| Revenues | Revenues General merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably credit card profit sharing income from our arrangement with TD Bank Group (TD). Revenues Three Months Ended Six Months Ended (millions) August 1, August 3, August 1, August 3, Apparel and accessories (a) $ 4,084 $ 3,656 $ 6,703 $ 6,946 Beauty and household essentials (b) 6,158 5,076 12,069 10,047 Food and beverage (c) 4,186 3,460 8,761 7,182 Hardlines (d) 3,608 2,503 6,582 4,889 Home furnishings and décor (e) 4,625 3,457 7,889 6,458 Other 35 31 63 62 Sales 22,696 18,183 42,067 35,584 Credit card profit sharing 158 168 324 328 Other 121 71 199 137 Other revenue 279 239 523 465 Total revenue $ 22,975 $ 18,422 $ 42,590 $ 36,049 (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 August 1, 2020, February 1, 2020, and August 3, 2019, the accrual for estimated returns was $201 million, $117 million, and $131 million, respectively. Other than as described below, we have not historically had notable adjustments to our returns estimates. From March 26, 2020 to April 26, 2020, we did not accept in-store merchandise returns and exchanges to protect our team members from COVID-19. We lengthened the return period for merchandise affected by this change. Our returns estimate for sales during the suspension period included significant assumptions, including the impact of the lengthened return period, sales mix, and recent changes in guest returns behavior. At May 2, 2020, the returns reserve totaled $398 million. After resuming guest returns, we received fewer returns than originally expected. During the second quarter, we reduced our estimate of sales returns, which increased sales by $146 million and operating income by $110 million. Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance. Gift Card Liability Activity February 1, Gift Cards Issued During Current Period But Not Redeemed (b) Revenue Recognized From Beginning Liability August 1, (millions) Gift card liability (a) $ 935 $ 315 $ (475) $ 775 (a) Included in Accrued and Other Current Liabilities. (b) Net of estimated breakage. Credit card profit sharing – We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for 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. |
