Target Corporation Reports Fourth Quarter and Full-Year 2021 Earnings
Target Corporation (NYSE: TGT) reported strong Q4 2021 results with GAAP EPS of $3.21, up from $2.73 in Q4 2020, and full-year total revenue reaching $106 billion, a 13.3% increase from 2020. Comparable sales rose by 8.9% in Q4 and 12.7% for the year. Operating income margin expanded to 8.4%, while operating income reached $8.9 billion, up 36.8% year-over-year. For fiscal 2022, Target anticipates low- to mid-single digit revenue growth and high-single digit growth in Adjusted EPS, though first quarter margins are expected to decline from last year's figures.
- Q4 GAAP EPS rose to $3.21 from $2.73 in 2020.
- Total revenue for 2021 reached $106 billion, up 13.3% from 2020.
- Operating income increased 36.8% to $8.9 billion.
- Comparable sales grew 12.7% for the year, indicating solid performance.
- First quarter 2022 operating margin expected to decline from 9.8% in Q1 2021.
- Fourth quarter gross margin rate decreased to 25.7% from 26.8% in 2020, due to supply chain costs.
MINNEAPOLIS, March 1, 2022 /PRNewswire/ --
Q4 2021 Highlights
- Comparable sales grew 8.9 percent, on top of 20.5 percent in Q4 2020.
- Comparable traffic grew 8.1 percent on top of 6.5 percent in Q4 2020.
- More than 95 percent of Target's fourth quarter sales were fulfilled by its stores.
- EPS established an all-time high with GAAP EPS of
$3.21 and Adjusted EPS1 of$3.19 , despite significant investments in team, price, and inventory availability.
Full-Year 2021 Highlights
- Target delivered
$106 billion in total revenue, having grown nearly$28 billion , or more than 35 percent over the past two years. - Comparable sales grew 12.7 percent, on top of 19.3 percent in 2020.
- Comparable traffic grew 12.3 percent, on top of 3.7 percent in 2020.
- Total sales have grown more than
$27 billion since 2019, reflecting more than$14 billion of additional store sales and digital sales growth of nearly$13 billion . - All five core merchandise categories delivered double-digit comparable sales growth in 2021, on top of unprecedented growth in 2020.
- Operating income margin rate of 8.4 percent expanded nearly 150 basis points from 2020.
- GAAP EPS from continuing operations of
$14.10 was 63.1 percent higher than last year, while Adjusted EPS of$13.56 grew 44.0 percent compared with 2020. Both GAAP and Adjusted EPS have more than doubled since 2019.
For additional media materials, please visit:
https://corporate.target.com/article/2022/03/q4-fy2021
1 | Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items. See the tables of this release for additional information about the items that have been excluded from Adjusted EPS. |
Target Corporation (NYSE: TGT) today announced its fourth-quarter and full-year 2021 results. The Company reported fourth-quarter GAAP earnings per share (EPS) from continuing operations of
"Our strong fourth-quarter performance capped off a year of record growth in 2021, reinforcing the durability of our business model and our confidence in long-term profitable growth," said Brian Cornell, chairman and CEO of Target. "As we look ahead, we'll keep investing and delivering on all that has earned the loyalty and trust of our guests; that starts with our outstanding team and includes continued differentiation through affordability, assortment, ease and convenience."
Fiscal 2022 Guidance and Quarterly Commentary
For fiscal year 2022, the Company expects low- to mid-single digit revenue growth, an operating margin rate of 8 percent or higher, low-single digit growth in operating margin dollars, and high-single digit growth in Adjusted Earnings per Share.
The Company expects quarterly, year-over-year profit performance will be variable during the year, and generally improve as the year progresses. The company expects its first quarter 2022 operating margin rate will be favorable in relation to historical performance, but well below its first quarter 2021 rate of 9.8 percent.
Long-Term Financial Algorithm
Target has also updated its long-term financial algorithm, which will define the Company's expectations for annual performance in fiscal years 2023 and beyond. The algorithm specifies annual benchmarks for the following metrics:
- Mid-single digit growth in Total Revenue;
- Mid-single digit growth in Operating Income;
- High-single digit growth in Adjusted EPS;
- CAPEX of
$4 to$5 billion ; and - After-tax Return on Invested Capital in the high
-20% to30% range.
Operating Results
The Company's total comparable sales grew 8.9 percent in the fourth quarter, reflecting comparable stores sales growth of 8.9 percent and digital sales growth of 9.2 percent. Total revenue of
Fourth quarter operating income margin rate was 6.8 percent in 2021 compared with 6.5 percent in 2020. Fourth quarter gross margin rate was 25.7 percent, compared with 26.8 percent in 2020, reflecting pressure from increased supply chain costs due to increased compensation and headcount in the Company's distribution centers as well as higher freight and merchandising costs. Fourth quarter SG&A expense rate was 17.9 percent in 2021, compared with 19.2 percent in 2020, reflecting the benefit of leverage resulting from strong revenue growth.
Full-year sales increased 13.2 percent to
Full-year operating income was
Interest Expense and Taxes
The Company's fourth quarter 2021 net interest expense was
Full-year 2021 net interest expense was
Fourth quarter 2021 effective income tax rate was 23.4 percent, compared with 20.2 percent last year. The Company's full-year 2021 effective income tax rate from continuing operations was 22.0 percent compared with 21.2 percent in 2020. This increase was driven by significantly higher earnings, which diluted the benefit of fixed and discrete tax items.
Capital Deployment and Return on Invested Capital
The Company paid dividends of
The Company repurchased
For the trailing twelve months through fourth quarter 2021, after-tax return on invested capital (ROIC) was 33.1 percent, compared with 23.5 percent for the twelve months through fourth quarter 2020. This increase was driven primarily by increased profitability. The tables in this release provide additional information about the Company's ROIC calculation.
Webcast Details
Target will webcast its financial community meeting, including a Q&A session, beginning at 8:00 a.m. CST today. Investors and the media are invited to listen to the meeting at Investors.Target.com (click on "2022 Financial Community Meeting, including Fourth Quarter and Full-Year 2021 Earnings" under "upcoming events"). A replay of the webcast will be provided when available.
Miscellaneous
Statements in this release regarding the Company's future financial performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company's actions to differ materially. The most important risks and uncertainties are described in Item 1A of the Company's Form 10-K for the fiscal year ended Jan. 30, 2021. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement.
About Target
Minneapolis-based Target Corporation (NYSE: TGT) serves guests at nearly 2,000 stores and at Target.com, with the purpose of helping all families discover the joy of everyday life. Since 1946, Target has given
For more on the Target Foundation, click here.
TARGET CORPORATION | ||||||||||||
Consolidated Statements of Operations | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
(millions, except per share data) (unaudited) | January 29, | January 30, | Change | January 29, | January 30, | Change | ||||||
Sales | $ 30,616 | $ 27,997 | $ 104,611 | $ 92,400 | ||||||||
Other revenue | 380 | 342 | 11.1 | 1,394 | 1,161 | 20.2 | ||||||
Total revenue | 30,996 | 28,339 | 9.4 | 106,005 | 93,561 | 13.3 | ||||||
Cost of sales | 22,761 | 20,485 | 11.1 | 74,963 | 66,177 | 13.3 | ||||||
Selling, general and administrative expenses | 5,535 | 5,448 | 1.6 | 19,752 | 18,615 | 6.1 | ||||||
Depreciation and amortization (exclusive of | 605 | 570 | 6.0 | 2,344 | 2,230 | 5.1 | ||||||
Operating income | 2,095 | 1,836 | 14.1 | 8,946 | 6,539 | 36.8 | ||||||
Net interest expense | 104 | 106 | (2.5) | 421 | 977 | (56.9) | ||||||
Net other (income) / expense | (26) | — | NM(a) | (382) | 16 | NM(a) | ||||||
Earnings before income taxes | 2,017 | 1,730 | 16.6 | 8,907 | 5,546 | 60.6 | ||||||
Provision for income taxes | 473 | 350 | 35.1 | 1,961 | 1,178 | 66.5 | ||||||
Net earnings | $ 1,544 | $ 1,380 | $ 6,946 | $ 4,368 | ||||||||
Basic earnings per share | $ 3.24 | $ 2.76 | $ 14.23 | $ 8.72 | ||||||||
Diluted earnings per share | $ 3.21 | $ 2.73 | $ 14.10 | $ 8.64 | ||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 476.1 | 500.8 | (4.9)% | 488.1 | 500.6 | (2.5)% | ||||||
Diluted | 480.6 | 506.0 | (5.0)% | 492.7 | 505.4 | (2.5)% | ||||||
Antidilutive shares | — | — | — | — | ||||||||
Dividends declared per share | $ 0.90 | $ 0.68 | $ 3.38 | $ 2.70 | ||||||||
(a) | Not meaningful. |
TARGET CORPORATION | ||||
Consolidated Statements of Financial Position | ||||
(millions, except footnotes) (unaudited) | January 29, | January 30, | ||
Assets | ||||
Cash and cash equivalents | $ 5,911 | $ 8,511 | ||
Inventory | 13,902 | 10,653 | ||
Other current assets | 1,760 | 1,592 | ||
Total current assets | 21,573 | 20,756 | ||
Property and equipment | ||||
Land | 6,164 | 6,141 | ||
Buildings and improvements | 32,985 | 31,557 | ||
Fixtures and equipment | 6,407 | 5,914 | ||
Computer hardware and software | 2,505 | 2,765 | ||
Construction-in-progress | 1,257 | 780 | ||
Accumulated depreciation | (21,137) | (20,278) | ||
Property and equipment, net | 28,181 | 26,879 | ||
Operating lease assets | 2,556 | 2,227 | ||
Other noncurrent assets | 1,501 | 1,386 | ||
Total assets | $ 53,811 | $ 51,248 | ||
Liabilities and shareholders' investment | ||||
Accounts payable | $ 15,478 | $ 12,859 | ||
Accrued and other current liabilities | 6,098 | 6,122 | ||
Current portion of long-term debt and other borrowings | 171 | 1,144 | ||
Total current liabilities | 21,747 | 20,125 | ||
Long-term debt and other borrowings | 13,549 | 11,536 | ||
Noncurrent operating lease liabilities | 2,493 | 2,218 | ||
Deferred income taxes | 1,566 | 990 | ||
Other noncurrent liabilities | 1,629 | 1,939 | ||
Total noncurrent liabilities | 19,237 | 16,683 | ||
Shareholders' investment | ||||
Common stock | 39 | 42 | ||
Additional paid-in capital | 6,421 | 6,329 | ||
Retained earnings | 6,920 | 8,825 | ||
Accumulated other comprehensive loss | (553) | (756) | ||
Total shareholders' investment | 12,827 | 14,440 | ||
Total liabilities and shareholders' investment | $ 53,811 | $ 51,248 | ||
Common Stock Authorized 6,000,000,000 shares, |
Preferred Stock Authorized 5,000,000 shares, |
TARGET CORPORATION | ||||
Consolidated Statements of Cash Flows | ||||
Twelve Months Ended | ||||
(millions) (unaudited) | January 29, | January 30, | ||
Operating activities | ||||
Net earnings | $ 6,946 | $ 4,368 | ||
Adjustments to reconcile net earnings to cash provided by operations: | ||||
Depreciation and amortization | 2,642 | 2,485 | ||
Share-based compensation expense | 228 | 200 | ||
Deferred income taxes | 522 | (184) | ||
Gain on Dermstore sale | (335) | — | ||
Loss on debt extinguishment | — | 512 | ||
Noncash losses / (gains) and other, net | 67 | 86 | ||
Changes in operating accounts: | ||||
Inventory | (3,249) | (1,661) | ||
Other assets | (78) | (137) | ||
Accounts payable | 2,628 | 2,925 | ||
Accrued and other liabilities | (746) | 1,931 | ||
Cash provided by operating activities | 8,625 | 10,525 | ||
Investing activities | ||||
Expenditures for property and equipment | (3,544) | (2,649) | ||
Proceeds from disposal of property and equipment | 27 | 42 | ||
Proceeds from Dermstore sale | 356 | — | ||
Other investments | 7 | 16 | ||
Cash required for investing activities | (3,154) | (2,591) | ||
Financing activities | ||||
Additions to long-term debt | 1,972 | 2,480 | ||
Reductions of long-term debt | (1,147) | (2,415) | ||
Dividends paid | (1,548) | (1,343) | ||
Repurchase of stock | (7,356) | (745) | ||
Stock option exercises | 8 | 23 | ||
Cash required for financing activities | (8,071) | (2,000) | ||
Net (decrease) / increase in cash and cash equivalents | (2,600) | 5,934 | ||
Cash and cash equivalents at beginning of period | 8,511 | 2,577 | ||
Cash and cash equivalents at end of period | $ 5,911 | $ 8,511 | ||
TARGET CORPORATION | ||||||||
Operating Results | ||||||||
Rate Analysis | Three Months Ended | Twelve Months Ended | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
Gross margin rate | ||||||||
SG&A expense rate | 17.9 | 19.2 | 18.6 | 19.9 | ||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate | 2.0 | 2.0 | 2.2 | 2.4 | ||||
Operating income margin rate | 6.8 | 6.5 | 8.4 | 7.0 | ||||
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. Other revenue includes |
Comparable Sales | Three Months Ended | Twelve Months Ended | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
Comparable sales change | ||||||||
Drivers of change in comparable sales: | ||||||||
Number of transactions | 8.1 | 6.5 | 12.3 | 3.7 | ||||
Average transaction amount | 0.7 | 13.1 | 0.4 | 15.0 | ||||
Comparable Sales by Channel | Three Months Ended | Twelve Months Ended | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
Stores originated comparable sales change | ||||||||
Digitally originated comparable sales change | 9.2 | 118.2 | 20.8 | 144.7 | ||||
Note: Amounts may not foot due to rounding. |
Sales by Channel | Three Months Ended | Twelve Months Ended | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
Stores originated | ||||||||
Digitally originated | 21.8 | 22.1 | 18.9 | 17.9 | ||||
Total | ||||||||
Sales by Fulfillment Channel | Three Months Ended | Twelve Months Ended | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
Stores | ||||||||
Other | 3.7 | 4.7 | 3.6 | 4.0 | ||||
Total | ||||||||
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. |
RedCard Penetration | Three Months Ended | Twelve Months Ended | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
Target Debit Card | ||||||||
Target Credit Cards | 8.9 | 9.3 | 8.7 | 9.2 | ||||
Total RedCard Penetration | ||||||||
Note: Amounts may not foot due to rounding. |
Number of Stores and Retail Square Feet | Number of Stores | Retail Square Feet(a) | ||||||
(unaudited) | January 29, | January 30, | January 29, | January 30, | ||||
170,000 or more sq. ft. | 274 | 273 | 49,071 | 48,798 | ||||
50,000 to 169,999 sq. ft. | 1,516 | 1,509 | 190,205 | 189,508 | ||||
49,999 or less sq. ft. | 136 | 115 | 4,008 | 3,342 | ||||
Total | 1,926 | 1,897 | 243,284 | 241,648 | ||||
(a) | In thousands, reflects total square feet less office, distribution center, and vacant space. |
TARGET CORPORATION
Reconciliation of Non-GAAP Financial 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 continuing operations. This measure is not in accordance with, or an alternative to, generally accepted accounting principles in the United States (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 | |||||||||||||
January 29, 2022 | January 30, 2021 | |||||||||||||
(millions, except per share data) (unaudited) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | Change | |||||||
GAAP diluted earnings per share | $ 3.21 | $ 2.73 | ||||||||||||
Adjustments | ||||||||||||||
Gain on investment (a) | $ — | $ — | $ — | $ — | $ (3) | $ (0.01) | ||||||||
Other (b) | (18) | (13) | (0.03) | (5) | (4) | (0.01) | ||||||||
Income tax matters (c) | — | — | — | — | (21) | (0.04) | ||||||||
Adjusted diluted earnings per share | $ 3.19 | $ 2.67 | ||||||||||||
Note: Amounts may not foot due to rounding. |
Reconciliation of Non-GAAP Adjusted EPS | Twelve Months Ended | |||||||||||||
January 29, 2022 | January 30, 2021 | |||||||||||||
(millions, except per share data) (unaudited) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | Change | |||||||
GAAP diluted earnings per share | $ 14.10 | $ 8.64 | ||||||||||||
Adjustments | ||||||||||||||
Gain on Dermstore Sale | $ (335) | $ (269) | $ (0.55) | $ — | $ — | $ — | ||||||||
Loss on debt extinguishment | — | — | — | 512 | 379 | 0.75 | ||||||||
Loss on investment (a) | — | — | — | 19 | 14 | 0.03 | ||||||||
Other (b) | 9 | 7 | 0.01 | 28 | 20 | 0.04 | ||||||||
Income tax matters (c) | — | — | — | — | (21) | (0.04) | ||||||||
Adjusted diluted earnings per share | $ 13.56 | $ 9.42 | ||||||||||||
Note: Amounts may not foot due to rounding. | |
(a) | Represents a (gain) / loss on our investment in Casper Sleep Inc., which was not core to our continuing operations. We sold this investment during the fourth quarter of 2020. |
(b) | Other items unrelated to current period operations, none of which were individually significant. |
(c) | Represents benefits from the resolution of certain income tax matters unrelated to current period operations. |
Earnings from continuing operations before interest expense and income taxes (EBIT) and earnings from continuing operations 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 from continuing operations. 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 | Twelve Months Ended | ||||||||||
(dollars in millions) (unaudited) | January 29, | January 30, | Change | January 29, | January 30, | Change | ||||||
Net earnings from continuing operations | $ 1,544 | $ 1,380 | $ 6,946 | $ 4,368 | ||||||||
+ Provision for income taxes | 473 | 350 | 35.1 | 1,961 | 1,178 | 66.5 | ||||||
+ Net interest expense | 104 | 106 | (2.5) | 421 | 977 | (56.9) | ||||||
EBIT | $ 2,121 | $ 1,836 | $ 9,328 | $ 6,523 | ||||||||
+ Total depreciation and amortization (a) | 690 | 637 | 8.5 | 2,642 | 2,485 | 6.3 | ||||||
EBITDA | $ 2,811 | $ 2,473 | $ 11,970 | $ 9,008 | ||||||||
(a) | Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales. |
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 | January 29, | January 30, | ||||
Operating income | $ 8,946 | $ 6,539 | ||||
+ Net other income / (expense) | 382 | (16) | ||||
EBIT | 9,328 | 6,523 | ||||
+ Operating lease interest (a) | 87 | 87 | ||||
- Income taxes (b) | 2,073 | 1,404 | ||||
Net operating profit after taxes | $ 7,342 | $ 5,206 | ||||
Denominator | January 29, | January 30, | February 1, | |||
Current portion of long-term debt and other borrowings | $ 171 | $ 1,144 | $ 161 | |||
+ Noncurrent portion of long-term debt | 13,549 | 11,536 | 11,338 | |||
+ Shareholders' investment | 12,827 | 14,440 | 11,833 | |||
+ Operating lease liabilities (c) | 2,747 | 2,429 | 2,475 | |||
- Cash and cash equivalents | 5,911 | 8,511 | 2,577 | |||
Invested capital | $ 23,383 | $ 21,038 | $ 23,230 | |||
Average invested capital (d) | $ 22,210 | $ 22,134 | ||||
After-tax return on invested capital |
(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 for continuing operations, which were 22.0 percent and 21.2 percent for the trailing twelve months ended January 29, 2022, and January 30, 2021, respectively. For the twelve months ended January 29, 2022, and January 30, 2021, includes tax effect of |
(c) | Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities. |
(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. |
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SOURCE Target Corporation
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