Target Corporation Reports Second Quarter Earnings
Target (NYSE: TGT) reported strong Q2 2024 financial results, with comparable sales up 2.0% and digital sales growing 8.7%. The company saw a 3% increase in traffic across all core merchandising categories. GAAP and Adjusted EPS rose 42.8% to $2.57, driven by sales growth and improved gross margin. Operating income margin increased to 6.4%, up 160 basis points year-over-year.
Target raised its full-year EPS guidance to $9.00-$9.70, up from $8.60-$9.60. For Q3, the company expects 0-2% comparable sales growth and EPS of $2.10-$2.40. The company's focus on growth, margin expansion, and strong digital performance, particularly in same-day services, positions it well for continued success.
Target (NYSE: TGT) ha riportato risultati finanziari solidi per il secondo trimestre del 2024, con vendite comparabili in crescita del 2,0% e vendite digitali in crescita dell'8,7%. L'azienda ha registrato un aumento del 3% del traffico in tutte le categorie merceologiche principali. GAAP e EPS rettificato sono aumentati del 42,8% a $2,57, spinti dalla crescita delle vendite e dal miglioramento del margine lordo. Il margine di reddito operativo è aumentato al 6,4%, con un incremento di 160 punti base rispetto all'anno precedente.
Target ha alzato le previsioni di EPS per l'intero anno a $9,00-$9,70, rispetto a $8,60-$9,60. Per il terzo trimestre, l'azienda prevede una crescita delle vendite comparabili compresa tra lo 0 e il 2% e un EPS di $2,10-$2,40. L'attenzione dell'azienda alla crescita, all'espansione del margine e alle forti performance digitali, in particolare nei servizi di consegna lo stesso giorno, la posiziona bene per un successo continuativo.
Target (NYSE: TGT) informó de resultados financieros sólidos para el segundo trimestre de 2024, con ventas comparables en aumento del 2,0% y ventas digitales creciendo un 8,7%. La compañía vio un aumento del 3% en el tráfico en todas las categorías de merchandising principales. El EPS GAAP y ajustado aumentaron un 42,8% a $2,57, impulsados por el crecimiento de las ventas y la mejora del margen bruto. El margen de ingresos operativos aumentó al 6,4%, un incremento de 160 puntos básicos interanuales.
Target elevó su guía de EPS para todo el año a $9,00-$9,70, en comparación con $8,60-$9,60. Para el tercer trimestre, la compañía espera un crecimiento de ventas comparables del 0 al 2% y un EPS de $2,10-$2,40. El enfoque de la empresa en el crecimiento, la expansión del margen y un fuerte desempeño digital, particularmente en los servicios del mismo día, la posiciona bien para un éxito continuo.
타겟(NYSE: TGT)은 2024년 2분기 강력한 재무 결과를 보고했으며, 비교 가능한 매출이 2.0% 증가하고 디지털 매출이 8.7% 성장했습니다. 회사는 모든 주요 상품 카테고리에서 교통량이 3% 증가하는 것을 목격했습니다. GAAP 및 조정된 EPS가 42.8% 증가하여 $2.57에 도달했습니다, 이는 매출 성장과 개선된 총 마진에 의해 주도되었습니다. 운영 소득 마진은 6.4%로 증가했으며, 전년 대비 160 베이시스 포인트 상승했습니다.
타겟은 연간 EPS 가이드를 $9.00-$9.70으로 상향 조정했으며, 이는 이전의 $8.60-$9.60에서 증가한 것입니다. 3분기에 대해 회사는 0-2%의 비교 가능한 매출 성장과 $2.10-$2.40의 EPS를 예상하고 있습니다. 회사의 성장, 마진 확장 및 특히 당일 서비스에서의 강력한 디지털 성과에 대한 집중은 지속적인 성공을 위한 좋은 위치를 제공합니다.
Target (NYSE: TGT) a rapporté de solides résultats financiers pour le deuxième trimestre 2024, avec des ventes comparables en hausse de 2,0% et des ventes numériques en croissance de 8,7%. La société a constaté une augmentation de 3% du trafic dans toutes les catégories de marchandises principales. Le bénéfice par action GAAP et ajusté a augmenté de 42,8% pour atteindre 2,57 $, soutenu par la croissance des ventes et l'amélioration de la marge brute. Le taux de marge opérationnelle a augmenté à 6,4%, en hausse de 160 points de base par rapport à l'année précédente.
Target a relevé ses prévisions de bénéfice par action pour l'année à 9,00 $ - 9,70 $, contre 8,60 $ - 9,60 $. Pour le troisième trimestre, l'entreprise s'attend à une croissance des ventes comparables comprise entre 0 et 2 % et un bénéfice par action de 2,10 $ - 2,40 $. L'accent mis par l'entreprise sur la croissance, l'expansion des marges et les solides performances numériques, notamment dans les services le jour même, la positionne bien pour un succès continu.
Target (NYSE: TGT) meldete starke Finanzzahlen für das zweite Quartal 2024, mit vergleichbaren Verkäufen, die um 2,0% gestiegen sind und digitalen Verkäufen, die um 8,7% gewachsen sind. Das Unternehmen verzeichnete einen 3%-igen Anstieg des Verkehrs in allen wichtigen Handelskategorien. GAAP- und angepasste EPS stiegen um 42,8% auf $2,57, angetrieben durch Umsatzwachstum und verbesserte Bruttomarge. Die operative Gewinnmarge erhöhte sich auf 6,4%, was einem Anstieg von 160 Basispunkten im Jahresvergleich entspricht.
Target erhöhte seine EPS-Prognose für das Gesamtjahr auf $9,00-$9,70, von zuvor $8,60-$9,60. Für das dritte Quartal erwartet das Unternehmen ein vergleichbares Umsatzwachstum von 0-2% und eine EPS von $2,10-$2,40. Der Fokus des Unternehmens auf Wachstum, Margenausweitung und starke digitale Leistungen, insbesondere bei den Same-Day-Diensten, positioniert es gut für anhaltenden Erfolg.
- Comparable sales increased 2.0%, driven by 3% traffic growth
- Digital comparable sales grew 8.7%, with double-digit growth in same-day services
- GAAP and Adjusted EPS increased 42.8% to $2.57
- Operating income margin rate improved by 160 basis points to 6.4%
- Gross margin rate increased to 28.9% from 27.0% last year
- Full-year EPS guidance raised to $9.00-$9.70
- Apparel comparable sales grew more than 3%
- Comparable store sales increase of only 0.7%
- SG&A expense rate increased to 21.2% from 20.9% last year
- Full-year comparable sales growth expected in the lower half of the 0-2% range
Insights
Target's Q2 results show a strong recovery, with comparable sales up
The company's focus on digital growth is paying off, with digital sales up
Overall, these results indicate Target is successfully navigating the challenging retail environment, but investors should watch for continued execution and any shifts in consumer behavior.
Target's Q2 performance highlights several key trends in the retail sector. The
The double-digit growth in same-day services, especially Drive Up and Target Circle 360™, underscores the increasing importance of convenience in retail. This aligns with broader industry shifts towards seamless online-offline integration.
The improvement in discretionary categories, with apparel growing over
Target's Q2 results present a compelling investment case. The company's ability to drive growth while expanding margins demonstrates strong operational execution. The increase in full-year EPS guidance to
Investors should note the robust cash flow generation, evidenced by the
However, the cautious outlook on comparable sales growth warrants attention. This could suggest potential headwinds in consumer spending or increased competition. Investors should monitor Target's ability to maintain its momentum in digital sales and same-day services, as these are likely to be key drivers of future growth and market share gains in the evolving retail landscape.
- Second quarter comparable sales increased 2.0 percent, at the high end of the Company's expectations.
- Traffic grew 3 percent in the second quarter as compared to the prior year, with all six core merchandising categories delivering traffic growth.
- Digital comparable sales grew 8.7 percent. Same-day services saw double digit growth, led by low teens growth in Drive Up and Target Circle 360™ same-day delivery.
- Discretionary sales trends continued to improve meaningfully, with Apparel comparable sales growing more than 3 percent in the quarter.
- Second quarter operating income margin rate of 6.4 percent grew 160 basis points compared to the prior year, driven by a higher gross margin rate.
- GAAP and Adjusted EPS of
$2.57
For additional media materials, please visit:
https://corporate.target.com/news-features/article/2024/08/q2-2024-earnings
Target Corporation (NYSE: TGT) today announced its second quarter 2024 financial results, which reflected a return to topline growth and strong profit performance.
The Company reported second quarter GAAP and Adjusted earnings per share1 (EPS) of
1Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items, when applicable. See the tables of this release for additional information. |
"We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS by more than
Guidance
For the third quarter, the Company expects a 0 to 2 percent increase in its comparable sales, and GAAP and Adjusted EPS of
While the Company believes its full-year guidance range of a 0 to 2 percent increase in its comparable sales remains appropriate, it now believes the increase will more likely be in the lower half of that range. However, based on strong profit performance in the front half of the year, the Company now expects full-year GAAP and Adjusted EPS of
Operating Results
Comparable sales increased 2.0 percent in the second quarter, reflecting a comparable store sales increase of 0.7 percent and a comparable digital sales increase of 8.7 percent. Total revenue of
Second quarter operating income margin rate was 6.4 percent in 2024, compared with 4.8 percent in 2023. Second quarter gross margin rate was 28.9 percent, compared with 27.0 percent in 2023, reflecting the net impact of merchandising activities, including cost improvements that more than offset higher promotional markdown rates, combined with favorable category mix and lower book to physical inventory adjustments as compared to the prior year, partially offset by higher digital fulfillment and supply chain costs. Second quarter SG&A expense rate was 21.2 percent in 2024, compared with 20.9 percent in 2023, reflecting the combined impact of higher costs, including continued investments in pay and benefits, partially offset by disciplined cost management.
Interest Expense and Taxes
The Company's second quarter 2024 net interest expense was
Second quarter 2024 effective income tax rate was 22.9 percent, compared with the prior year rate of 22.2 percent, reflecting higher pretax earnings and lower discrete benefits as compared to the prior year.
Capital Deployment and Return on Invested Capital
The Company paid dividends of
The Company repurchased
For the trailing twelve months through second quarter 2024, after-tax return on invested capital (ROIC) was 16.6 percent, compared with 13.7 percent for the trailing twelve months through second quarter 2023. The increase in ROIC reflects higher operating income, partially offset by higher average invested capital. The tables in this release provide additional information about the Company's ROIC calculation.
Webcast Details
Target will webcast its second quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Corporate.Target.com/Investors (click on "Q2 2024 Target Corporation Earnings Conference Call" under "Events & Presentations"). A replay of the webcast will be provided when available. The replay number is 1-866-405-7299.
Miscellaneous
Statements in this release regarding the Company's future financial performance, including its fiscal 2024 third quarter and full-year guidance, 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 results 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 February 3, 2024. 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
TARGET CORPORATION | ||||||||||||
Consolidated Statements of Operations | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
(millions, except per share data) (unaudited) | August 3, 2024 | July 29, 2023 | Change | August 3, 2024 | July 29, 2023 | Change | ||||||
Sales | $ 25,021 | $ 24,384 | 2.6 % | $ 49,164 | $ 49,332 | (0.3) % | ||||||
Other revenue | 431 | 389 | 10.8 | 819 | 763 | 7.4 | ||||||
Total revenue | 25,452 | 24,773 | 2.7 | 49,983 | 50,095 | (0.2) | ||||||
Cost of sales | 17,799 | 17,798 | 0.0 | 35,248 | 36,184 | (2.6) | ||||||
Selling, general and administrative expenses | 5,392 | 5,184 | 4.0 | 10,560 | 10,209 | 3.4 | ||||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) | 626 | 594 | 5.3 | 1,244 | 1,177 | 5.7 | ||||||
Operating income | 1,635 | 1,197 | 36.6 | 2,931 | 2,525 | 16.1 | ||||||
Net interest expense | 110 | 141 | (22.4) | 216 | 288 | (25.1) | ||||||
Net other income | (20) | (16) | 20.3 | (49) | (39) | 24.2 | ||||||
Earnings before income taxes | 1,545 | 1,072 | 44.1 | 2,764 | 2,276 | 21.4 | ||||||
Provision for income taxes | 353 | 237 | 48.7 | 630 | 491 | 28.2 | ||||||
Net earnings | $ 1,192 | $ 835 | 42.7 % | $ 2,134 | $ 1,785 | 19.6 % | ||||||
Basic earnings per share | $ 2.58 | $ 1.81 | 42.5 % | $ 4.62 | $ 3.87 | 19.3 % | ||||||
Diluted earnings per share | $ 2.57 | $ 1.80 | 42.4 % | $ 4.60 | $ 3.86 | 19.3 % | ||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 462.5 | 461.6 | 0.2 % | 462.4 | 461.3 | 0.2 % | ||||||
Diluted | 463.5 | 462.5 | 0.2 % | 463.7 | 462.7 | 0.2 % | ||||||
Antidilutive shares | 2.3 | 2.9 | 1.8 | 2.4 | ||||||||
Dividends declared per share | $ 1.12 | $ 1.10 | 1.8 % | $ 2.22 | $ 2.18 | 1.8 % | ||||||
TARGET CORPORATION | ||||||
Consolidated Statements of Financial Position | ||||||
(millions, except footnotes) (unaudited) | August 3, 2024 | February 3, 2024 | July 29, 2023 | |||
Assets | ||||||
Cash and cash equivalents | $ 3,497 | $ 3,805 | $ 1,617 | |||
Inventory | 12,604 | 11,886 | 12,684 | |||
Other current assets | 1,817 | 1,807 | 1,797 | |||
Total current assets | 17,918 | 17,498 | 16,098 | |||
Property and equipment | ||||||
Land | 6,645 | 6,547 | 6,504 | |||
Buildings and improvements | 38,324 | 37,066 | 35,889 | |||
Fixtures and equipment | 8,690 | 8,765 | 7,936 | |||
Computer hardware and software | 3,437 | 3,428 | 3,178 | |||
Construction-in-progress | 830 | 1,703 | 2,641 | |||
Accumulated depreciation | (24,851) | (24,413) | (23,201) | |||
Property and equipment, net | 33,075 | 33,096 | 32,947 | |||
Operating lease assets | 3,545 | 3,362 | 2,840 | |||
Other noncurrent assets | 1,457 | 1,400 | 1,321 | |||
Total assets | $ 55,995 | $ 55,356 | $ 53,206 | |||
Liabilities and shareholders' investment | ||||||
Accounts payable | $ 12,595 | $ 12,098 | $ 12,278 | |||
Accrued and other current liabilities | 5,749 | 6,090 | 5,948 | |||
Current portion of long-term debt and other borrowings | 1,640 | 1,116 | 1,106 | |||
Total current liabilities | 19,984 | 19,304 | 19,332 | |||
Long-term debt and other borrowings | 13,654 | 14,922 | 14,926 | |||
Noncurrent operating lease liabilities | 3,444 | 3,279 | 2,798 | |||
Deferred income taxes | 2,495 | 2,480 | 2,334 | |||
Other noncurrent liabilities | 1,989 | 1,939 | 1,826 | |||
Total noncurrent liabilities | 21,582 | 22,620 | 21,884 | |||
Shareholders' investment | ||||||
Common stock | 38 | 38 | 38 | |||
Additional paid-in capital | 6,831 | 6,761 | 6,610 | |||
Retained earnings | 8,030 | 7,093 | 5,767 | |||
Accumulated other comprehensive loss | (470) | (460) | (425) | |||
Total shareholders' investment | 14,429 | 13,432 | 11,990 | |||
Total liabilities and shareholders' investment | $ 55,995 | $ 55,356 | $ 53,206 | |||
Common Stock Authorized 6,000,000,000 shares, |
Preferred Stock Authorized 5,000,000 shares, |
TARGET CORPORATION | ||||
Consolidated Statements of Cash Flows | ||||
Six Months Ended | ||||
(millions) (unaudited) | August 3, 2024 | July 29, 2023 | ||
Operating activities | ||||
Net earnings | $ 2,134 | $ 1,785 | ||
Adjustments to reconcile net earnings to cash provided by operating activities: | ||||
Depreciation and amortization | 1,461 | 1,350 | ||
Share-based compensation expense | 149 | 107 | ||
Deferred income taxes | 16 | 141 | ||
Noncash losses / (gains) and other, net | 22 | 11 | ||
Changes in operating accounts: | ||||
Inventory | (718) | 815 | ||
Other assets | (53) | 62 | ||
Accounts payable | 522 | (1,137) | ||
Accrued and other liabilities | (194) | 264 | ||
Cash provided by operating activities | 3,339 | 3,398 | ||
Investing activities | ||||
Expenditures for property and equipment | (1,313) | (2,825) | ||
Proceeds from disposal of property and equipment | 2 | 6 | ||
Other investments | 6 | (2) | ||
Cash required for investing activities | (1,305) | (2,821) | ||
Financing activities | ||||
Reductions of long-term debt | (1,076) | (72) | ||
Dividends paid | (1,017) | (996) | ||
Repurchase of stock | (155) | — | ||
Shares withheld for taxes on share-based compensation | (94) | (121) | ||
Cash required for financing activities | (2,342) | (1,189) | ||
Net decrease in cash and cash equivalents | (308) | (612) | ||
Cash and cash equivalents at beginning of period | 3,805 | 2,229 | ||
Cash and cash equivalents at end of period | $ 3,497 | $ 1,617 | ||
TARGET CORPORATION | ||||||||
Operating Results | ||||||||
Rate Analysis | Three Months Ended | Six Months Ended | ||||||
(unaudited) | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||
Gross margin rate | 28.9 % | 27.0 % | 28.3 % | 26.7 % | ||||
SG&A expense rate | 21.2 | 20.9 | 21.1 | 20.4 | ||||
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) | 2.5 | 2.4 | 2.5 | 2.3 | ||||
Operating income margin rate | 6.4 | 4.8 | 5.9 | 5.0 | ||||
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 | Six Months Ended | ||||||
(unaudited) | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||
Comparable sales change | 2.0 % | (5.4) % | (0.9) % | (2.8) % | ||||
Drivers of change in comparable sales | ||||||||
Number of transactions (traffic) | 3.0 | (4.8) | 0.6 | (2.0) | ||||
Average transaction amount | (0.9) | (0.7) | (1.4) | (0.8) | ||||
Comparable Sales by Channel | Three Months Ended | Six Months Ended | ||||||
(unaudited) | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||
Stores originated comparable sales change | 0.7 % | (4.3) % | (2.1) % | (1.8) % | ||||
Digitally originated comparable sales change | 8.7 | (10.5) | 5.0 | (7.0) | ||||
Sales by Channel | Three Months Ended | Six Months Ended | ||||||
(unaudited) | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||
Stores originated | 82.1 % | 83.1 % | 81.9 % | 82.8 % | ||||
Digitally originated | 17.9 | 16.9 | 18.1 | 17.2 | ||||
Total | 100 % | 100 % | 100 % | 100 % | ||||
Sales by Fulfillment Channel | Three Months Ended | Six Months Ended | ||||||
(unaudited) | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||
Stores | 97.9 % | 97.6 % | 97.8 % | 97.4 % | ||||
Other | 2.1 | 2.4 | 2.2 | 2.6 | ||||
Total | 100 % | 100 % | 100 % | 100 % | ||||
Note: Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Shipt. |
Target Circle Card Penetration | Three Months Ended | Six Months Ended | ||||||
(unaudited) | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||
Total Target Circle Card Penetration | 17.7 % | 18.6 % | 17.9 % | 18.8 % | ||||
Number of Stores and Retail Square Feet | Number of Stores | Retail Square Feet (a) | ||||||||||
(unaudited) | August 3, | February 3, | July 29, | August 3, | February 3, | July 29, | ||||||
170,000 or more sq. ft. | 273 | 273 | 274 | 48,824 | 48,824 | 48,995 | ||||||
50,000 to 169,999 sq. ft. | 1,549 | 1,542 | 1,534 | 193,705 | 192,908 | 191,947 | ||||||
49,999 or less sq. ft. | 144 | 141 | 147 | 4,334 | 4,207 | 4,404 | ||||||
Total | 1,966 | 1,956 | 1,955 | 246,863 | 245,939 | 245,346 | ||||||
(a) | In thousands; reflects total square feet less office, supply chain facilities, and vacant space. |
TARGET CORPORATION
Reconciliation of Non-GAAP Financial Measures
To provide additional transparency, we disclose non-GAAP adjusted diluted earnings per share (Adjusted EPS). When applicable, this metric excludes certain discretely managed items. However, there are no adjustments in any period presented. 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,
Reconciliation of Non-GAAP Adjusted EPS | Three Months Ended | Six Months Ended | ||||||||||
August 3, 2024 | July 29, 2023 | Change | August 3, 2024 | July 29, 2023 | Change | |||||||
GAAP and adjusted diluted earnings per share | $ 2.57 | $ 1.80 | 42.4 % | $ 4.60 | $ 3.86 | 19.3 % | ||||||
Reconciliation of Non-GAAP Adjusted EPS Guidance | Guidance | ||
(per share) (unaudited) | Q3 2024 | Full Year 2024 | |
GAAP diluted earnings per share guidance | |||
Estimated adjustments | |||
Other (a) | $ — | $ — | |
Adjusted diluted earnings per share guidance | |||
(a) | Third quarter and full-year 2024 GAAP EPS may include the impact of certain discrete items, which will be excluded in calculating Adjusted EPS. The guidance does not currently reflect any such discrete items. In the past, these items have included losses on the early retirement of debt and certain other items that are discretely managed. |
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 | Six Months Ended | ||||||||||
(dollars in millions) (unaudited) | August 3, 2024 | July 29, 2023 | Change | August 3, 2024 | July 29, 2023 | Change | ||||||
Net earnings | $ 1,192 | $ 835 | 42.7 % | $ 2,134 | $ 1,785 | 19.6 % | ||||||
+ Provision for income taxes | 353 | 237 | 48.7 | 630 | 491 | 28.2 | ||||||
+ Net interest expense | 110 | 141 | (22.4) | 216 | 288 | (25.1) | ||||||
EBIT | $ 1,655 | $ 1,213 | 36.3 % | $ 2,980 | $ 2,564 | 16.2 % | ||||||
+ Total depreciation and amortization (a) | 743 | 683 | 8.8 | 1,461 | 1,350 | 8.2 | ||||||
EBITDA | $ 2,398 | $ 1,896 | 26.4 % | $ 4,441 | $ 3,914 | 13.5 % | ||||||
(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) (unaudited) | ||||||
Trailing Twelve Months | ||||||
Numerator | August 3, 2024 (a) | July 29, 2023 | ||||
Operating income | $ 6,113 | $ 4,706 | ||||
+ Net other income | 102 | 65 | ||||
EBIT | 6,215 | 4,771 | ||||
+ Operating lease interest (b) | 146 | 102 | ||||
- Income taxes (c) | 1,427 | 986 | ||||
Net operating profit after taxes | $ 4,934 | $ 3,887 | ||||
Denominator | August 3, 2024 | July 29, 2023 | July 30, 2022 | |||
Current portion of long-term debt and other borrowings | $ 1,640 | $ 1,106 | $ 1,649 | |||
+ Noncurrent portion of long-term debt | 13,654 | 14,926 | 13,453 | |||
+ Shareholders' investment | 14,429 | 11,990 | 10,592 | |||
+ Operating lease liabilities (d) | 3,786 | 3,104 | 2,823 | |||
- Cash and cash equivalents | 3,497 | 1,617 | 1,117 | |||
Invested capital | $ 30,012 | $ 29,509 | $ 27,400 | |||
Average invested capital (e) | $ 29,760 | $ 28,454 | ||||
After-tax return on invested capital | 16.6 % | 13.7 % | ||||
(a) | The trailing twelve months ended August 3, 2024, consisted of 53 weeks compared with 52 weeks in the prior-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 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. |
(c) | Calculated using the effective tax rates, which were 22.4 percent and 20.2 percent for the trailing twelve months ended August 3, 2024, and July 29, 2023, respectively. For the twelve months ended August 3, 2024, and July 29, 2023, includes tax effect of |
(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. |
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SOURCE Target Corporation
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