023		April 30, 2022
Net earnings	Net earnings	$	712	$	1,488	$	1,904	$	5,402	Net earnings	$	950	$	1,009
Other comprehensive income, net of tax	Other comprehensive income, net of tax									Other comprehensive income, net of tax
Pension benefit liabilities	Pension benefit liabilities	11		21		33		63		Pension benefit liabilities	2		11
Cash flow hedges and currency translation adjustment	Cash flow hedges and currency translation adjustment	150		5		312		6		Cash flow hedges and currency translation adjustment	(5)		190
Other comprehensive income	Other comprehensive income	161		26		345		69		Other comprehensive income	(3)		201
Comprehensive income	Comprehensive income	$	873	$	1,514	$	2,249	$	5,471	Comprehensive income	$	947	$	1,210

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 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)	October 29, 2022		January 29, 2022		October 30, 2021		(millions, except footnotes) (unaudited)	April 29, 2023		January 28, 2023		April 30, 2022
Assets	Assets							Assets
Cash and cash equivalents	Cash and cash equivalents	$	954	$	5,911	$	5,753	Cash and cash equivalents	$	1,321	$	2,229	$	1,112
Inventory	Inventory	17,117		13,902		14,958		Inventory	12,616		13,499		15,083
Other current assets	Other current assets	2,322		1,760		1,865		Other current assets	1,836		2,118		1,758
Total current assets	Total current assets	20,393		21,573		22,576		Total current assets	15,773		17,846		17,953
Property and equipment	Property and equipment							Property and equipment
Land	Land	6,214		6,164		6,146		Land	6,493		6,231		6,164
Buildings and improvements	Buildings and improvements	34,279		32,985		32,478		Buildings and improvements	35,198		34,746		33,300
Fixtures and equipment	Fixtures and equipment	7,184		6,407		6,144		Fixtures and equipment	7,473		7,439		6,459
Computer hardware and software	Computer hardware and software	2,899		2,505		2,447		Computer hardware and software	3,067		3,039		2,588
Construction-in-progress	Construction-in-progress	2,358		1,257		1,302		Construction-in-progress	2,822		2,688		1,444
Accumulated depreciation	Accumulated depreciation	(22,013)		(21,137)		(20,602)		Accumulated depreciation	(22,657)		(22,631)		(21,285)
Property and equipment, net	Property and equipment, net	30,921		28,181		27,915		Property and equipment, net	32,396		31,512		28,670
Operating lease assets	Operating lease assets	2,596		2,556		2,539		Operating lease assets	2,640		2,657		2,571
Other noncurrent assets	Other noncurrent assets	1,705		1,501		1,381		Other noncurrent assets	1,341		1,320		1,648
Total assets	Total assets	$	55,615	$	53,811	$	54,411	Total assets	$	52,150	$	53,335	$	50,842
Liabilities and shareholders’ investment	Liabilities and shareholders’ investment							Liabilities and shareholders’ investment
Accounts payable	Accounts payable	$	15,438	$	15,478	$	16,250	Accounts payable	$	11,935	$	13,487	$	14,053
Accrued and other current liabilities	Accrued and other current liabilities	6,138		6,098		5,925		Accrued and other current liabilities	5,732		5,883		5,582
Current portion of long-term debt and other borrowings	Current portion of long-term debt and other borrowings	2,207		171		1,176		Current portion of long-term debt and other borrowings	200		130		1,089
Total current liabilities	Total current liabilities	23,783		21,747		23,351		Total current liabilities	17,867		19,500		20,724
Long-term debt and other borrowings	Long-term debt and other borrowings	14,237		13,549		11,586		Long-term debt and other borrowings	16,010		16,009		13,379
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	2,590		2,493		2,494		Noncurrent operating lease liabilities	2,621		2,638		2,581
Deferred income taxes	Deferred income taxes	2,240		1,566		1,246		Deferred income taxes	2,289		2,196		1,752
Other noncurrent liabilities	Other noncurrent liabilities	1,746		1,629		1,931		Other noncurrent liabilities	1,758		1,760		1,632
Total noncurrent liabilities	Total noncurrent liabilities	20,813		19,237		17,257		Total noncurrent liabilities	22,678		22,603		19,344
Shareholders’ investment	Shareholders’ investment							Shareholders’ investment
Common stock	Common stock	38		39		40		Common stock	38		38		39
Additional paid-in capital	Additional paid-in capital	6,558		6,421		6,381		Additional paid-in capital	6,541		6,608		5,592
Retained earnings	Retained earnings	4,631		6,920		8,069		Retained earnings	5,448		5,005		5,495
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(208)		(553)		(687)		Accumulated other comprehensive loss	(422)		(419)		(352)
Total shareholders’ investment	Total shareholders’ investment	11,019		12,827		13,803		Total shareholders’ investment	11,605		11,232		10,774
Total liabilities and shareholders’ investment	Total liabilities and shareholders’ investment	$	55,615	$	53,811	$	54,411	Total liabilities and shareholders’ investment	$	52,150	$	53,335	$	50,842

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; ~~460,297,654, 471,274,073~~461,552,843, 460,346,947, and ~~480,905,493~~463,683,711 shares issued and outstanding as of ~~October~~April 29, ~~2022,~~2023, January ~~29,~~28, 2023, and April 30, 2022, ~~and October 30, 2021,~~ respectively.

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

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 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
		Nine Months Ended					Three Months Ended
(millions) (unaudited)	(millions) (unaudited)	October 29, 2022		October 30, 2021		(millions) (unaudited)	April 29, 2023		April 30, 2022
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	1,904	$	5,402	Net earnings	$	950	$	1,009

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	2,004		1,952		Depreciation and amortization	667		679
Share-based compensation expense	Share-based compensation expense	177		187		Share-based compensation expense	43		83
Deferred income taxes	Deferred income taxes	548		233		Deferred income taxes	95		115
Gain on Dermstore sale		—		(335)

Noncash losses / (gains) and other, net	Noncash losses / (gains) and other, net	141		18		Noncash losses / (gains) and other, net	(11)		52
Changes in operating accounts:	Changes in operating accounts:					Changes in operating accounts:
Inventory	Inventory	(3,215)		(4,305)		Inventory	883		(1,181)
Other assets	Other assets	(205)		(117)		Other assets	34		(86)
Accounts payable	Accounts payable	(224)		3,284		Accounts payable	(1,463)		(1,560)
Accrued and other liabilities	Accrued and other liabilities	(578)		(722)		Accrued and other liabilities	67		(505)

Cash provided by operating activities		552		5,597
Cash provided by (required for) operating activities						Cash provided by (required for) operating activities	1,265		(1,394)
Investing activities	Investing activities					Investing activities
Expenditures for property and equipment	Expenditures for property and equipment	(4,323)		(2,483)		Expenditures for property and equipment	(1,605)		(952)
Proceeds from disposal of property and equipment	Proceeds from disposal of property and equipment	4		23		Proceeds from disposal of property and equipment	2		2
Proceeds from Dermstore sale		—		356
Other investments	Other investments	16		14		Other investments	1		2
Cash required for investing activities	Cash required for investing activities	(4,303)		(2,090)		Cash required for investing activities	(1,602)		(948)
Financing activities	Financing activities					Financing activities
Change in commercial paper, net	Change in commercial paper, net	2,104		—		Change in commercial paper, net	90		945
Additions to long-term debt		991		—

Reductions of long-term debt	Reductions of long-term debt	(139)		(112)		Reductions of long-term debt	(46)		(48)
Dividends paid	Dividends paid	(1,339)		(1,116)		Dividends paid	(497)		(424)
Repurchase of stock	Repurchase of stock	(2,825)		(5,042)		Repurchase of stock	—		(10)

Accelerated share repurchase pending final settlement						Accelerated share repurchase pending final settlement	—		(2,750)
Shares withheld for taxes on share-based compensation						Shares withheld for taxes on share-based compensation	(118)		(171)
Stock option exercises	Stock option exercises	2		5		Stock option exercises	—		1
Cash required for financing activities	Cash required for financing activities	(1,206)		(6,265)		Cash required for financing activities	(571)		(2,457)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(4,957)		(2,758)		Net decrease in cash and cash equivalents	(908)		(4,799)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	5,911		8,511		Cash and cash equivalents at beginning of period	2,229		5,911
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	954	$	5,753	Cash and cash equivalents at end of period	$	1,321	$	1,112
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	$	116	$	234	Leased assets obtained in exchange for new finance lease liabilities	$	15	$	62
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	203		482		Leased assets obtained in exchange for new operating lease liabilities	54		59

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			4


			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		500.9	$	42	$	6,329	$	8,825	$	(756)	$	14,440
January 29, 2022													January 29, 2022	471.3	$	39	$	6,421	$	6,920	$	(553)	$	12,827
Net earnings	Net earnings	—	—		—		2,097		—		2,097		Net earnings	—	—		—		1,009		—		1,009
Other comprehensive income	Other comprehensive income	—	—		—		—		31		31		Other comprehensive income	—	—		—		—		201		201
Dividends declared	Dividends declared	—	—		—		(343)		—		(343)		Dividends declared	—	—		—		(426)		—		(426)
Repurchase of stock	Repurchase of stock	(6.1)	(1)		—		(1,207)		—		(1,208)		Repurchase of stock	(0.1)	—		—		(10)		—		(10)

Accelerated share repurchase pending final settlement													Accelerated share repurchase pending final settlement	(8.9)	(1)		(751)		(1,998)		—		(2,750)
Stock options and awards	Stock options and awards	1.3	—		(58)		—		—		(58)		Stock options and awards	1.4	1		(78)		—		—		(77)
May 1, 2021		496.1	$	41	$	6,271	$	9,372	$	(725)	$	14,959
April 30, 2022													April 30, 2022	463.7	$	39	$	5,592	$	5,495	$	(352)	$	10,774
Net earnings													Net earnings	—	—		—		183		—		183
Other comprehensive loss													Other comprehensive loss	—	—		—		—		(17)		(17)
Dividends declared													Dividends declared	—	—		—		(502)		—		(502)
Repurchase of stock													Repurchase of stock	(3.6)	(1)		870		(755)		—		114
Stock options and awards													Stock options and awards	0.1	—		40		—		—		40
July 30, 2022													July 30, 2022	460.2	$	38	$	6,502	$	4,421	$	(369)	$	10,592
Net earnings	Net earnings	—	—		—		1,817		—		1,817		Net earnings	—	—		—		712		—		712
Other comprehensive income	Other comprehensive income	—	—		—		—		12		12		Other comprehensive income	—	—		—		—		161		161
Dividends declared	Dividends declared	—	—		—		(445)		—		(445)		Dividends declared	—	—		—		(502)		—		(502)
Repurchase of stock		(6.6)	—		—		(1,544)		—		(1,544)
Stock options and awards		0.2	—		61		—		—		61
July 31, 2021		489.7	$	41	$	6,332	$	9,200	$	(713)	$	14,860
Net earnings		—	—		—		1,488		—		1,488
Other comprehensive income		—	—		—		—		26		26
Dividends declared		—	—		—		(439)		—		(439)
Repurchase of stock		(8.8)	(1)		—		(2,180)		—		(2,181)

Stock options and awards	Stock options and awards	—	—		49		—		—		49		Stock options and awards	0.1	—		56		—		—		56
October 30, 2021		480.9	$	40	$	6,381	$	8,069	$	(687)	$	13,803
October 29, 2022													October 29, 2022	460.3	$	38	$	6,558	$	4,631	$	(208)	$	11,019
Net earnings	Net earnings	—	—		—		1,544		—		1,544		Net earnings	—	—		—		876		—		876
Other comprehensive income		—	—		—		—		134		134
Other comprehensive loss													Other comprehensive loss	—	—		—		—		(211)		(211)
Dividends declared	Dividends declared	—	—		—		(428)		—		(428)		Dividends declared	—	—		—		(502)		—		(502)
Repurchase of stock		(9.8)	(1)		—		(2,265)		—		(2,266)

Stock options and awards	Stock options and awards	0.2	—		40		—		—		40		Stock options and awards	—	—		50		—		—		50
January 29, 2022		471.3	$	39	$	6,421	$	6,920	$	(553)	$	12,827
January 28, 2023													January 28, 2023	460.3	$	38	$	6,608	$	5,005	$	(419)	$	11,232


TARGET CORPORATION						~~Q3 2022~~Q1 2023 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 29, 2022		471.3	$	39	$	6,421	$	6,920	$	(553)	$	12,827
January 28, 2023													January 28, 2023	460.3	$	38	$	6,608	$	5,005	$	(419)	$	11,232
Net earnings	Net earnings	—	—		—		1,009		—		1,009		Net earnings	—	—		—		950		—		950
Other comprehensive income		—	—		—		—		201		201
Dividends declared		—	—		—		(426)		—		(426)
Repurchase of stock		(0.1)	—		—		(10)		—		(10)
Accelerated share repurchase pending final settlement		(8.9)	(1)		(751)		(1,998)		—		(2,750)
Stock options and awards		1.4	1		(78)		—		—		(77)
April 30, 2022		463.7	$	39	$	5,592	$	5,495	$	(352)	$	10,774
Net earnings		—	—		—		183		—		183
Other comprehensive income		—	—		—		—		(17)		(17)
Dividends declared		—	—		—		(502)		—		(502)
Repurchase of stock		(3.6)	(1)		870		(755)		—		114
Stock options and awards		0.1	—		40		—		—		40
July 31, 2022		460.2	$	38	$	6,502	$	4,421	$	(369)	$	10,592
Net earnings		—	—		—		712		—		712
Other comprehensive income		—	—		—		—		161		161
Other comprehensive loss													Other comprehensive loss	—	—		—		—		(3)		(3)
Dividends declared	Dividends declared	—	—		—		(502)		—		(502)		Dividends declared	—	—		—		(507)		—		(507)

Stock options and awards	Stock options and awards	0.1	—		56		—		—		56		Stock options and awards	1.3	—		(67)		—		—		(67)
October 29, 2022		460.3	$	38	$	6,558	$	4,631	$	(208)	$	11,019
April 29, 2023													April 29, 2023	461.6	$	38	$	6,541	$	5,448	$	(422)	$	11,605

We declared $1.08 and $0.90 dividends per share for the three months ended ~~October~~April 29, 2023, and April 30, 2022, and ~~October 30, 2021, and $3.38~~$4.14 per share for the fiscal year ended January ~~29, 2022.~~28, 2023.

See accompanying Notes to Consolidated Financial Statements.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			6


			FINANCIAL STATEMENTS			Table of Contents
			INDEX			Index to Notes


TARGET CORPORATION						~~Q3 2022~~Q1 2023 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 ~~2021~~most recent 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. 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 represented less than 1 percent of our consolidated revenues, operating income and net assets.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			8


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

~~3. Revenues~~2. Revenue

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		Three Months Ended				Nine Months Ended
Revenue										Revenue	Three Months Ended
(millions)	(millions)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021		(millions)	April 29, 2023		April 30, 2022
Apparel and accessories (a)		$	4,367	$	4,364	$	13,223	$	13,384
Beauty and household essentials (b)		7,465		6,980		21,726		20,070
Food and beverage (c)		5,748		5,074		16,521		14,617
Apparel & accessories (a)										Apparel & accessories (a)	$	3,967	$	4,239
Beauty & household essentials (b)										Beauty & household essentials (b)	7,682		7,053
Food & beverage (c)										Food & beverage (c)	5,997		5,505
Hardlines (d)	Hardlines (d)	3,665		3,841		11,244		11,654		Hardlines (d)	3,391		3,713
Home furnishings and décor (e)		4,832		4,989		13,750		14,147
Home furnishings & décor (e)										Home furnishings & décor (e)	3,855		4,271
Other	Other	45		42		141		123		Other	56		49
Sales	Sales	26,122		25,290		76,605		73,995		Sales	24,948		24,830

Credit card profit sharing	Credit card profit sharing	184		184		550		527		Credit card profit sharing	174		185
Other	Other	212		178		570		487		Other	200		155
Other revenue	Other revenue	396		362		1,120		1,014		Other revenue	374		340

Total revenue	Total revenue	$	26,518	$	25,652	$	77,725	$	75,009	Total revenue	$	25,322	$	25,170

(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/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 and our expectation of future returns. As of ~~October~~April 29, ~~2022,~~2023, January ~~29,~~28, 2023, and April 30, 2022, ~~and October 30, 2021,~~ the accrual for estimated returns was ~~$209~~$206 million, ~~$165~~$174 million, and ~~$210~~$204 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	Gift Card Liability Activity	January 29, 2022		Gift Cards Issued During Current Period But Not Redeemed (b)			Revenue Recognized From Beginning Liability			October 29, 2022	Gift Card Liability Activity	January 28, 2023			Gift Cards Issued During Current Period But Not Redeemed (b)			Revenue Recognized From Beginning Liability			April 29, 2023
(millions)	(millions)							(millions)
Gift card liability (a)	Gift card liability (a)	$	1,202		$	533		$	(772)				$	963	Gift card liability (a)	$	1,240		$	268		$	(481)	$	1,027

(a)Included in Accrued and Other Current Liabilities.

(b)Net of estimated breakage.

Other Revenue

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						~~Q3 2022~~Q1 2023 Form 10-Q			9


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

Other — Includes advertising revenue, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellaneous revenues.

4.3. Fair Value Measurements

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

Financial Instruments Measured On a Recurring Basis

Fair Value

Financial Instruments Measured On a Recurring Basis

Fair Value

(millions)

Classification

Measurement Level

October 29, 2022

January 29, 2022

October 30, 2021

(millions)

Classification

Measurement Level

April 29, 2023

January 28, 2023

April 30, 2022

Assets

Short-term investments

Cash and Cash Equivalents

Level 1

—

4,985

4,818

Short-term investments

Cash and Cash Equivalents

Level 1

408

1,343

182

Prepaid forward contracts

Other Current Assets

Level 1

Prepaid forward contracts

Other Current Assets

Level 1

Interest rate swaps

Other Current Assets

Level 2

Interest rate swaps

Other Current Assets

Level 2

—

Interest rate swaps

Other Noncurrent Assets

Level 2

341

135

116

Interest rate swaps

Other Noncurrent Assets

Level 2

292

Liabilities

Interest rate swaps

Other Noncurrent Liabilities

Level 2

147

—

Interest rate swaps

Other Noncurrent Liabilities

Level 2


Significant Financial Instruments Not Measured at Fair Value (a) (millions)	Significant Financial Instruments Not Measured at Fair Value (a) (millions)	October 29, 2022				January 29, 2022				October 30, 2021				Significant Financial Instruments Not Measured at Fair Value (a) (millions)	April 29, 2023				January 28, 2023				April 30, 2022
		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)	$	12,505	$	11,291	$	11,568	$	12,808	$	10,605	$	12,300	Long-term debt, including current portion (b)	$	14,144	$	13,672	$	14,141	$	13,688	$	11,549	$	11,466

(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~~fair value hedge adjustments, and lease liabilities.

~~5. Property and Equipment~~4. Supplier Finance Programs

We ~~review long-lived assets~~have arrangements with several financial institutions to act as our paying agents to certain vendors. The arrangements also permit the financial institutions to provide vendors with an option, at our vendors' sole discretion, to sell their receivables from Target to the financial institutions. A vendor’s election to receive early payment at a discounted amount from the financial institutions does not change the amount that we must remit to the financial institutions or our payment date, which is up to 120 days from the invoice date.

We do not pay any fees or pledge any security to these financial institutions under these arrangements. The arrangements can be terminated by either party with notice ranging up to 120 days.

Our outstanding vendor obligations eligible for ~~impairment when store performance expectations, events, or changes in circumstances—such~~early payment under these arrangements totaled $3.3 billion, $3.4 billion, and $4.4 billion 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 ~~$5 million~~April 29, 2023, January 28, 2023, and ~~$55 million for the three~~April 30, 2022, respectively, and nine months ended October 29, 2022, respectively. We recognized impairment charges of $3 million and $84 million for the three and nine months ended October 30, 2021, respectively. These impairment charges are included ~~in Selling, General and Administrative Expenses (SG&A).~~within Accounts Payable on our Consolidated Statements of Financial Position. Our outstanding vendor obligations do not represent actual receivables sold by our vendors to the financial institutions, which may be lower.

6.5. Commercial Paper and Long-Term Debt

In September 2022, we issued unsecured fixed rate debt of $1.0 billion at 4.5 percent that matures in September 2032. In connection with this issuance, we terminated certain of our forward-starting interest rate swaps. ~~Note 7~~ ~~provides additional information.~~

We obtain short-term financing from time to time under our commercial paper program. For the ~~nine~~three months ended ~~October~~April 29, 2023 and April 30, 2022, the maximum ~~amount~~amounts outstanding ~~was $2.1~~were $90 million and $1.1 billion, respectively, and the average daily ~~amount~~amounts outstanding ~~was $713~~were $2 million and $291 million, respectively, at a weighted average annual interest rate of ~~1.91 percent.~~4.8 percent and 0.4 percent, respectively. As of ~~October~~April 29, 2023 and April 30, 2022, ~~$2.1 billion was~~$90 million and $945 million, respectively, were outstanding and isare classified within Current Portion of Long-Term Debt and Other Borrowings on our Consolidated ~~Statement~~Statements of Financial Position. ~~No balances were outstanding at any time during 2021.~~


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			10


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

In October 2022, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2023. We also extended our existing committed $3.0 billion unsecured revolving credit facility, which now expires in October 2027. No balances were outstanding under either credit facility at any time during 2021 or 2022.

7.6. 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 43 to the Consolidated Financial Statements provides the fair value and classification of these instruments.

We were party to interest rate swaps with notional amounts totaling $2.45 billion as of ~~October~~April 29, ~~2022,~~2023 and January 28, 2023, and $1.50 billion as of ~~January 29, 2022, and October~~April 30, ~~2021.~~2022. 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 nine~~ months ended ~~October~~April 29, ~~2022,~~2023 and ~~October~~April 30, ~~2021.~~2022.

During the first quarter of 2023, we amended certain of our interest rate swaps, with notional amounts totaling $1.25 billion, to replace the London Interbank Offered Rate (LIBOR) with the daily Secured Overnight Financing Rate (SOFR) as part of our planned reference rate reform activities. These amendments did not result in any change to our application of hedge accounting or any impact to our consolidated financial statements.

We were party to forward-starting interest rate swaps with notional amounts totaling ~~$1.45 billion as of October 29, 2022,~~ $2.15 billion as of ~~January 29, 2022, and $1.25 billion as of October~~April 30, 2021. 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 during the next two years. In September2022. During 2022, we terminated all remaining forward-starting interest rate swap ~~agreements that hedged $700 million of the $1.0 billion debt issuance described in~~ ~~Note 6~~.agreements. The resulting ~~gain of $109 million was~~gains upon termination were recorded in Accumulated Other Comprehensive Loss ~~(AOCI)~~ and will be recognized as a reduction to Net Interest Expense over the respective term of the debt. Based on the fair value of our remaining forward-starting interest rate swaps as of October 29, 2022, AOCI included an unrealized gain of $394 million. Any unrealized gain or loss at the time of debt issuance will be reclassified and impact Net Interest Expense as we record interest expense on the associated debt.


Effect of Hedges on Debt (millions)	Effect of Hedges on Debt (millions)	October 29, 2022		January 29, 2022		October 30, 2021		Effect of Hedges on Debt (millions)	April 29, 2023		January 28, 2023		April 30, 2022

Long-term debt and other borrowings	Long-term debt and other borrowings							Long-term debt and other borrowings
Carrying amount of hedged debt	Carrying amount of hedged debt	$	2,294	$	1,572	$	1,609	Carrying amount of hedged debt	$	2,376	$	2,366	$	1,468
Cumulative hedging adjustments, included in carrying amount	Cumulative hedging adjustments, included in carrying amount	(146)		77		114		Cumulative hedging adjustments, included in carrying amount	(65)		(74)		(27)


Effect of Hedges on Net Interest Expense	Effect of Hedges on Net Interest Expense	Three Months Ended				Nine Months Ended				Effect of Hedges on Net Interest Expense	Three Months Ended
(millions)	(millions)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021		(millions)	April 29, 2023		April 30, 2022

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	$	(168)	$	(40)	$	(223)	$	(69)	Interest rate swap designated as fair value hedges	$	9	$	(104)
Hedged debt	Hedged debt	168		40		223		69		Hedged debt	(9)		104
Gain on cash flow hedges recognized in Net Interest Expense										Gain on cash flow hedges recognized in Net Interest Expense	6		—
Total	Total	$	—	$	—	$	—	$	—	Total	$	6	$	—


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			11


			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

8.7. 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 (ASR) arrangements, and other privately negotiated transactions with financial institutions. We did not repurchase any of our shares during the three months ended ~~October~~April 29, ~~2022.~~2023.

Share Repurchase Activity Three Months Ended Nine Months Ended
(millions, except per share data) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Number of shares purchased — 8.8 12.5 21.5
Average price paid per share $ — $ 246.80 $ 211.57 $ 226.93
Total investment $ — $ 2,184 $ 2,646 $ 4,884


Share Repurchase Activity	Three Months Ended
(millions, except per share data)	April 29, 2023		April 30, 2022
Number of shares purchased	—		0.1
Average price paid per share	$	—	$	208.60
Total investment	$	—	$	10

Note: This table excludes activity related to the ASR arrangement described below because final settlement had not occurred as of April 30, 2022.

During the first quarter of 2022, we entered into an ASR arrangement to repurchase up to $2.75 billion of our common stock. Under the agreement, we paid $2.75 billion and received an initial delivery of 8.9 million shares, which were retired, resulting in a $2.0 billion reduction to Retained Earnings. As of April 30, 2022, $751 million was included in the Consolidated Statement of Financial Position as a reduction to Additional Paid-in Capital. Final settlement occurred during the second quarter of 2022. In total, under the ASR arrangement, we repurchased 12.5 million shares for a total cash investment of $2.6 billion. ~~We did not enter into any other ASR arrangements during the periods presented.~~

9.8. Pension Benefits

We provide pension plan benefits to eligible team members.


Net Pension Benefits Expense	Net Pension Benefits Expense		Three Months Ended				Nine Months Ended				Net Pension Benefits Expense		Three Months Ended
(millions)	(millions)	Classification	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021		(millions)	Classification	April 29, 2023		April 30, 2022
Service cost benefits earned	Service cost benefits earned	SG&A	$	22	$	25	$	68	$	73	Service cost benefits earned	SG&A	$	20	$	23
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	Net Other (Income) / Expense	29		24		88		72		Interest cost on projected benefit obligation	Net Other Income	41		29
Expected return on assets	Expected return on assets	Net Other (Income) / Expense	(59)		(60)		(176)		(178)		Expected return on assets	Net Other Income	(67)		(59)
Amortization of losses	Amortization of losses	Net Other (Income) / Expense	16		28		46		85		Amortization of losses	Net Other Income	—		15
Amortization of prior service cost		Net Other (Income) / Expense	—		2		10		1
Prior service cost											Prior service cost	Net Other Income	3		—

Total	Total		$	8	$	19	$	36	$	53	Total		$	(3)	$	8

~~10.~~9. Accumulated Other Comprehensive Income (Loss)


Change in Accumulated Other Comprehensive Income (Loss)	Change in Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges		Currency Translation Adjustment				Pension				Total		Change in Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges					Currency Translation Adjustment			Pension			Total
(millions)	(millions)									(millions)
January 29, 2022		$	49			$	(19)			$	(583)							$	(553)
January 28, 2023														January 28, 2023		$	300				$	(23)		$	(696)		$	(419)
Other comprehensive income (loss) before reclassifications, net of tax	Other comprehensive income (loss) before reclassifications, net of tax	316		(3)				—				313		Other comprehensive income (loss) before reclassifications, net of tax	—					—			—			—
Amounts reclassified from AOCI, net of tax	Amounts reclassified from AOCI, net of tax	(1)		—				33				32		Amounts reclassified from AOCI, net of tax	(5)					—			2			(3)
October 29, 2022		$	364	$	(22)			$	(550)			$	(208)
April 29, 2023														April 29, 2023	$	295				$	(23)		$	(694)		$	(422)


TARGET CORPORATION						~~Q3 2022~~Q1 2023 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

~~Third~~First quarter ~~2022~~2023 included the following notable items:

•GAAP ~~diluted earnings per share were $1.54.~~

•and Adjusted diluted earnings per share were ~~$1.54.~~$2.05.

•Total revenue ~~increased 3.4~~was $25.3 billion, an increase of 0.6 percent, reflecting total sales growth of ~~3.3~~0.5 percent and a ~~9.5~~10.2 percent increase in other revenue.

•Comparable sales ~~increased 2.7 percent, driven by~~were flat, reflecting a ~~1.4~~0.9 percent increase in traffic and a ~~1.3~~(0.9) percent ~~increase~~decrease in average transaction amount.

◦Comparable stores originated sales grew ~~3.2~~0.7 percent.

◦Comparable digitally originated sales ~~increased 0.3~~declined (3.4) percent.

•Operating income of ~~$1.0~~$1.3 billion was ~~49.2~~(1.4) percent lower than the comparable prior-year period, driven primarily by a decrease in gross margin, reflecting higher clearance and promotional markdown rates, inventory shrink, and higher freight and merchandise costs, partially offset by the benefit of retail price increases.period. See Business Environment ~~and Gross Margin Rate sections~~ below for additional information.

~~Sales were $26.1 billion for the three months ended October 29, 2022, an increase of~~ ~~$832 million, or 3.3 percent, from the comparable prior-year period.~~ Cash flow provided by operating activities was ~~$552 million for the nine months ended October 29, 2022, compared with $5.6~~$1.3 billion for the ~~nine~~three months ended ~~October~~April 29, 2023, compared with $(1.4) billion cash flow required for operating activities for the three months ended April 30, ~~2021.~~2022. The drivers of the operating cash flow ~~decrease~~increase are described on page 2120.


Earnings Per Share	Earnings Per Share	Three Months Ended						Nine Months Ended						Earnings Per Share	Three Months Ended
		October 29, 2022		October 30, 2021		Change		October 29, 2022		October 30, 2021		Change			April 29, 2023		April 30, 2022		Change
GAAP diluted earnings per share	GAAP diluted earnings per share	$	1.54	$	3.04	(49.3)	%	$	4.09	$	10.87	(62.4)	%	GAAP diluted earnings per share	$	2.05	$	2.16	(4.8)	%
Adjustments	Adjustments	—		(0.01)				0.03		(0.50)				Adjustments	—		0.03
Adjusted diluted earnings per share	Adjusted diluted earnings per share	$	1.54	$	3.03	(49.1)	%	$	4.12	$	10.37	(60.2)	%	Adjusted diluted earnings per share	$	2.05	$	2.19	(6.2)	%

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 1918.

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 ~~October~~April 29, ~~2022,~~2023, after-tax ROIC was ~~14.6~~11.4 percent, compared with ~~31.3~~25.3 percent for the trailing twelve months ended ~~October~~April 30, ~~2021.~~2022. The calculation of ROIC is provided on page 2019.

Business Environment

During the ~~third~~first quarter of 2022, we have continued to see soft trends in Discretionary categories (Apparel and Accessories, Hardlines, and Home Furnishings and Décor), which accelerated in October. We believe this is consistent with the broader industry trends. Our overall comparable2023, sales ~~increase reflects~~ growth in our Frequency categories (Beauty ~~and~~& Household Essentials and Food ~~and~~& Beverage)~~, partially~~ was offset by ~~sales~~ decreases in our Discretionary ~~categories. Our comparable~~categories (Apparel & Accessories, Hardlines, and Home Furnishings & Decor). Inventory as of April 29, 2023 decreased compared with January 28, 2023 and April 30, 2022. This decrease was driven by actions we took during 2022 and strategies we employed to align inventories with sales ~~performance also reflects~~trends, as well as improvements in the ~~impact of retail price increases. Within the quarter, comparable sales grew 2.8 percent~~supply chain that reduced in-transit inventory. These improvements have resulted in ~~August, 4.0 percent~~a reduction in ~~September,~~costs related to managing elevated inventory levels and ~~0.9 percent in October. Notably, within October,~~reduced our working capital investment. In addition, we ~~saw~~experienced a significant ~~change~~decrease in ~~the pace~~freight costs due to a decline in freight rates compared to 2022.

We continue to experience higher inventory shrink, as a percentage of sales, ~~with~~relative to historical levels — including significantly higher shrink rates at certain stores. We believe that this trend is pervasive across the retail industry. Increased shrink has had, and if current trends persist will continue to have, an ~~increase in comparable sales during~~adverse impact on our results of operations, including potential impairment of our long-lived assets.

The Gross Margin Rate analysis on page 16 and the ~~first week, followed by a decrease over the last three weeks of the month, driven by steeper declines in our Discretionary categories.~~Inventory section on page 20 provide additional information.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			13


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			~~FINANCIAL SUMMARY~~ANALYSIS OF RESULTS OF OPERATIONS			~~Index to Notes~~

Throughout the COVID-19 pandemic, the retail industry has experienced continued disruption and volatility in the global supply chain. In response, we have ordered import merchandise (which typically has longer lead times) earlier, and added incremental holding capacity near U.S. ports to add flexibility in the portions of the supply chain most affected by external volatility. During the third quarter of 2022, port congestion, shipping container availability, and other supply chain pressures have improved. This has resulted in inventory arriving earlier than anticipated, which has resulted in increased costs of managing elevated inventory levels. These factors, net of pricing actions we have taken to address the impact of higher merchandise and freight costs, have resulted in decreased profitability in the three and nine months ended October 29, 2022, compared to the prior-year periods. We believe that the actions we have taken reduce our risks and provide additional flexibility to focus on serving guests in a rapidly changing environment. The ~~Gross Margin Rate~~ ~~analysis on~~ ~~page 17~~ ~~and the~~ ~~Inventory~~ ~~section on~~ ~~page 21~~ ~~provide additional information.~~

Analysis of Results of Operations


Summary of Operating Income	Summary of Operating Income	Three Months Ended						Nine Months Ended						Summary of Operating Income	Three Months Ended
(dollars in millions)	(dollars in millions)	October 29, 2022		October 30, 2021		Change		October 29, 2022		October 30, 2021		Change		(dollars in millions)	April 29, 2023		April 30, 2022		Change
Sales	Sales	$	26,122	$	25,290	3.3	%	$	76,605	$	73,995	3.5	%	Sales	$	24,948	$	24,830	0.5	%
Other revenue	Other revenue	396		362		9.5		1,120		1,014		10.4		Other revenue	374		340		10.2
Total revenue	Total revenue	26,518		25,652		3.4		77,725		75,009		3.6		Total revenue	25,322		25,170		0.6
Cost of sales	Cost of sales	19,680		18,206		8.1		58,283		52,202		11.6		Cost of sales	18,386		18,461		(0.4)
Selling, general and administrative expenses	Selling, general and administrative expenses	5,219		4,859		7.4		14,983		14,217		5.4		Selling, general and administrative expenses	5,025		4,762		5.5
Depreciation and amortization (exclusive of depreciation included in cost of sales)	Depreciation and amortization (exclusive of depreciation included in cost of sales)	597		577		3.6		1,770		1,739		1.8		Depreciation and amortization (exclusive of depreciation included in cost of sales)	583		601		(3.0)
Operating income	Operating income	$	1,022	$	2,010	(49.2)	%	$	2,689	$	6,851	(60.8)	%	Operating income	$	1,328	$	1,346	(1.4)	%


Rate Analysis	Rate Analysis	Three Months Ended				Nine Months Ended				Rate Analysis	Three Months Ended
		October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021			April 29, 2023		April 30, 2022
Gross margin rate	Gross margin rate	24.7	%	28.0	%	23.9	%	29.5	%	Gross margin rate	26.3	%	25.7	%
SG&A expense rate	SG&A expense rate	19.7		18.9		19.3		19.0		SG&A expense rate	19.8		18.9
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)	2.3		2.2		2.3		2.3		Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)	2.3		2.4
Operating income margin rate	Operating income margin rate	3.9		7.8		3.5		9.1		Operating income margin rate	5.2		5.3

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 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 Shipt. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.


~~TARGET CORPORATION~~						~~Q3 2022 Form 10-Q~~			14


			~~MANAGEMENT'S DISCUSSION AND ANALYSIS~~			~~Table of Contents~~
			~~ANALYSIS OF RESULTS OF OPERATIONS~~

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)~~(number of transactions, or "traffic") and the amount spent each visit (average transaction amount).


Comparable Sales	Comparable Sales	Three Months Ended				Nine Months Ended				Comparable Sales	Three Months Ended
		October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021			April 29, 2023		April 30, 2022
Comparable sales change	Comparable sales change	2.7	%	12.7	%	2.9	%	14.4	%	Comparable sales change	0.0	%	3.3	%
Drivers of change in comparable sales	Drivers of change in comparable sales									Drivers of change in comparable sales
Number of transactions (traffic)	Number of transactions (traffic)	1.4		12.9		2.6		14.0		Number of transactions (traffic)	0.9		3.9
Average transaction amount	Average transaction amount	1.3		(0.2)		0.2		0.3		Average transaction amount	(0.9)		(0.6)

Comparable Sales by Channel Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Stores originated comparable sales change 3.2 % 9.7 % 2.6 % 11.9 %
Digitally originated comparable sales change 0.3 28.9 4.1 27.8


TARGET CORPORATION						Q1 2023 Form 10-Q			14


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF RESULTS OF OPERATIONS


Comparable Sales by Channel	Three Months Ended
	April 29, 2023		April 30, 2022
Stores originated comparable sales change	0.7	%	3.4	%
Digitally originated comparable sales change	(3.4)		3.2


Sales by Channel	Sales by Channel	Three Months Ended				Nine Months Ended				Sales by Channel	Three Months Ended
		October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021			April 29, 2023		April 30, 2022
Stores originated	Stores originated	82.9	%	82.4	%	82.3	%	82.3	%	Stores originated	82.5	%	81.8	%
Digitally originated	Digitally originated	17.1		17.6		17.7		17.7		Digitally originated	17.5		18.2
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%


Sales by Fulfillment Channel	Sales by Fulfillment Channel	Three Months Ended				Nine Months Ended				Sales by Fulfillment Channel	Three Months Ended
		October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021			April 29, 2023		April 30, 2022
Stores	Stores	96.8	%	96.7	%	96.7	%	96.5	%	Stores	97.2	%	96.5	%
Other	Other	3.2		3.3		3.3		3.5		Other	2.8		3.5
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

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

Sales by Product Category Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Apparel and accessories 17 % 17 % 17 % 18 %
Beauty and household essentials 29 28 28 27
Food and beverage 22 20 22 20
Hardlines 14 15 15 16
Home furnishings and décor 18 20 18 19
Total 100 % 100 % 100 % 100 %


Sales by Product Category	Three Months Ended
	April 29, 2023		April 30, 2022
Apparel & accessories	16	%	17	%
Beauty & household essentials	31		29
Food & beverage	24		22
Hardlines	14		15
Home furnishings & décor	15		17
Total	100	%	100	%

Note 32 to the Financial Statements provides additional product category sales information. 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~~						~~Q3 2022 Form 10-Q~~			15


			~~MANAGEMENT'S DISCUSSION AND ANALYSIS~~			~~Table of Contents~~
			~~ANALYSIS OF RESULTS OF OPERATIONS~~

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 Penetration Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Target Debit Card 10.8 % 11.7 % 11.2 % 11.8 %
Target Credit Cards 8.8 8.9 8.8 8.7
Total RedCard Penetration 19.6 % 20.7 % 20.0 % 20.5 %

~~Note: Amounts may not foot due to rounding.~~ For the three months ended April 29, 2023 and April 30, 2022, total RedCard Penetration was 19.0 percent and 20.3 percent, respectively.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			1615


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF RESULTS OF OPERATIONS

Gross Margin Rate

For the three months ended ~~October~~April 29, ~~2022,~~2023, our gross margin rate was ~~24.7~~26.3 percent compared with ~~28.0~~25.7 percent in the comparable prior-year period. The ~~decrease~~increase reflected the net impact of

•merchandising ~~pressure,~~benefit, including

◦~~higher clearance and promotional markdown rates, which were primarily in our Discretionary categories;~~lower freight costs;

◦~~higher merchandise and freight costs, partially offset by the benefit of~~ retail price increases; and

◦~~higher inventory shrink;~~

•~~supply chain pressure related to increased compensation and headcount in our distribution centers and costs of managing elevated inventory levels, including the impact of early receipts; and~~

•~~favorable mix in the relative growth~~lower clearance markdown rates ~~of higher and lower margin categories.~~

~~For the nine months ended October 29, 2022, our gross margin rate was 23.9 percent~~ compared with ~~29.5 percent in~~ the ~~comparable~~ prior-year, ~~period. The decrease reflected~~which included the ~~net~~ impact of

•~~merchandising pressure, including~~

◦~~higher clearance and promotional markdown rates, which were primarily the result~~ of inventory impairments and other ~~actions taken in our Discretionary categories;~~actions;

◦•~~higher merchandise~~lower digital fulfillment costs due to a decrease in digital volume and ~~freight costs, partially offset by the benefit~~a beneficial mix of ~~retail price increases;~~

◦~~higher inventory shrink;~~sales fulfilled through lower-cost same-day fulfillment options; and

•~~supply chain pressure related to increased compensation and headcount in our distribution centers and costs of managing elevated~~higher inventory ~~levels, including the impact of early receipts.~~shrink.

Business Environment on page 13 provides additional information.

Selling, General, and Administrative Expense Rate

For the three months ended April 29, 2023, our SG&A expense rate was 19.8 percent compared with 18.9 percent for the comparable prior-year period. The increase reflected the net impact of cost increases across our business, including investments in team member pay and benefits.

Store Data


Change in Number of Stores	Three Months Ended
	April 29, 2023	April 30, 2022
Beginning store count	1,948	1,926
Opened	6	7
Closed	—	—

Ending store count	1,954	1,933


Number of Stores and	Number of Stores			Retail Square Feet (a)
Retail Square Feet	April 29, 2023	January 28, 2023	April 30, 2022	April 29, 2023	January 28, 2023	April 30, 2022
170,000 or more sq. ft.	274	274	274	48,985	48,985	49,071
50,000 to 169,999 sq. ft.	1,530	1,527	1,519	191,543	191,241	190,461
49,999 or less sq. ft.	150	147	140	4,465	4,358	4,147
Total	1,954	1,948	1,933	244,993	244,584	243,679

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


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			1716


			MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents
			ANALYSIS OF RESULTS OF OPERATIONS

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

For the three months ended October 29, 2022, our SG&A expense rate was 19.7 percent compared with 18.9 percent for the comparable prior-year period. For the nine months ended October 29, 2022, our SG&A expense rate was 19.3 percent compared with 19.0 percent for the comparable prior-year period. For both the three and nine months ended October 29, 2022, the rates reflected the net impact of cost increases across our business, including investments in hourly team member wages, partially offset by lower incentive compensation expense, compared to the comparable prior-year periods.

~~Store Data~~

Change in Number of Stores Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Beginning store count 1,937 1,909 1,926 1,897
Opened 4 15 16 29
Closed — — (1) (2)
Ending store count 1,941 1,924 1,941 1,924

Number of Stores and Number of Stores
Retail Square Feet (a)
Retail Square Feet October 29, 2022 January 29, 2022 October 30, 2021 October 29, 2022 January 29, 2022 October 30, 2021
170,000 or more sq. ft. 274 274 274 48,985 49,071 49,071
50,000 to 169,999 sq. ft. 1,522 1,516 1,515 190,739 190,205 190,116
49,999 or less sq. ft. 145 136 135 4,305 4,008 3,952
Total 1,941 1,926 1,924 244,029 243,284 243,139

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

Other Performance Factors

Net Interest Expense

Net interest expense was ~~$125 million and $349~~$147 million for the three ~~and nine~~ months ended ~~October~~April 29, ~~2022, respectively, compared with $105~~2023 and $112 million ~~and $317 million in~~for the ~~comparable prior-year periods.~~three months ended April 30, 2022. The increase in net interest expense was primarily due to higher average debt ~~and commercial paper~~ levels in addition to higher floating interest rates for the three ~~and nine~~ months ended ~~October~~April 29, ~~2022,~~2023 compared with the prior-year ~~periods.~~

~~Net Other (Income) / Expense~~

Net Other (Income) / Expense was $(12) million and $(35) million for the three and nine months ended October 29, 2022, respectively, compared with $(6) million and $(356) million in the comparable prior-year periods. The nine months ended October 30, 2021, included the $335 million pretax gain on the February 2021 sale of Dermstore. ~~Note 2~~ ~~to the Financial Statements provides additional information.~~period.

Provision for Income Taxes

Our effective income tax rate for the three ~~and nine~~ months ended ~~October~~April 29, ~~2022,~~2023 was ~~21.6~~21.1 percent, ~~and 19.8 percent, respectively,~~ compared with ~~22.1 percent and 21.6~~19.2 percent in the ~~respective~~ comparable prior-year ~~periods. For the three and nine month periods, the decrease~~period. The increase reflects ~~lower pretax earnings resulting in a larger tax rate benefit from ongoing and discrete tax items in the current year, partially offset by the impacts of~~higher discrete tax benefits in the ~~prior-year. Our effective tax rate is generally more volatile at lower amounts of pretax income because the impact of discrete, deductible, and nondeductible tax items and credits is greater.~~

prior-year, primarily related to share-based compensation.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			1817


			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 Three Months Ended
October 29, 2022 October 30, 2021
(millions, except per share data) Pretax Net of Tax Per Share Pretax Net of Tax Per Share
GAAP diluted earnings per share $ 1.54 $ 3.04
Adjustments
Other (a)
$ — $ — $ — $ (9) $ (7) $ (0.01)
Adjusted diluted earnings per share $ 1.54 $ 3.03

Reconciliation of Non-GAAP Adjusted EPS Nine Months Ended
October 29, 2022 October 30, 2021
(millions, except per share data) Pretax Net of Tax Per Share Pretax Net of Tax Per Share
GAAP diluted earnings per share $ 4.09 $ 10.87
Adjustments
Gain on Dermstore sale $ — $ — $ — $ (335) $ (269) $ (0.54)
Other (a)
20 15 0.03 27 20 0.04
Adjusted diluted earnings per share $ 4.12 $ 10.37

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


Reconciliation of Non-GAAP Adjusted EPS	Three Months Ended
	April 29, 2023						April 30, 2022
(millions, except per share data)	Pretax		Net of Tax		Per Share		Pretax		Net of Tax		Per Share
GAAP diluted earnings per share					$	2.05					$	2.16
Adjustments




Other (a)	$	—	$	—	$	—	$	20	$	15	$	0.03
Adjusted diluted earnings per share					$	2.05					$	2.19

(a)Other items unrelated to current period operations, none of which were individually significant.

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


EBIT and EBITDA	EBIT and EBITDA	Three Months Ended						Nine Months Ended						EBIT and EBITDA	Three Months Ended
(dollars in millions)	(dollars in millions)	October 29, 2022		October 30, 2021		Change		October 29, 2022		October 30, 2021		Change		(dollars in millions)	April 29, 2023		April 30, 2022		Change
Net earnings	Net earnings	$	712	$	1,488	(52.1)	%	$	1,904	$	5,402	(64.7)	%	Net earnings	$	950	$	1,009	(5.8)	%
+ Provision for income taxes	+ Provision for income taxes	197		423		(53.6)		471		1,488		(68.4)		+ Provision for income taxes	254		240		6.0
+ Net interest expense	+ Net interest expense	125		105		17.5		349		317		9.8		+ Net interest expense	147		112		31.2
EBIT	EBIT	$	1,034	$	2,016	(48.7)	%	$	2,724	$	7,207	(62.2)	%	EBIT	$	1,351	$	1,361	(0.7)	%
+ Total depreciation and amortization (a)	+ Total depreciation and amortization (a)	674		652		3.5		2,004		1,952		2.7		+ Total depreciation and amortization (a)	667		679		(1.8)
EBITDA	EBITDA	$	1,708	$	2,668	(36.0)	%	$	4,728	$	9,159	(48.4)	%	EBITDA	$	2,018	$	2,040	(1.1)	%

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


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			1918


			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	October 29, 2022		October 30, 2021		Numerator	April 29, 2023		April 30, 2022
Operating income	Operating income	$	4,784	$	8,687	Operating income	$	3,830	$	7,918
+ Net other income / (expense)		61		358
+ Net other income						+ Net other income	57		55
EBIT	EBIT	4,845		9,045		EBIT	3,887		7,973
+ Operating lease interest (a)	+ Operating lease interest (a)	89		85		+ Operating lease interest (a)	96		87
- Income taxes (b)	- Income taxes (b)	1,059		1,947		- Income taxes (b)	770		1,804
Net operating profit after taxes	Net operating profit after taxes	$	3,875	$	7,183	Net operating profit after taxes	$	3,213	$	6,256


Denominator	Denominator	October 29, 2022			October 30, 2021			October 31, 2020		Denominator	April 29, 2023			April 30, 2022			May 1, 2021
Current portion of long-term debt and other borrowings	Current portion of long-term debt and other borrowings	$	2,207		$	1,176		$	131	Current portion of long-term debt and other borrowings	$	200		$	1,089		$	1,173
+ Noncurrent portion of long-term debt	+ Noncurrent portion of long-term debt	14,237			11,586			12,490		+ Noncurrent portion of long-term debt	16,010			13,379			11,509
+ Shareholders' investment	+ Shareholders' investment	11,019			13,803			13,319		+ Shareholders' investment	11,605			10,774			14,959
+ Operating lease liabilities (c)	+ Operating lease liabilities (c)	2,879			2,737			2,400		+ Operating lease liabilities (c)	2,921			2,854			2,563
- Cash and cash equivalents	- Cash and cash equivalents	954			5,753			5,996		- Cash and cash equivalents	1,321			1,112			7,816
Invested capital	Invested capital	$	29,388		$	23,549		$	22,344	Invested capital	$	29,415		$	26,984		$	22,388
Average invested capital (d)	Average invested capital (d)	$	26,469		$	22,947				Average invested capital (d)	$	28,199		$	24,686

After-tax return on invested capital	After-tax return on invested capital	14.6		%	31.3		%			After-tax return on invested capital	11.4		%	25.3		%

(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 ~~21.5~~19.3 percent and ~~21.3~~22.4 percent for the trailing twelve months ended ~~October~~April 29, ~~2022,~~2023 and ~~October~~April 30, ~~2021,~~2022, respectively. For the trailing twelve months ended ~~October~~April 29, ~~2022,~~2023 and ~~October~~April 30, ~~2021,~~2022, includes tax effect of ~~$1.0~~$0.8 billion and ~~$1.9~~$1.8 billion, respectively, related to EBIT and ~~$19~~$18 million and ~~$18~~$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						~~Q3 2022~~Q1 2023 Form 10-Q			2019


			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 ~~$954 million, $5.9~~$1.3 billion, $2.2 billion, and ~~$5.8~~$1.1 billion as of ~~October~~April 29, ~~2022,~~2023, January ~~29,~~28, 2023, and April 30, 2022, ~~and October 30, 2021,~~ respectively. Our cash and cash equivalents balance ~~includes~~included short-term investments of ~~$5.0~~$408 million, $1.3 billion, and ~~$4.8 billion~~$182 million as of April 29, 2023, January ~~29,~~28, 2023, and April 30, 2022, ~~and October 30, 2021,~~ respectively. ~~We had no short-term investments as of October 29, 2022.~~ 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 ~~$552 million~~$1.3 billion for the ~~nine~~three months ended ~~October~~April 29, ~~2022,~~2023, compared with ~~$5.6~~$(1.4) billion of cash flows ~~provided by~~required for operating activities for the ~~nine~~three months ended ~~October~~April 30, ~~2021.~~2022. For the ~~nine~~three months ended ~~October~~April 29, ~~2022,~~2023, operating cash flows ~~decreased~~increased as a result of an improvement in working capital, including lower ~~earnings, increased~~ inventory levels, ~~and lower accounts payable leverage,~~ compared with the ~~nine~~three months ended ~~October~~April 30, ~~2021.~~2022.

Inventory

Inventory was ~~$17.1~~$12.6 billion as of ~~October~~April 29, ~~2022,~~2023, compared with ~~$13.9~~$13.5 billion and ~~$15.0~~$15.1 billion at January ~~29,~~28, 2023 and April 30, 2022, ~~and October 30, 2021,~~ respectively. The ~~increase~~decrease over the balance as of ~~October~~April 30, ~~2021,~~2022 primarily reflects ~~the following:~~

•~~our decision~~actions taken to ~~move import merchandise receipt timing earlier due to expected~~align inventory levels with sales trends, as well as improvements in the supply chain ~~volatility, coupled with recent decreases in shipping times, resulting in earlier-than-expected inventory receipts,~~

•~~investments in our inventory position in our frequency categories (Food and Beverage and Beauty and Household Essentials),~~

•~~lower-than-expected sales in our discretionary categories, partially offset by actions taken during the current year to reduce excess inventory in these categories, and~~

•~~increases in unit costs across all of our categories.~~that reduced in-transit inventory.

The ~~increase was amplified by unintentionally low inventory levels last year resulting from supply chain disruptions and high sell-through rates. The~~ Business ~~Environmen~~Environmentt section on page 13 provides additional information.

Investing Cash Flows

Investing cash flows included capital investments of ~~$4.3~~$1.6 billion and ~~$2.5~~$1.0 billion for the ~~nine~~three months ended ~~October~~April 29, ~~2022,~~2023 and ~~October~~April 30, ~~2021,~~2022, respectively. The increase primarily reflects ~~an increase in~~real estate acquisitions for new store ~~remodel activity, investment in~~and supply chain sites and timing of remodel activity.

Dividends

We paid dividends totaling $497 million ($1.08 per share) for the ~~impact of inflation on these projects. For the nine~~three months ended ~~October~~April 29, 2023, and $424 million ($0.90 per share) for the three months ended April 30, ~~2021, investing cash flows included $356~~2022, a per share increase of 20.0 percent. We declared dividends totaling $507 million ($1.08 per share) during the first quarter of ~~proceeds from~~2023 and $426 million ($0.90 per share) during the ~~sale~~first quarter of ~~Dermstore.~~2022, a per share increase of 20.0 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 did not repurchase any shares during the three months ended April 29, 2023. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 7 to the Financial Statements for more information.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			2120


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

~~Dividends~~

We paid dividends totaling $497 million ($1.08 per share) and $1.3 billion ($2.88 per share) for the three and nine months ended October 29, 2022, respectively, and $440 million ($0.90 per share) and $1.1 billion ($2.26 per share) for the three and nine months ended October 30, 2021, respectively, a per share increase of 20.0 percent for the three month period and 27.4 percent for the nine month period. We declared dividends totaling $502 million ($1.08 per share) during the third quarter of 2022 and $439 million ($0.90 per share) during the third quarter of 2021, a per share increase of 20.0 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 $2.6 billion to shareholders through share repurchase during the nine months ended October 29, 2022. See~~ ~~Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds~~ ~~of this Quarterly Report on Form 10-Q and~~ ~~Note 8~~ ~~to the Financial Statements for more information.~~

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 ~~October~~April 29, ~~2022,~~2023, our credit ratings were as follows:


Credit Ratings	Moody’s	Standard and Poor’s	Fitch
Long-term debt	A2	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.

We have the ability to obtain short-term financing from time to time under our commercial paper program and credit ~~facility. In October 2022, we obtained a new~~facilities. Our committed $1.0 billion 364-day and $3.0 billion unsecured revolving credit ~~facility~~facilities that will expire in October ~~2023. We also extended our existing committed $3.0 billion unsecured revolving credit facility, which now expires in~~2023 and October ~~2027. Both credit facilities~~2027, respectively, backstop our commercial paper program. No balances were outstanding under either credit facility at any time during ~~2021~~2023 or 2022. ~~As of October 29, 2022, we~~We had ~~$2.1 billion outstanding under our commercial paper program. We did not have any balances~~$90 million and $945 million outstanding under our commercial paper program as of ~~October~~April 29, 2023 and April 30, ~~2021.~~2022, respectively. Note 65 to the Financial Statements provides additional information.

Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of ~~October~~April 29, ~~2022,~~2023, 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, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital and planned capital expenditures, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.


~~TARGET CORPORATION~~						~~Q3 2022 Form 10-Q~~			22


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

New Accounting Pronouncements

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


TARGET CORPORATION						Q1 2023 Form 10-Q			21


			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, 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 ~~29, 2022,~~28, 2023, 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 ~~29, 2022.~~28, 2023.

Item 4. Controls and Procedures

Changes in Internal Control Over Financial Reporting

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

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						~~Q3 2022~~Q1 2023 Form 10-Q			2322


			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~No response is required under Item 103~~On March 29, 2023, Target Corporation and certain of ~~Regulation S-K.~~its officers were named as defendants in a purported federal securities law class action filed in the United States District Court for the District of Minnesota. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 relating to certain prior disclosures of Target about its business model, strategy, and inventory. The plaintiff seeks to represent a class of shareholders who purchased or otherwise acquired Target common stock between August 18, 2021 and May 17, 2022. The plaintiff seeks damages and other relief, including attorneys’ fees, based on allegations that the defendants misled investors about Target’s business model, strategy, and inventory and that such conduct affected the value of Target common stock. Target intends to vigorously defend this lawsuit.

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 ~~29, 2022.~~28, 2023.

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

On August 11, 2021, our Board of Directors authorized a $15 billion share repurchase program with no stated expiration. Under the program, we have repurchased 23.8 million shares of common stock at an average price of $223.52, for a total investment of $5.3 billion. As of ~~October~~April 29, ~~2022,~~2023, the dollar value of shares that may yet be purchased under the program is $9.7 billion. There were no Target common stock purchases made during the three months ended ~~October~~April 29, ~~2022~~2023 by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			2423


			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

Item 6. Exhibits


~~(3)A~~3.1		Amended and Restated Articles of Incorporation of Target Corporation (as amended through June 9, 2010) (filed as Exhibit (3)A to Target's Current Report on Form 8-K on June 10, 2010 and incorporated herein by reference).~~(1)~~

~~(3)B~~3.2		Bylaws of Target Corporation (as amended and restated through ~~March 27, 2020)(2)~~

~~(10)BB ‡~~		~~Aircraft Time Sharing Agreement~~January 11, 2023) (filed as ~~of October 4, 2022 among Target Corporation~~Exhibit 3.2 to Target's Current Report on Form 8-K on January 12, 2023 and ~~Brian C. Cornell~~incorporated herein by reference).

~~(10)EE ‡~~10.21.4	** +	~~Amendment No. 1 to Five-Year Credit~~Letter Agreement dated ~~as of October 25, 2022 among Target Corporation, Bank of America, N.A., as Administrative Agent, and the Banks listed therein~~

~~(10)FF ‡~~		364-Day Credit Agreement dated as of October 25, 2022 among Target Corporation, the Banks listed therein, the Co-Documentation Agents and Syndication Agent listed therein, and Bank of America, N.A., as Administrative Agent

~~(10)JJ +~~		~~Third Amendment dated November 1, 2022 to Credit Card Program Agreement~~March 8, 2023 among Target Corporation, Target Enterprise, Inc. and TD Bank USA, N.A.

~~(31)A~~31.1	**	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		**
~~(31)B~~		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~(32)A~~32.1	***	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~(32)B~~32.2	***	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	**	Inline 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)

~~+ Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The~~


**			Filed herewith.
***			Furnished herewith.
+			Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of the exhibit ~~to the Securities and Exchange Commission upon its request.~~ ~~‡ Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to~~ ~~furnish a copy of such schedules and exhibits~~ to the Securities and Exchange Commission upon its request.

~~(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						~~Q3 2022~~Q1 2023 Form 10-Q			2524


			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

SIGNATURES

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: ~~November 23, 2022~~May 26, 2023	By:	/s/ Michael J. Fiddelke
			Michael J. Fiddelke
			Executive Vice President and
			Chief Financial Officer
			(Duly Authorized Officer and
			Principal Financial Officer)


		/s/ Matthew A. Liegel
			Matthew A. Liegel
			Senior Vice President, Chief Accounting Officer
			and Controller


TARGET CORPORATION						~~Q3 2022~~Q1 2023 Form 10-Q			2625


INDEX TO NOTES

Notes to Consolidated Financial Statements		8
Note 1	Accounting Policies	8
Note 2	~~Dermstore Sale~~	8
~~Note 3~~	~~Revenues~~Revenue	9
Note 43	Fair Value Measurements	10
Note 54	~~Property and Equipment~~Supplier Finance Programs	10
Note 65	Commercial Paper and Long-Term Debt	10
Note 76	Derivative Financial Instruments	11
Note 87	Share Repurchase	12
Note 98	Pension Benefits	12
Note 109	Accumulated Other Comprehensive Income (Loss)	12


RedCard Penetration	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Target Debit Card	10.8	%	11.7	%	11.2	%	11.8	%
Target Credit Cards	8.8		8.9		8.8		8.7
Total RedCard Penetration	19.6	%	20.7	%	20.0	%	20.5	%