SEC Form 10-Q filed by Target Corporation
$TGT
Department/Specialty Retail Stores
Consumer Discretionary
| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended November 1, 2025
OR
For the transition period from ____ to ____
Commission File Number 1-6049
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(Address of principal executive offices)
(I.R.S. Employer Identification No.)
(Zip Code)
(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 | ||||||||||||
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.
| ☒ | 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 19, 2025, were 452,806,418 .
TARGET CORPORATION
TABLE OF CONTENTS
| FINANCIAL STATEMENTS | ||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| Consolidated Statements of Operations | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (millions, except per share data) (unaudited) | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Selling, general, and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization (exclusive of depreciation included in cost of sales) | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Net interest expense | |||||||||||||||||||||||
| Net other income | ( | ( | ( | ( | |||||||||||||||||||
| Earnings before income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Antidilutive shares | |||||||||||||||||||||||
| TARGET CORPORATION |  | Q3 2025 Form 10-Q | 1 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Comprehensive Income | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (millions) (unaudited) | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) / income, net of tax | |||||||||||||||||||||||
| Cash flow hedges and currency translation adjustment | ( | ( | ( | ( | |||||||||||||||||||
| Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 2 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Financial Position | |||||||||||||||||
| (millions, except footnotes) (unaudited) | November 1, 2025 | February 1, 2025 | November 2, 2024 | ||||||||||||||
| Assets | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Inventory | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Total current assets | |||||||||||||||||
| Property and equipment, net | |||||||||||||||||
| Operating lease assets | |||||||||||||||||
| Other noncurrent assets | |||||||||||||||||
| Total assets | $ | $ | $ | ||||||||||||||
| Liabilities and shareholders’ investment | |||||||||||||||||
| Accounts payable | $ | $ | $ | ||||||||||||||
| Accrued and other current liabilities | |||||||||||||||||
| Current portion of long-term debt and other borrowings | |||||||||||||||||
| Total current liabilities | |||||||||||||||||
| Long-term debt and other borrowings | |||||||||||||||||
| Noncurrent operating lease liabilities | |||||||||||||||||
| Deferred income taxes | |||||||||||||||||
| Other noncurrent liabilities | |||||||||||||||||
| Total noncurrent liabilities | |||||||||||||||||
| Shareholders’ investment | |||||||||||||||||
| Common stock | |||||||||||||||||
| Additional paid-in capital | |||||||||||||||||
| Retained earnings | |||||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||
| Total shareholders’ investment | |||||||||||||||||
| Total liabilities and shareholders’ investment | $ | $ | $ | ||||||||||||||
Common Stock Authorized 6,000,000,000 0.0833 452,796,520 455,566,995 459,244,995
Preferred Stock Authorized 5,000,000 0.01 no
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 3 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| Nine Months Ended | |||||||||||
| (millions) (unaudited) | November 1, 2025 | November 2, 2024 | |||||||||
| Operating activities | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation expense | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Noncash (gains) / losses and other, net | ( | ||||||||||
| Changes in operating accounts: | |||||||||||
| Inventory | ( | ( | |||||||||
| Other assets | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Accrued and other liabilities | ( | ||||||||||
Cash provided by operating activities | |||||||||||
| Investing activities | |||||||||||
| Expenditures for property and equipment | ( | ( | |||||||||
| Other | |||||||||||
| Cash required for investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Additions to long-term debt | |||||||||||
| Reductions of long-term debt | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Repurchase of stock | ( | ( | |||||||||
| Shares withheld for taxes on share-based compensation | ( | ( | |||||||||
| Cash required for financing activities | ( | ( | |||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental information | |||||||||||
| Leased assets obtained in exchange for new finance lease liabilities | $ | $ | |||||||||
| Leased assets obtained in exchange for new operating lease liabilities | |||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 4 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Shareholders’ Investment | |||||||||||||||||||||||||||||||||||
| Common | Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
| Stock | Par | Paid-in | Retained | Comprehensive | |||||||||||||||||||||||||||||||
| (millions) (unaudited) | Shares | Value | Capital | Earnings | Loss | Total | |||||||||||||||||||||||||||||
| February 3, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | ( | — | — | ( | |||||||||||||||||||||||||||||||
| May 4, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | ( | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| August 3, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| November 2, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| February 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 5 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Shareholders’ Investment | |||||||||||||||||||||||||||||||||||
| Common | Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
| Stock | Par | Paid-in | Retained | Comprehensive | |||||||||||||||||||||||||||||||
| (millions) (unaudited) | Shares | Value | Capital | Earnings | Loss | Total | |||||||||||||||||||||||||||||
| February 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| May 3, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| August 2, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| November 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 6 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| INDEX | ||||||||
| INDEX TO NOTES | |||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 7 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
Notes to Consolidated Financial Statements (unaudited)
1. Accounting Policies
We use the same accounting policies in preparing quarterly and annual financial statements.
Certain prior-year amounts have been reclassified to conform to the current-year presentation.
We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Nearly all of our revenues are generated in the U.S. The vast majority of our long-lived assets are located within the U.S.
Due to the seasonal nature of our business, quarterly revenues, expenses, earnings, and cash flows are not necessarily indicative of the results that may be expected for the full year.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 8 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
2. Net Sales
Merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably advertising revenue and credit card profit-sharing income.
| Net Sales | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| (millions) | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||
Apparel & accessories (a) | $ | $ | $ | $ | |||||||||||||||||||
Beauty (b) | |||||||||||||||||||||||
Food & beverage (c) | |||||||||||||||||||||||
Hardlines (d) | |||||||||||||||||||||||
Home furnishings & décor (e) | |||||||||||||||||||||||
Household essentials (f) | |||||||||||||||||||||||
| Other merchandise sales | |||||||||||||||||||||||
| Merchandise sales | |||||||||||||||||||||||
| Advertising revenue | |||||||||||||||||||||||
| Credit card profit sharing | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
(a)Includes apparel for women, men, young adults, kids, toddlers, and babies, as well as jewelry, accessories, and shoes.
(b)Includes skin and bath care, cosmetics, hair care, oral care, deodorant, and shaving products.
(c)Includes dry and perishable grocery, including snacks, candy, beverages, deli, bakery, meat, produce, and food service (primarily Starbucks) in our stores.
(d)Includes electronics, including video games and consoles, toys, sporting goods, entertainment, and luggage.
(e)Includes bed and bath, home décor, school/office supplies, storage, small appliances, kitchenware, greeting cards, party supplies, furniture, lighting, home improvement, and seasonal merchandise.
(f)Includes household cleaning, paper products, over-the-counter healthcare, vitamins and supplements, baby gear, and pet supplies.
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, 2025 | Gift Cards Issued During Current Period But Not Redeemed (b) | Revenue Recognized From Beginning Liability | November 1, 2025 | |||||||||||||||||||
| (millions) | |||||||||||||||||||||||
Gift card liability (a) | $ | $ | $ | ( | $ | ||||||||||||||||||
(a)Included in Accrued and Other Current Liabilities.
(b)Net of estimated breakage.
Advertising revenue — Primarily represents revenue related to certain advertising services provided via our Roundel digital advertising business offering. Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 9 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
Credit card profit sharing — We receive payments under a credit card program agreement with TD Bank Group (TD). Under the agreement, we receive a percentage of the profits generated by the Target Circle credit card receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Circle credit card receivables, controls risk management policies, and oversees regulatory compliance.
Other — Includes commissions earned on third-party sales through our Target Plus third-party digital marketplace, Target Circle 360 membership revenue, Shipt membership and service revenues, rental income, and other miscellaneous revenues.
3. Interchange Fee Settlements
In March 2025, we entered into settlement agreements to resolve credit card interchange fee litigation matters in which we were a plaintiff. As a result of these lump-sum settlements, during the first quarter of 2025, we recorded gains within SG&A Expenses of $593 million, net of legal fees.
4. Business Transformation Costs
In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. Costs incurred in connection with our business transformation initiative include the following:
•Severance and Related Costs — In October 2025, we reduced our headquarters workforce. As a result, we recognized $115
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 10 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
5. 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 | ||||||||||||||||||||||
| (millions) | Classification | Measurement Level | November 1, 2025 | February 1, 2025 | November 2, 2024 | ||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Short-term investments | Cash and Cash Equivalents | Level 1 | $ | $ | $ | ||||||||||||||||||
| Prepaid forward contracts | Other Current Assets | Level 1 | |||||||||||||||||||||
| Interest rate swaps | Other Noncurrent Assets | Level 2 | |||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swaps | Other Current Liabilities | Level 2 | |||||||||||||||||||||
| Interest rate swaps | Other Noncurrent Liabilities | Level 2 | |||||||||||||||||||||
Significant Financial Instruments Not Measured at Fair Value (a) (millions) | November 1, 2025 | February 1, 2025 | November 2, 2024 | |||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||
Long-term debt, including current portion (b) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
(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 long-term debt is estimated using Level 2 inputs based on quoted prices for the instruments. Where quoted prices are not available, fair value is estimated using discounted cash flows and market-based expectations for interest rates. These amounts exclude commercial paper, fair value hedge adjustments, and lease liabilities.
6. Property and Equipment
We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable. We recognized impairment charges of $35 million and $69 million for the three and nine months ended November 1, 2025, and $1 million and $37 million for the three and nine months ended November 2, 2024. These impairment charges are included in SG&A Expenses.
7. Supplier Finance Programs
We 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 elect to receive early payment of our payment obligations from the financial institutions at a discounted amount. A vendor’s election to receive early payment 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.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 11 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
8. Commercial Paper and Long-Term Debt
Our unsecured long-term debt issuances during the nine months ended November 1, 2025 were as follows:
Debt Issuances (dollars in millions) | ||||||||||||||||||||
| Issuance Date | Maturity Date | Principal Amount | Interest Rate (Fixed) | |||||||||||||||||
| March 2025 | April 2035 | $ | % | |||||||||||||||||
| June 2025 | June 2028 | |||||||||||||||||||
| June 2025 | February 2036 | |||||||||||||||||||
Our unsecured long-term debt repayments during the nine months ended November 1, 2025 were as follows:
Debt Repayments (dollars in millions) | ||||||||||||||||||||
| Repayment Date | Maturity Date | Principal Amount | Interest Rate (Fixed) | |||||||||||||||||
| April 2025 | April 2025 | $ | % | |||||||||||||||||
We obtain short-term financing from time to time under our commercial paper program. There was no
In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day facility. No
9. Derivative Financial Instruments
Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk. As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis. Note 5 to the Consolidated Financial Statements provides the fair value and classification of these instruments.
We were party to interest rate swaps with notional amounts totaling $2.20
Effect of Hedges on Debt (millions) | November 1, 2025 | February 1, 2025 | November 2, 2024 | |||||||||||||||||
| Long-term debt and other borrowings | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
| Cumulative hedging adjustments, included in carrying amount | ( | ( | ( | |||||||||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 12 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
| Effect of Hedges on Net Interest Expense | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| (millions) | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||
| Gain (loss) on fair value hedges recognized in Net Interest Expense | |||||||||||||||||||||||
| Interest rate swaps designated as fair value hedges | $ | $ | ( | $ | $ | ||||||||||||||||||
| Hedged debt | ( | ( | ( | ||||||||||||||||||||
| Gain on cash flow hedges recognized in Net Interest Expense | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
10. Share Repurchase
We periodically repurchase shares of our common stock under a board-authorized repurchase program through a combination of open market transactions, accelerated share repurchase arrangements, and other privately negotiated transactions with financial institutions.
| Share Repurchase Activity | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| (millions, except per share data) | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||
| Number of shares purchased | |||||||||||||||||||||||
Average price paid per share (a) | $ | $ | $ | $ | |||||||||||||||||||
Total investment (a) | $ | $ | $ | $ | |||||||||||||||||||
(a) Amounts include applicable excise tax and commissions.
11. Pension Benefits
We provide pension plan benefits to eligible team members.
| Net Pension Benefits (Income) / Expense | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| (millions) | Classification | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||||
| Service cost benefits earned | SG&A Expenses | $ | $ | $ | $ | |||||||||||||||||||||
| Interest cost on projected benefit obligation | Net Other Income | |||||||||||||||||||||||||
| Expected return on assets | Net Other Income | ( | ( | ( | ( | |||||||||||||||||||||
| Amortization of losses | Net Other Income | |||||||||||||||||||||||||
| Prior service cost | Net Other Income | |||||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
12. Accumulated Other Comprehensive Loss
| Change in Accumulated Other Comprehensive Loss | Cash Flow Hedges | Currency Translation Adjustment | Pension | Total | |||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| February 1, 2025 | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ||||||||||||||||||||||
| Amounts reclassified | ( | ( | |||||||||||||||||||||
| November 1, 2025 | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Note: Amounts are net of tax.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 13 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
13. Segment Reporting
Our Chief Operating Decision Maker—our Chief Executive Officer—monitors our consolidated operating income and net earnings to evaluate performance and make operating decisions. We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Virtually all of our consolidated revenues are generated in the United States. The vast majority of our properties and equipment are located within the United States.
| Business Segment Results | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| (millions) | November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Merchandising cost of sales | |||||||||||||||||||||||
| Supply chain and digital fulfillment costs | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
Selling, general and administrative expenses (a) | |||||||||||||||||||||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) | |||||||||||||||||||||||
Operating income (a) | |||||||||||||||||||||||
| Net interest expense | |||||||||||||||||||||||
| Net other income | ( | ( | ( | ( | |||||||||||||||||||
| Earnings before income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
(a)For the three and nine months ended November 1, 2025, includes $161 593 million of pretax net gains related to settlements of credit card interchange fee litigation matters. Note 3 provides additional information.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 14 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| FINANCIAL SUMMARY | ||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Summary
Third quarter 2025 included the following notable items:
•GAAP diluted earnings per share were $1.51 and Adjusted EPS1 were $1.78.
•Net Sales were $25.3 billion, a decrease of 1.5 percent from the comparable prior-year period.
•Comparable sales decreased 2.7 percent, reflecting a 2.2 percent decrease in traffic and a 0.5 percent decrease in average transaction amount.
◦Comparable stores-originated sales declined 3.8 percent.
◦Comparable digitally-originated sales increased 2.4 percent.
•Operating income of $0.9 billion was 18.9 percent lower than the comparable prior-year period.
| Earnings Per Share | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | Change | November 1, 2025 | November 2, 2024 | Change | ||||||||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 1.51 | $ | 1.85 | (18.2) | % | $ | 5.84 | $ | 6.45 | (9.6) | % | |||||||||||||||||||||||
| Adjustments | 0.26 | — | (0.71) | — | |||||||||||||||||||||||||||||||
| Adjusted diluted earnings per share | $ | 1.78 | $ | 1.85 | (3.9) | % | $ | 5.13 | $ | 6.45 | (20.5) | % | |||||||||||||||||||||||
Note: Amounts may not foot due to rounding.
1Adjusted 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 22.
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 November 1, 2025, after-tax ROIC was 13.4 percent, compared with 15.9 percent for the trailing twelve months ended November 2, 2024. The calculation of ROIC is provided on page 23.
Business Environment
In April 2025, the U.S. imposed a range of tariffs on the vast majority of products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs. The U.S. has indicated that it is actively negotiating or expects to negotiate country-specific agreements that it expects will result in changes to imposed tariff rates. Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or through our vendors, with China as the single largest source of merchandise we import.
We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed. The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods.
Business Transformation Initiatives
In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. The three months ended November 1, 2025, included costs and charges related to our business transformation initiatives, including a reduction in our headquarters workforce. Note 4 to the Financial Statements provides additional information.
We may incur additional business transformation costs and charges in future periods, which may adversely affect our results of operations and financial condition; however, we cannot reasonably estimate the amount of such costs and charges at this time.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 15 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Analysis of Results of Operations
| Summary of Operating Income | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| (dollars in millions) | November 1, 2025 | November 2, 2024 | Change | November 1, 2025 | November 2, 2024 | Change | |||||||||||||||||||||||||||||
| Net sales | $ | 25,270 | $ | 25,668 | (1.5) | % | $ | 74,327 | $ | 75,651 | (1.7) | % | |||||||||||||||||||||||
Cost of sales (a) | 18,137 | 18,402 | (1.4) | 53,168 | 53,700 | (1.0) | |||||||||||||||||||||||||||||
SG&A expenses (a)(b) | 5,536 | 5,459 | 1.4 | 15,486 | 15,969 | (3.0) | |||||||||||||||||||||||||||||
| Depreciation and amortization (exclusive of depreciation included in cost of sales) | 649 | 639 | 1.7 | 1,936 | 1,883 | 2.8 | |||||||||||||||||||||||||||||
Operating income (b) | $ | 948 | $ | 1,168 | (18.9) | % | $ | 3,737 | $ | 4,099 | (8.8) | % | |||||||||||||||||||||||
| Rate Analysis | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
Gross margin rate (a) | 28.2 | % | 28.3 | % | 28.5 | % | 29.0 | % | |||||||||||||||
SG&A expense rate (a)(b) | 21.9 | 21.3 | 20.8 | 21.1 | |||||||||||||||||||
| Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) | 2.6 | 2.5 | 2.6 | 2.5 | |||||||||||||||||||
Operating income margin rate (b) | 3.8 | 4.6 | 5.0 | 5.4 | |||||||||||||||||||
(a)Reflects the impact of a reclassification of prior year amounts, which were not material, to conform with current year presentation.
(b)SG&A Expenses and Operating Income for the three and nine months ended November 1, 2025, include certain business transformation costs described in Note 4 to the Financial Statements. For the nine months ended November 1, 2025, SG&A Expenses and Operating Income also include gains related to interchange fee settlements described in Note 3. These discretely managed items resulted in a net impact to the SG&A Expense Rate of 0.6 and (0.6) percentage points for the three and nine months ended November 1, 2025, respectively, with an inverse impact on the Operating Income Margin Rate in the respective periods. The Reconciliation of Non-GAAP Adjusted EPS tables provide additional information.
Note: Gross margin (GM) is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales. We updated the prior period gross margin rate to conform to the current year calculation, which resulted in an approximate 1 percentage point increase in our gross margin rate for the 2024 periods presented.
Net Sales
Net sales includes all Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card profit-sharing income.
Merchandise Sales are net of expected returns, and our estimate of gift card breakage. Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed. We use comparable sales to evaluate the performance of our stores and digital channels by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. 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 Merchandise 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 Same Day Delivery. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 16 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Merchandise 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 a significant portion 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 (number of transactions, or "traffic") and the amount spent each visit (average transaction amount).
| Comparable Sales | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
| Comparable sales change | (2.7) | % | 0.3 | % | (2.8) | % | (0.5) | % | |||||||||||||||
| Drivers of change in comparable sales | |||||||||||||||||||||||
| Number of transactions (traffic) | (2.2) | 2.4 | (1.9) | 1.1 | |||||||||||||||||||
| Average transaction amount | (0.5) | (2.0) | (0.9) | (1.6) | |||||||||||||||||||
| Comparable Sales by Channel | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
| Stores originated comparable sales change | (3.8) | % | (1.9) | % | (4.2) | % | (2.0) | % | |||||||||||||||
| Digitally originated comparable sales change | 2.4 | 10.8 | 3.8 | 6.9 | |||||||||||||||||||
| Merchandise Sales by Channel | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
| Stores originated | 80.7 | % | 81.5 | % | 80.7 | % | 81.8 | % | |||||||||||||||
| Digitally originated | 19.3 | 18.5 | 19.3 | 18.2 | |||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Merchandise Sales by Fulfillment Channel | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
| Stores | 97.7 | % | 97.7 | % | 97.7 | % | 97.8 | % | |||||||||||||||
| Other | 2.3 | 2.3 | 2.3 | 2.2 | |||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Note: Merchandise 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 Same Day Delivery.
| Merchandise Sales by Product Category | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
| Apparel & accessories | 16 | % | 16 | % | 16 | % | 16 | % | |||||||||||||||
| Beauty | 13 | 13 | 13 | 13 | |||||||||||||||||||
| Food & beverage | 24 | 23 | 24 | 23 | |||||||||||||||||||
| Hardlines | 13 | 12 | 14 | 13 | |||||||||||||||||||
| Home furnishings & décor | 16 | 17 | 15 | 16 | |||||||||||||||||||
| Household essentials | 18 | 19 | 18 | 19 | |||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 17 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Note 2 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.
We monitor the percentage of purchases that are paid for using Target Circle™ Cards (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on our Target Circle Cards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target. For the three months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively. For the nine months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 17.0 percent and 17.8 percent, respectively.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 18 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Gross Margin Rate
Quarter-to-Date
For the three months ended November 1, 2025, our gross margin rate was 28.2 percent compared with 28.3 percent in the comparable prior-year period. The decrease reflected the net impact of
•merchandising, primarily due to higher markdown rates partially offset by growth in advertising and other revenues;
•lower inventory shrink; and
•lower supply chain and digital fulfillment costs, reflecting the comparison over costs in 2024 related to timing of receipts and elevated inventory, combined with the benefit of productivity improvements at supply chain facilities and in digital fulfillment, partially offset by the deleveraging impact of lower sales.
Year-to-Date
For the nine months ended November 1, 2025, our gross margin rate was 28.5 percent compared with 29.0 percent in the comparable prior-year period. The decrease reflected the net impact of
•merchandising activities, including higher markdown rates and purchase order cancellation costs, partially offset by growth in advertising and other revenues;
•higher supply chain and digital fulfillment costs, partially due to the combined impact of investments in new supply chain facilities and the deleveraging impact of lower sales; and
•lower inventory shrink.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 19 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Selling, General, and Administrative Expense Rate
For the three months ended November 1, 2025, our SG&A expense rate was 21.9 percent compared with 21.3 percent for the comparable prior-year period. The increase reflected business transformation costs of approximately 0.6 percentage points. The deleveraging impact of lower Net Sales was offset by a reduction in other costs, including lower incentive compensation expense.
For the nine months ended November 1, 2025, our SG&A expense rate was 20.8 percent compared with 21.1 percent for the comparable prior-year period. The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 0.8 percentage points. This rate benefit was partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs, including 0.2 percentage points related to business transformation costs.
Interchange fee settlements and business transformation costs are further described in Notes 3 and 4, respectively, to the Financial Statements.
Store Data
| Change in Number of Stores | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | ||||||||||||||||||||
| Beginning store count | 1,982 | 1,966 | 1,978 | 1,956 | |||||||||||||||||||
| Opened | 14 | 13 | 18 | 23 | |||||||||||||||||||
| Closed | (1) | (1) | (1) | (1) | |||||||||||||||||||
| Ending store count | 1,995 | 1,978 | 1,995 | 1,978 | |||||||||||||||||||
| Number of Stores and | Number of Stores | Retail Square Feet (a) | |||||||||||||||||||||
| Retail Square Feet | November 1, 2025 | February 1, 2025 | November 2, 2024 | November 1, 2025 | February 1, 2025 | November 2, 2024 | |||||||||||||||||
| 170,000 or more sq. ft. | 273 | 273 | 273 | 48,824 | 48,824 | 48,824 | |||||||||||||||||
| 50,000 to 169,999 sq. ft. | 1,576 | 1,559 | 1,559 | 197,274 | 195,050 | 195,050 | |||||||||||||||||
| 49,999 or less sq. ft. | 146 | 146 | 146 | 4,420 | 4,404 | 4,404 | |||||||||||||||||
| Total | 1,995 | 1,978 | 1,978 | 250,518 | 248,278 | 248,278 | |||||||||||||||||
(a)In thousands; reflects total square feet less office, supply chain facility, and vacant space.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 20 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
OTHER PERFORMANCE FACTORS | ||||||||
Other Performance Factors
Net Interest Expense
Net interest expense was $115 million and $346 million for the three and nine months ended November 1, 2025, respectively, compared with $105 million and $321 million in the comparable prior-year periods. The increase was primarily due to higher average debt levels.
Provision for Income Taxes
Our effective income tax rates for the three and nine months ended November 1, 2025, were 19.8 percent and 23.1 percent, respectively, compared with 21.7 percent and 22.5 percent in the comparable prior-year periods. For the three month period, the decrease primarily reflects benefits from tax credits in the current year. For the nine month period, the increase reflects discrete tax expense in the current year related to share-based compensation and global minimum taxes, partially offset by benefits from tax credits.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 21 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
Reconciliation of Non-GAAP Financial Measures to GAAP Measures
To provide additional transparency, we disclose 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, generally accepted accounting principles in the 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 | |||||||||||||||||||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | |||||||||||||||||||||||||||||||||||||
| (millions, except per share data) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | ||||||||||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 1.51 | $ | 1.85 | ||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||
Business transformation costs (a) | $ | 161 | $ | 120 | $ | 0.26 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||
| Adjusted EPS | $ | 1.78 | $ | 1.85 | ||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Adjusted EPS | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| November 1, 2025 | November 2, 2024 | |||||||||||||||||||||||||||||||||||||
| (millions, except per share data) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | ||||||||||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 5.84 | $ | 6.45 | ||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||
Business transformation costs (a) | $ | 161 | $ | 120 | $ | 0.26 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||
Interchange fee settlements (b) | (593) | (441) | (0.97) | — | — | — | ||||||||||||||||||||||||||||||||
| Adjusted EPS | $ | 5.13 | $ | 6.45 | ||||||||||||||||||||||||||||||||||
Note: Amounts may not foot due to rounding.
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 | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| (dollars in millions) | November 1, 2025 | November 2, 2024 | Change | November 1, 2025 | November 2, 2024 | Change | ||||||||||||||||||||||||||||||||
| Net earnings | $ | 689 | $ | 854 | (19.3) | % | $ | 2,660 | $ | 2,988 | (11.0) | % | ||||||||||||||||||||||||||
| + Provision for income taxes | 170 | 237 | (28.4) | 799 | 867 | (7.9) | ||||||||||||||||||||||||||||||||
| + Net interest expense | 115 | 105 | 8.5 | 346 | 321 | 7.8 | ||||||||||||||||||||||||||||||||
| EBIT | $ | 974 | $ | 1,196 | (18.7) | % | $ | 3,805 | $ | 4,176 | (8.9) | % | ||||||||||||||||||||||||||
+ Total depreciation and amortization (a) | 773 | 754 | 2.6 | 2,331 | 2,215 | 5.2 | ||||||||||||||||||||||||||||||||
| EBITDA | $ | 1,747 | $ | 1,950 | (10.5) | % | $ | 6,136 | $ | 6,391 | (4.0) | % | ||||||||||||||||||||||||||
(a)Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 22 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
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 | ||||||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||
| Trailing Twelve Months | ||||||||||||||||||||||||||
| Numerator | November 1, 2025 | November 2, 2024 (a) | ||||||||||||||||||||||||
| Operating income | $ | 5,204 | $ | 5,964 | ||||||||||||||||||||||
| + Net other income | 97 | 105 | ||||||||||||||||||||||||
| EBIT | 5,301 | 6,069 | ||||||||||||||||||||||||
+ Operating lease interest (b) | 167 | 157 | ||||||||||||||||||||||||
- Income taxes (c) | 1,238 | 1,403 | ||||||||||||||||||||||||
| Net operating profit after taxes | $ | 4,230 | $ | 4,823 | ||||||||||||||||||||||
| Denominator | November 1, 2025 | November 2, 2024 | October 28, 2023 | |||||||||||||||||
| Current portion of long-term debt and other borrowings | $ | 1,133 | $ | 1,635 | $ | 1,112 | ||||||||||||||
| + Noncurrent portion of long-term debt | 15,366 | 14,346 | 14,883 | |||||||||||||||||
| + Shareholders' investment | 15,501 | 14,489 | 12,514 | |||||||||||||||||
+ Operating lease liabilities (d) | 3,924 | 3,765 | 3,351 | |||||||||||||||||
| - Cash and cash equivalents | 3,822 | 3,433 | 1,910 | |||||||||||||||||
| Invested capital | $ | 32,102 | $ | 30,802 | $ | 29,950 | ||||||||||||||
Average invested capital (e) | $ | 31,451 | $ | 30,376 | ||||||||||||||||
After-tax return on invested capital (f) | 13.4 | % | 15.9 | % | ||||||||||||||||
(a)The trailing twelve months ended November 2, 2024, consisted of 53 weeks compared with 52 weeks in the current-year period.
(b)Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases was owned or accounted for under finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.
(c)Calculated using the effective tax rates, which were 22.6 percent and 22.5 percent for the trailing twelve months ended November 1, 2025, and November 2, 2024, respectively. For the trailing twelve months ended November 1, 2025, and November 2, 2024, includes tax effect of $1.2 billion and $1.4 billion, respectively, related to EBIT and $38 million and $35 million, respectively, related to operating lease interest.
(d)Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.
(e)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.
(f)For the trailing twelve months ended November 1, 2025, includes the impact of after-tax net gains on interchange fee settlements and business transformation costs, which had a net impact on after-tax ROIC of 1.0 percentage point. Notes 3 and 4 to the Financial Statements provide additional information.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 23 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF FINANCIAL CONDITION | ||||||||
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 $3.8 billion, $4.8 billion, and $3.4 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. Our cash and cash equivalents balance includes short-term investments of $2.9 billion, $3.9 billion, and $2.5 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly-rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.
Operating Cash Flows
Cash flows provided by operating activities were $3.5 billion and $4.1 billion for the nine months ended November 1, 2025, and November 2, 2024, respectively. The decrease reflects lower net earnings, as well as the net impact of lower accounts payable leverage and inventory purchases in the current year.
Inventory
Inventory was $14.9 billion as of November 1, 2025, compared with $12.7 billion and $15.2 billion as of February 1, 2025, and November 2, 2024, respectively. The increase from February 1, 2025, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period. The decrease compared to November 2, 2024, reflects alignment of inventory with sales trends, partially offset by higher merchandise costs.
Investing Cash Flows
Cash required for investing activities increased to $2.8 billion for the nine months ended November 1, 2025, compared to $1.9 billion for the nine months ended November 2, 2024, due to higher capital expenditures.
Dividends
We paid dividends totaling $518 million ($1.14 per share) and $1.5 billion ($3.38 per share) for the three and nine months ended November 1, 2025, respectively, and $516 million ($1.12 per share) and $1.5 billion ($3.32 per share) for the three and nine months ended November 2, 2024, respectively, a per share increase of 1.8 percent. We declared dividends totaling $526 million ($1.14 per share) during the third quarter of 2025 and $521 million ($1.12 per share) during the third quarter of 2024, a per share increase of 1.8 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 deployed $403 million to repurchase shares during the nine months ended November 1, 2025. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 10 to the Financial Statements for more information.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 24 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF FINANCIAL CONDITION | ||||||||
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 November 1, 2025, our credit ratings were as follows:
| Credit Ratings | Moody’s | S&P | 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 issued $1.0 billion of unsecured debt in both March and June 2025, and repaid $1.5 billion of unsecured debt in April 2025. Note 8 to the Financial Statements provides additional information.
We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day credit facility. This credit facility and our $3.0 billion unsecured revolving credit facility that will expire in October 2028 provide a liquidity backstop to our commercial paper program. No balances were outstanding under either credit facility at any time during 2025 or 2024. There was no commercial paper outstanding as of either November 1, 2025, or November 2, 2024. Note 8 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 November 1, 2025, 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.
New Accounting Pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 25 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS & SUPPLEMENTAL INFORMATION | ||||||||
| FORWARD-LOOKING STATEMENTS & CONTROLS AND PROCEDURES | ||||||||
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 "anticipate," "believe," "could," “expect,” “may,” “might,” “seek,” "will," “would,” or similar words. The principal forward-looking statements in this report include statements regarding: our future financial and operational performance, changes in the consumer landscape, evolution in tariffs and global trade policy, the impacts of business transformation efforts, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the 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 February 1, 2025, 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 February 1, 2025.
Item 4. Controls and Procedures
Changes in Internal Control Over Financial Reporting
There were no changes during the most recent fiscal quarter that 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 2025 Form 10-Q | 26 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On November 14, 2025, the United States District Court for the Middle District of Florida transferred the purported federal securities law class actions naming Target Corporation and current and former members of its Board of Directors to the United States District Court for the District of Minnesota. These proceedings, which were consolidated on July 24, 2025, relate to certain prior disclosures about risks related to Target’s environmental, social, and governance initiatives (including with respect to diversity, equity, and inclusion) and oversight of those risks. These proceedings were previously described in Target’s Annual Report on Form 10-K for the year ended February 1, 2025.
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 February 1, 2025.
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 34.8 million shares of common stock for a total investment of $6.7 billion. The table below presents information with respect to Target common stock purchases made during the three months ended November 1, 2025, by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.
| Share Repurchase Activity | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Programs | |||||||||||||||||||
| Period | |||||||||||||||||||||||
| August 3, 2025 through August 30, 2025 | |||||||||||||||||||||||
| Open market and privately negotiated purchases | 96,300 | $ | 97.99 | 96,300 | $ | 8,405,041,035 | |||||||||||||||||
| August 31, 2025 through October 4, 2025 | |||||||||||||||||||||||
| Open market and privately negotiated purchases | 1,558,284 | 91.20 | 1,558,284 | 8,262,928,791 | |||||||||||||||||||
| October 5, 2025 through November 1, 2025 | |||||||||||||||||||||||
| Open market and privately negotiated purchases | — | — | — | 8,262,928,791 | |||||||||||||||||||
| Total | 1,654,584 | $ | 91.59 | 1,654,584 | $ | 8,262,928,791 | |||||||||||||||||
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 27 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
Item 6. Exhibits
| 3.1 | ||||||||
| 3.2 | ||||||||
| 10.20 | ** | |||||||
| 31.1 | ** | |||||||
| 31.2 | ** | |||||||
| 32.1 | *** | |||||||
| 32.2 | *** | |||||||
| 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) | ||||||
| ** | Filed herewith. | ||||
| *** | Furnished herewith. | ||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 28 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
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 26, 2025 | By: | /s/ Jim Lee | |||||||||
| Jim Lee | |||||||||||
| 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 | |||||||||||
| (Principal Accounting Officer) | |||||||||||
| TARGET CORPORATION | | Q3 2025 Form 10-Q | 29 | ||||||||