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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 3, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-6049
TARGET CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation or organization)
1000 Nicollet Mall, Minneapolis, Minnesota
(Address of principal executive offices)
41-0215170
(I.R.S. Employer Identification No.)
55403
(Zip Code)
612-304-6073
(Registrant’s telephone number, including area code)

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

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common stock, par value $0.0833 per share |  | TGT |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  |  | Accelerated filer | ☐ |
Non-accelerated filer | ☐ |  |  |  |  | Smaller reporting company | ☐ |
|  | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Total shares of common stock, par value $0.0833, outstanding at May 23, 2025, were 454,365,901.

|  | Table of Contents
|  | Index to Notes

TARGET CORPORATION
TABLE OF CONTENTS

PART I | FINANCIAL INFORMATION |
Item 1. | Financial Statements (unaudited) |
| Consolidated Statements of Operations | 1
| Consolidated Statements of Comprehensive Income | 2
| Consolidated Statements of Financial Position | 3
| Consolidated Statements of Cash Flows | 4
| Consolidated Statements of Shareholders’ Investment | 5
| Notes to Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23
Item 4. | Controls and Procedures | 23
PART II | OTHER INFORMATION |
Item 1. | Legal Proceedings | 24
Item 1A. | Risk Factors | 24
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 24
Item 3. | Defaults Upon Senior Securities | 24
Item 4. | Mine Safety Disclosures | 24
Item 5. | Other Information | 24
Item 6. | Exhibits | 25
Signatures |  | 26

| FINANCIAL STATEMENTS | Table of Contents
|  | Index to Notes

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

Consolidated Statements of Operations |  |  |  |  |  |  |
| Three Months Ended |  |
(millions, except per share data) (unaudited) | May 3, 2025 |  | May 4, 2024 |  |  |  |
Net sales | $ | 23,846 |  |  | $ | 24,531 |  |  |  |  |
Cost of sales | 17,128 |  |  | 17,471 |  |  |  |  |
Selling, general, and administrative expenses | 4,591 |  |  | 5,146 |  |  |  |  |
Depreciation and amortization (exclusive of depreciation included in cost of sales) | 655 |  |  | 618 |  |  |  |  |
Operating income | 1,472 |  |  | 1,296 |  |  |  |  |
Net interest expense | 116 |  |  | 106 |  |  |  |  |
Net other income | (26) |  |  | (29) |  |  |  |  |
Earnings before income taxes | 1,382 |  |  | 1,219 |  |  |  |  |
Provision for income taxes | 346 |  |  | 277 |  |  |  |  |
Net earnings | $ | 1,036 |  |  | $ | 942 |  |  |  |  |
Basic earnings per share | $ | 2.28 |  |  | $ | 2.04 |  |  |  |  |
Diluted earnings per share | $ | 2.27 |  |  | $ | 2.03 |  |  |  |  |
Weighted average common shares outstanding |  |  |  |  |  |  |
Basic | 455.0 |  |  | 462.2 |  |  |  |  |
Diluted | 456.5 |  |  | 463.9 |  |  |  |  |
Antidilutive shares | 2.4 |  |  | 1.6 |  |  |  |  |

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 1

| FINANCIAL STATEMENTS | Table of Contents
|  | Index to Notes

Consolidated Statements of Comprehensive Income
| Three Months Ended |  |
(millions) (unaudited) | May 3, 2025 |  | May 4, 2024 |  |  |  |
Net earnings | $ | 1,036 |  |  | $ | 942 |  |  |  |  |
Other comprehensive (loss) / income, net of tax |  |  |  |  |  |  |
Cash flow hedges and currency translation adjustment | (4) |  |  | (5) |  |  |  |  |
Other comprehensive loss | (4) |  |  | (5) |  |  |  |  |
Comprehensive income | $ | 1,032 |  |  | $ | 937 |  |  |  |  |

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 2

| FINANCIAL STATEMENTS | Table of Contents
|  | Index to Notes

Consolidated Statements of Financial Position |  |  |  |  |
(millions, except footnotes) (unaudited) | May 3, 2025 |  | February 1, 2025 |  | May 4, 2024
Assets |  |  |  |  |
Cash and cash equivalents | $ | 2,887 |  |  | $ | 4,762 |  |  | $ | 3,604 |
Inventory | 13,048 |  |  | 12,740 |  |  | 11,730 |
Other current assets | 1,824 |  |  | 1,952 |  |  | 1,744 |
Total current assets | 17,759 |  |  | 19,454 |  |  | 17,078 |
Property and equipment, net | 33,182 |  |  | 33,022 |  |  | 33,114 |
Operating lease assets | 3,739 |  |  | 3,763 |  |  | 3,486 |
Other noncurrent assets | 1,505 |  |  | 1,530 |  |  | 1,439 |
Total assets | $ | 56,185 |  |  | $ | 57,769 |  |  | $ | 55,117 |
Liabilities and shareholders’ investment |  |  |  |  |
Accounts payable | $ | 11,823 |  |  | $ | 13,053 |  |  | $ | 11,561 |
Accrued and other current liabilities | 6,029 |  |  | 6,110 |  |  | 5,684 |
Current portion of long-term debt and other borrowings | 1,139 |  |  | 1,636 |  |  | 2,614 |
Total current liabilities | 18,991 |  |  | 20,799 |  |  | 19,859 |
Long-term debt and other borrowings | 14,334 |  |  | 14,304 |  |  | 13,487 |
Noncurrent operating lease liabilities | 3,564 |  |  | 3,582 |  |  | 3,392 |
Deferred income taxes | 2,338 |  |  | 2,303 |  |  | 2,543 |
Other noncurrent liabilities | 2,011 |  |  | 2,115 |  |  | 1,996 |
Total noncurrent liabilities | 22,247 |  |  | 22,304 |  |  | 21,418 |
Shareholders’ investment |  |  |  |  |
Common stock | 38 |  |  | 38 |  |  | 39 |
Additional paid-in capital | 7,011 |  |  | 6,996 |  |  | 6,747 |
Retained earnings | 8,360 |  |  | 8,090 |  |  | 7,519 |
Accumulated other comprehensive loss | (462) |  |  | (458) |  |  | (465) |
Total shareholders’ investment | 14,947 |  |  | 14,666 |  |  | 13,840 |
Total liabilities and shareholders’ investment | $ | 56,185 |  |  | $ | 57,769 |  |  | $ | 55,117 |

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 454,364,799, 455,566,995, and 462,635,539 shares issued and outstanding as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively.
Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.
See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 3

| FINANCIAL STATEMENTS | Table of Contents
|  | Index to Notes

Consolidated Statements of Cash Flows |  |  |  |
| Three Months Ended |
(millions) (unaudited) | May 3, 2025 |  | May 4, 2024 |
Operating activities |  |  |  |
Net earnings | $ | 1,036 |  |  | $ | 942 |  |
Adjustments to reconcile net earnings to cash provided by operating activities: |  |  |  |
Depreciation and amortization | 787 |  |  | 718 |  |
Share-based compensation expense | 69 |  |  | 72 |  |
Deferred income taxes | 36 |  |  | 64 |  |
Noncash (gains) / losses and other, net | (4) |  |  | (31) |  |
Changes in operating accounts: |  |  |  |
Inventory | (308) |  |  | 156 |  |
Other assets | 146 |  |  | 43 |  |
Accounts payable | (1,344) |  |  | (524) |  |
Accrued and other liabilities | (143) |  |  | (339) |  |
Cash provided by operating activities | 275 |  |  | 1,101 |  |
Investing activities |  |  |  |
Expenditures for property and equipment | (790) |  |  | (674) |  |
Other | 3 |  |  | 3 |  |
Cash required for investing activities | (787) |  |  | (671) |  |
Financing activities |  |  |  |
Additions to long-term debt | 991 |  |  | — |  |
Reductions of long-term debt | (1,534) |  |  | (32) |  |
Dividends paid | (510) |  |  | (508) |  |
Repurchase of stock | (250) |  |  | — |  |
Shares withheld for taxes on share-based compensation | (60) |  |  | (91) |  |
Cash required for financing activities | (1,363) |  |  | (631) |  |
Net decrease in cash and cash equivalents | (1,875) |  |  | (201) |  |
Cash and cash equivalents at beginning of period | 4,762 |  |  | 3,805 |  |
Cash and cash equivalents at end of period | $ | 2,887 |  |  | $ | 3,604 |  |
Supplemental information |  |  |  |
Leased assets obtained in exchange for new finance lease liabilities | $ | 17 |  |  | $ | 122 |  |
Leased assets obtained in exchange for new operating lease liabilities | 70 |  |  | 214 |  |

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 4

| FINANCIAL STATEMENTS | Table of Contents
|  | Index to Notes

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 | 461.7 |  |  | $ | 38 |  |  | $ | 6,761 |  |  | $ | 7,093 |  |  | $ | (460) |  |  | $ | 13,432 |
Net earnings | — |  |  | — |  |  | — |  |  | 942 |  |  | — |  |  | 942 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (5) |  |  | (5) |
Dividends declared | — |  |  | — |  |  | — |  |  | (516) |  |  | — |  |  | (516) |
Share-based compensation | 0.9 |  |  | 1 |  |  | (14) |  |  | — |  |  | — |  |  | (13) |
May 4, 2024 | 462.6 |  |  | $ | 39 |  |  | $ | 6,747 |  |  | $ | 7,519 |  |  | $ | (465) |  |  | $ | 13,840 |
Net earnings | — |  |  | — |  |  | — |  |  | 1,192 |  |  | — |  |  | 1,192 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (5) |  |  | (5) |
Dividends declared | — |  |  | — |  |  | — |  |  | (527) |  |  | — |  |  | (527) |
Repurchase of stock | (1.1) |  |  | (1) |  |  | — |  |  | (154) |  |  | — |  |  | (155) |
Share-based compensation | 0.1 |  |  | — |  |  | 84 |  |  | — |  |  | — |  |  | 84 |
August 3, 2024 | 461.6 |  |  | $ | 38 |  |  | $ | 6,831 |  |  | $ | 8,030 |  |  | $ | (470) |  |  | $ | 14,429 |
Net earnings | — |  |  | — |  |  | — |  |  | 854 |  |  | — |  |  | 854 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (4) |  |  | (4) |
Dividends declared | — |  |  | — |  |  | — |  |  | (521) |  |  | — |  |  | (521) |
Repurchase of stock | (2.4) |  |  | — |  |  | — |  |  | (354) |  |  | — |  |  | (354) |
Share-based compensation | — |  |  | — |  |  | 85 |  |  | — |  |  | — |  |  | 85 |
November 2, 2024 | 459.2 |  |  | $ | 38 |  |  | $ | 6,916 |  |  | $ | 8,009 |  |  | $ | (474) |  |  | $ | 14,489 |
Net earnings | — |  |  | — |  |  | — |  |  | 1,103 |  |  | — |  |  | 1,103 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 16 |  |  | 16 |
Dividends declared | — |  |  | — |  |  | — |  |  | (516) |  |  | — |  |  | (516) |
Repurchase of stock | (3.7) |  |  | — |  |  | — |  |  | (506) |  |  | — |  |  | (506) |
Share-based compensation | 0.1 |  |  | — |  |  | 80 |  |  | — |  |  | — |  |  | 80 |
February 1, 2025 | 455.6 |  |  | $ | 38 |  |  | $ | 6,996 |  |  | $ | 8,090 |  |  | $ | (458) |  |  | $ | 14,666 |

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 5

| FINANCIAL STATEMENTS | Table of Contents
|  | Index to Notes

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 | 455.6 |  |  | $ | 38 |  |  | $ | 6,996 |  |  | $ | 8,090 |  |  | $ | (458) |  |  | $ | 14,666 |
Net earnings | — |  |  | — |  |  | — |  |  | 1,036 |  |  | — |  |  | 1,036 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (4) |  |  | (4) |
Dividends declared | — |  |  | — |  |  | — |  |  | (515) |  |  | — |  |  | (515) |
Repurchase of stock | (2.2) |  |  | — |  |  | — |  |  | (251) |  |  | — |  |  | (251) |
Share-based compensation | 1.0 |  |  | — |  |  | 15 |  |  | — |  |  | — |  |  | 15 |
May 3, 2025 | 454.4 |  |  | $ | 38 |  |  | $ | 7,011 |  |  | $ | 8,360 |  |  | $ | (462) |  |  | $ | 14,947 |

We declared $1.12 and $1.10 dividends per share for the three months ended May 3, 2025, and May 4, 2024, respectively, and $4.46 per share for the fiscal year ended February 1, 2025.
See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 6

| FINANCIAL STATEMENTS | Table of Contents
| INDEX | Index to Notes

INDEX TO NOTES
Notes to Consolidated Financial Statements | 8
Note 1 |  | Accounting Policies | 8
Note 2 |  | Net Sales | 9
Note 3 |  | Interchange Fee Settlements | 10
Note 4 |  | Fair Value Measurements | 10
Note 5 |  | Supplier Finance Programs | 11
Note 6 |  | Commercial Paper and Long-Term Debt | 11
Note 7 |  | Derivative Financial Instruments | 11
Note 8 |  | Share Repurchase | 12
Note 9 |  | Pension Benefits | 12
Note 10 |  | Accumulated Other Comprehensive Loss | 12
Note 11 |  | Segment Reporting | 13

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 7

| FINANCIAL STATEMENTS | Table of Contents
| NOTES | Index to Notes

Notes to Consolidated Financial Statements (unaudited)
1. Accounting Policies
These unaudited condensed consolidated financial statements are prepared in accordance with the rules and regulations of the Securities and Exchange Commission applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States (U.S.) generally accepted accounting principles (GAAP) for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in our most recent Form 10-K.
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 |  | Q1 2025 Form 10-Q | 8

| FINANCIAL STATEMENTS | Table of Contents
| NOTES | Index to 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 |  |
(millions) | May 3, 2025 |  | May 4, 2024 |  |  |  |
Apparel & accessories (a) | $ | 3,711 |  |  | $ | 3,897 |  |  |  |  |
Beauty (b) | 3,101 |  |  | 3,119 |  |  |  |  |
Food & beverage (c) | 5,902 |  |  | 5,853 |  |  |  |  |
Hardlines (d) | 3,074 |  |  | 3,160 |  |  |  |  |
Home furnishings & décor (e) | 3,220 |  |  | 3,519 |  |  |  |  |
Household essentials (f) | 4,357 |  |  | 4,549 |  |  |  |  |
Other merchandise sales | 40 |  |  | 46 |  |  |  |  |
Merchandise sales | 23,405 |  |  | 24,143 |  |  |  |  |
Advertising revenue | 163 |  |  | 130 |  |  |  |  |
Credit card profit sharing | 141 |  |  | 142 |  |  |  |  |
Other | 137 |  |  | 116 |  |  |  |  |
Net sales | $ | 23,846 |  |  | $ | 24,531 |  |  |  |  |

(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.
Merchandise sales — We record almost all retail store revenues at the point of sale. Digitally originated sales may include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. Sales are recognized net of expected returns, which we estimate using historical return patterns and our expectation of future returns. As of May 3, 2025, February 1, 2025, and May 4, 2024, the accrual for estimated returns was $186 million, $172 million, and $198 million, respectively.
Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance.

Gift Card Liability Activity | February 1, 2025 |  | Gift Cards Issued During Current Period But Not Redeemed (b) |  | Revenue Recognized From Beginning Liability |  | May 3, 2025
(millions) |  |  |
Gift card liability (a) | $ | 1,209 |  |  | $ | 251 |  |  | $ | (429) |  |  | $ | 1,031 |

(a)Included in Accrued and Other Current Liabilities.
(b)Net of estimated breakage.
Advertising revenue — Primarily represents revenue related to 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 |  | Q1 2025 Form 10-Q | 9

| FINANCIAL STATEMENTS | Table of Contents
| NOTES | Index to 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, Shipt membership and service revenues, rental income, Target Circle 360 membership revenue, 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, we recorded gains within SG&A Expenses of $593 million, net of legal fees.
4. 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 | May 3, 2025 |  | February 1, 2025 |  | May 4, 2024
Assets |  |  |  |  |  |  |
Short-term investments | Cash and Cash Equivalents | Level 1 | $ | 1,975 |  |  | $ | 3,893 |  |  | $ | 2,726 |
Prepaid forward contracts | Other Current Assets | Level 1 | 17 |  |  | 23 |  |  | 27 |
Liabilities |  |  |  |  |  |  |
Interest rate swaps | Other Current Liabilities | Level 2 | 3 |  |  | — |  |  | 3 |
Interest rate swaps | Other Noncurrent Liabilities | Level 2 | 65 |  |  | 125 |  |  | 154 |

Significant Financial Instruments Not Measured at Fair Value (a) (millions) | May 3, 2025 |  | February 1, 2025 |  | May 4, 2024
Carrying Amount | Fair Value |  | Carrying Amount | Fair Value |  | Carrying Amount | Fair Value
Long-term debt, including current portion (b) | $ | 13,398 |  | $ | 12,377 |  |  | $ | 13,904 |  | $ | 12,953 |  |  | $ | 14,155 |  | $ | 13,123 |

(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.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 10

| FINANCIAL STATEMENTS | Table of Contents
| NOTES | Index to Notes

5. 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 sell their receivables from Target to the financial institutions. A vendor’s election to receive early payment at a discounted amount from the financial institutions does not change the amount that we must remit to the financial institutions or our payment date, which is up to 120 days from the invoice date.
We do not pay any fees or pledge any security to these financial institutions under these arrangements. The arrangements can be terminated by either party with notice ranging up to 120 days.
Our outstanding vendor obligations eligible for early payment under these arrangements totaled $3.3 billion, $3.7 billion, and $3.3 billion as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively, and are included within Accounts Payable on our Consolidated Statements of Financial Position. Our outstanding vendor obligations do not represent actual receivables sold by our vendors to the financial institutions, which have historically been lower.
6. Commercial Paper and Long-Term Debt
In March 2025, we issued $1.0 billion of unsecured debt with a fixed rate of 5.0 percent that matures in April 2035.
In April 2025, we repaid at maturity $1.5 billion of unsecured debt with a fixed rate of 2.25 percent.
We obtain short-term financing from time to time under our commercial paper program. There was no commercial paper outstanding at any time during the three months ended May 3, 2025 or May 4, 2024.
7. 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 4 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 billion as of May 3, 2025, and February 1, 2025, and $2.45 billion as of May 4, 2024. We pay a floating rate and receive a fixed rate under each of these agreements. All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three months ended May 3, 2025, and May 4, 2024.

Effect of Hedges on Debt (millions) |  | May 3, 2025 |  | February 1, 2025 |  | May 4, 2024
Long-term debt and other borrowings |  |  |  |  |  |
Carrying amount of hedged debt |  | $ | 2,126 |  |  | $ | 2,069 |  |  | $ | 2,285 |
Cumulative hedging adjustments, included in carrying amount |  | (68) |  |  | (125) |  |  | (157) |

Effect of Hedges on Net Interest Expense | Three Months Ended |  |
(millions) | May 3, 2025 |  | May 4, 2024 |  |  |  |
Gain (loss) on fair value hedges recognized in Net Interest Expense |  |  |  |  |  |  |
Interest rate swaps designated as fair value hedges | $ | 57 |  |  | $ | (31) |  |  |  |  |
Hedged debt | (57) |  |  | 31 |  |  |  |  |
Gain on cash flow hedges recognized in Net Interest Expense | 6 |  |  | 6 |  |  |  |  |
Total | $ | 6 |  |  | $ | 6 |  |  |  |  |

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 11

| FINANCIAL STATEMENTS | Table of Contents
| NOTES | Index to Notes

8. 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 |  |
(millions, except per share data) | May 3, 2025 |  | May 4, 2024 |  |  |  |
Number of shares purchased | 2.2 |  |  | — |  |  |  |  |
Average price paid per share (a) | $ | 114.60 |  |  | $ | — |  |  |  |  |
Total investment (a) | $ | 251 |  |  | $ | — |  |  |  |  |

(a) Amounts include applicable excise tax and commissions.
9. Pension Benefits
We provide pension plan benefits to eligible team members.

Net Pension Benefits (Income) / Expense |  | Three Months Ended |  |
(millions) | Classification | May 3, 2025 |  | May 4, 2024 |  |  |  |
Service cost benefits earned | SG&A Expenses | $ | 17 |  |  | $ | 20 |  |  |  |  |
Interest cost on projected benefit obligation | Net Other Income | 42 |  |  | 41 |  |  |  |  |
Expected return on assets | Net Other Income | (67) |  |  | (70) |  |  |  |  |
Total |  | $ | (8) |  |  | $ | (9) |  |  |  |  |

10. Accumulated Other Comprehensive Loss

Change in Accumulated Other Comprehensive Loss | Cash Flow Hedges |  | Currency Translation Adjustment |  | Pension |  | Total
(millions) |  |  |
February 1, 2025 | $ | 266 |  |  | $ | (27) |  |  | $ | (697) |  |  | $ | (458) |
Other comprehensive (loss) income before reclassifications | (1) |  |  | 1 |  |  | — |  |  | — |
Amounts reclassified | (4) |  |  | — |  |  | — |  |  | (4) |
May 3, 2025 | $ | 261 |  |  | $ | (26) |  |  | $ | (697) |  |  | $ | (462) |

Note: Amounts are net of tax.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 12

| FINANCIAL STATEMENTS | Table of Contents
| NOTES | Index to Notes

11. 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 |  |
(millions) | May 3, 2025 |  | May 4, 2024 |  |  |  |
Net sales | $ | 23,846 |  |  | $ | 24,531 |  |  |  |  |
Cost of sales |  |  |  |  |  |  |
Merchandising cost of sales | 15,355 |  |  | 15,846 |  |  |  |  |
Supply chain and digital fulfillment costs | 1,773 |  |  | 1,625 |  |  |  |  |
Total cost of sales | 17,128 |  |  | 17,471 |  |  |  |  |
Selling, general and administrative expenses (a) | 4,591 |  |  | 5,146 |  |  |  |  |
Depreciation and amortization (exclusive of depreciation included in cost of sales) | 655 |  |  | 618 |  |  |  |  |
Operating income | 1,472 |  |  | 1,296 |  |  |  |  |
Net interest expense | 116 |  |  | 106 |  |  |  |  |
Net other income | (26) |  |  | (29) |  |  |  |  |
Earnings before income taxes | 1,382 |  |  | 1,219 |  |  |  |  |
Provision for income taxes | 346 |  |  | 277 |  |  |  |  |
Net earnings | $ | 1,036 |  |  | $ | 942 |  |  |  |  |

(a)For the three months ended May 3, 2025, includes $593 million of pretax net gains related to settlements of credit card interchange fee litigation matters. N ote 3 provides additional information.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 13

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| FINANCIAL SUMMARY | Index to Notes

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Summary
First quarter 2025 included the following notable items:
•GAAP diluted earnings per share were $2.27 and Adjusted EPS 1 were $1.30.
•Net Sales were $23.8 billion, a decrease of 2.8 percent from the comparable prior-year period.
•Comparable sales decreased 3.8 percent, reflecting a 2.4 percent decrease in traffic and a 1.4 percent decrease in average transaction amount.
◦Comparable stores-originated sales declined 5.7 percent.
◦Comparable digitally-originated sales increased 4.7 percent.
•Operating income of $1.5 billion, including $593 million of pretax net gains related to interchange fee settlements further described in Note 3 to the Financial Statements.

Earnings Per Share | Three Months Ended |  |  |  |  |  |
| May 3, 2025 |  | May 4, 2024 |  | Change |  |  |  |  |  |
GAAP diluted earnings per share | $ | 2.27 |  |  | $ | 2.03 |  |  | 11.7 | % |  |  |  |  |  |
Adjustments | (0.97) |  |  | — |  |  |  |  |  |  |  |  |
Adjusted diluted earnings per share | $ | 1.30 |  |  | $ | 2.03 |  |  | (35.9) | % |  |  |  |  |  |

Note: Amounts may not foot due to rounding.
1 Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provid ed on page 19.
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 May 3, 2025, after-tax ROIC was 15.1 percent, compared with 15.4 percent for the trailing twelve months ended May 4, 2024. The calculation of ROIC is provided on page 20.
Business Environment
Our financial results for the quarter ended May 3, 2025, reflected several challenges, including recent declines in consumer confidence, uncertainty regarding the impact of potential tariffs, the reaction to updates we shared in January on our approach to belonging, as well as the continued trend of reduced consumer spending in discretionary categories. While we believe each of these factors played a meaningful role in our first quarter performance, we can't reasonably estimate the impact of each one separately.
Recently, the United States (U.S.) imposed a range of tariffs on all products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs, and indicated that the U.S. is actively negotiating 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 indirectly, with China as our single largest source of merchandise we import.
We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed, including, but not limited to, vendor negotiations, assortment changes, movements in country of production, adjustments in order unit quantities and timing, and pricing strategies. Additionally, we are working closely with industry associations and government leaders, all with a goal to continue delivering the products our guests expect and minimizing the impact of tariffs on our guests. 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.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 14

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| ANALYSIS OF RESULTS OF OPERATIONS | Index to Notes

Analysis of Results of Operations

Summary of Operating Income | Three Months Ended |  |  |  |  |  |
(dollars in millions) | May 3, 2025 |  | May 4, 2024 |  | Change |  |  |  |  |  |
Net sales | $ | 23,846 |  |  | $ | 24,531 |  |  | (2.8) | % |  |  |  |  |  |
Cost of sales (a) | 17,128 |  |  | 17,471 |  |  | (2.0) |  |  |  |  |  |  |
SG&A expenses (a) | 4,591 |  |  | 5,146 |  |  | (10.8) |  |  |  |  |  |  |
Depreciation and amortization (exclusive of depreciation included in cost of sales) | 655 |  |  | 618 |  |  | 6.0 |  |  |  |  |  |  |
Operating income | $ | 1,472 |  |  | $ | 1,296 |  |  | 13.6 | % |  |  |  |  |  |

Rate Analysis | Three Months Ended |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Gross margin rate (a) | 28.2 | % |  | 28.8 | % |  |  |  |
SG&A expense rate (a) | 19.3 |  |  | 21.0 |  |  |  |  |
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) | 2.7 |  |  | 2.5 |  |  |  |  |
Operating income margin rate | 6.2 |  |  | 5.3 |  |  |  |  |

(a)Reflects the impact of a reclassification of prior year amounts, which were not material, to conform with current year presentation.
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 period 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.
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).

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 15

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| ANALYSIS OF RESULTS OF OPERATIONS | Index to Notes

Comparable Sales | Three Months Ended |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Comparable sales change | (3.8) | % |  | (3.7) | % |  |  |  |
Drivers of change in comparable sales |  |  |  |  |  |  |
Number of transactions (traffic) | (2.4) |  |  | (1.9) |  |  |  |  |
Average transaction amount | (1.4) |  |  | (1.9) |  |  |  |  |

Comparable Sales by Channel | Three Months Ended |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Stores originated comparable sales change | (5.7) | % |  | (4.8) | % |  |  |  |
Digitally originated comparable sales change | 4.7 |  |  | 1.4 |  |  |  |  |

Merchandise Sales by Channel | Three Months Ended |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Stores originated | 80.2 | % |  | 81.7 | % |  |  |  |
Digitally originated | 19.8 |  |  | 18.3 |  |  |  |  |
Total | 100 | % |  | 100 | % |  |  |  |

Merchandise Sales by Fulfillment Channel | Three Months Ended |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Stores | 97.6 | % |  | 97.7 | % |  |  |  |
Other | 2.4 |  |  | 2.3 |  |  |  |  |
Total | 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 |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Apparel & accessories | 16 | % |  | 16 | % |  |  |  |
Beauty | 13 |  |  | 13 |  |  |  |  |
Food & beverage | 25 |  |  | 24 |  |  |  |  |
Hardlines | 13 |  |  | 13 |  |  |  |  |
Home furnishings & décor | 14 |  |  | 15 |  |  |  |  |
Household essentials | 19 |  |  | 19 |  |  |  |  |
Total | 100 | % |  | 100 | % |  |  |  |

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 May 3, 2025 and May 4, 2024, total Target Circle Card Penetration was 17.4 percent and 18.0 percent, respectively.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 16

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| ANALYSIS OF RESULTS OF OPERATIONS | Index to Notes

Gross Margin Rate
Quarter-to-Date
For the three months ended May 3, 2025, our gross margin rate was 28.2 percent compared with 28.8 percent in the comparable prior-year period. For the three months ended May 3, 2025, the changes reflected the net impact of
•merchandising activities, including higher markdown rates, partially offset by growth in advertising and other revenues;
•higher supply chain and digital fulfillment costs due to new supply chain facilities coming online and an increase in digital penetration; and
•lower inventory shrink.
Selling, General, and Administrative Expense Rate
For the three months ended May 3, 2025, our SG&A expense rate was 19.3 percent compared with 21.0 percent for the comparable prior-year period. The decrease reflected a favorable impact of interchange fee settlements of approximately 2.5 percentage points, as further described in Note 3, partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs.
Store Data

Change in Number of Stores | Three Months Ended |  |
| May 3, 2025 |  | May 4, 2024 |  |  |  |
Beginning store count | 1,978 |  |  | 1,956 |  |  |  |  |
Opened | 3 |  |  | 7 |  |  |  |  |
Closed | — |  |  | — |  |  |  |  |
Ending store count | 1,981 |  |  | 1,963 |  |  |  |  |

Number of Stores and | Number of Stores |  | Retail Square Feet (a)
Retail Square Feet | May 3, 2025 | February 1, 2025 | May 4, 2024 |  | May 3, 2025 | February 1, 2025 | May 4, 2024
170,000 or more sq. ft. | 273 |  | 273 |  | 273 |  |  | 48,824 |  | 48,824 |  | 48,824 |
50,000 to 169,999 sq. ft. | 1,562 |  | 1,559 |  | 1,547 |  |  | 195,436 |  | 195,050 |  | 193,529 |
49,999 or less sq. ft. | 146 |  | 146 |  | 143 |  |  | 4,404 |  | 4,404 |  | 4,301 |
Total | 1,981 |  | 1,978 |  | 1,963 |  |  | 248,664 |  | 248,278 |  | 246,654 |

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

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 17

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| OTHER PERFORMANCE FACTORS | Index to Notes

Other Performance Factors
Net Interest Expense
For the three months ended May 3, 2025, net interest expense was $116 million compared with $106 million in the comparable prior-year period. The increase was primarily due to a decrease in interest income.
Provision for Income Taxes
Our effective income tax rate for the three months ended May 3, 2025, was 25.0 percent compared with 22.7 percent in the comparable prior-year period. The increase primarily reflects discrete tax expense in the current year related to share-based compensation.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 18

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | Index to Notes

Reconciliation of Non-GAAP Financial Measures to GAAP Measures
To provide additional transparency, we 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 |  | Three Months Ended
|  | May 3, 2025 |  | May 4, 2024
(millions, except per share data) |  | Pretax |  | Net of Tax |  | Per Share |  | Pretax |  | Net of Tax |  | Per Share
GAAP diluted earnings per share |  |  |  |  |  | $ | 2.27 |  |  |  |  |  |  | $ | 2.03 |
Adjustments |  |  |  |  |  |  |  |  |  |  |  |
Interchange fee settlements (a) |  | $ | (593) |  |  | $ | (441) |  |  | $ | (0.97) |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Adjusted EPS |  |  |  |  |  | $ | 1.30 |  |  |  |  |  |  | $ | 2.03 |

Note: Amounts may not foot due to rounding.
(a)Note 3 to the Financial Statements provides additional information.
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 |  |  |  |  |  |
(dollars in millions) |  | May 3, 2025 |  | May 4, 2024 |  | Change |  |  |  |  |  |
Net earnings |  | $ | 1,036 |  |  | $ | 942 |  |  | 10.0 | % |  |  |  |  |  |
+ Provision for income taxes |  | 346 |  |  | 277 |  |  | 25.1 |  |  |  |  |  |  |
+ Net interest expense |  | 116 |  |  | 106 |  |  | 8.7 |  |  |  |  |  |  |
EBIT |  | $ | 1,498 |  |  | $ | 1,325 |  |  | 13.0 | % |  |  |  |  |  |
+ Total depreciation and amortization (a) |  | 787 |  |  | 718 |  |  | 9.7 |  |  |  |  |  |  |
EBITDA |  | $ | 2,285 |  |  | $ | 2,043 |  |  | 11.9 | % |  |  |  |  |  |

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

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 19

| MANAGEMENT'S DISCUSSION AND ANALYSIS | Table of Contents
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | Index to Notes

We have also disclosed after-tax ROIC, which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies.

After-Tax Return on Invested Capital |  |
(dollars in millions) |  |  |  |
|  | Trailing Twelve Months |  |
Numerator |  | May 3, 2025 |  | May 4, 2024 (a) |  |
Operating income |  | $ | 5,742 |  |  | $ | 5,675 |  |  |
+ Net other income |  | 102 |  |  | 99 |  |  |
EBIT |  | 5,844 |  |  | 5,774 |  |  |
+ Operating lease interest (b) |  | 165 |  |  | 133 |  |  |
- Income taxes (c) |  | 1,373 |  |  | 1,314 |  |  |
Net operating profit after taxes |  | $ | 4,636 |  |  | $ | 4,593 |  |  |

Denominator |  | May 3, 2025 |  | May 4, 2024 |  | April 29, 2023
Current portion of long-term debt and other borrowings |  | $ | 1,139 |  | $ | 2,614 |  | $ | 200 |
+ Noncurrent portion of long-term debt |  | 14,334 |  | 13,487 |  | 16,010 |
+ Shareholders' investment |  | 14,947 |  | 13,840 |  | 11,605 |
+ Operating lease liabilities (d) |  | 3,922 |  | 3,723 |  | 2,921 |
- Cash and cash equivalents |  | 2,887 |  | 3,604 |  | 1,321 |
Invested capital |  | $ | 31,455 |  | $ | 30,060 |  | $ | 29,415 |
Average invested capital (e) |  | $ | 30,757 |  | $ | 29,737 |  |
After-tax return on invested capital (f) |  | 15.1 | % |  | 15.4 | % |  |

(a)The trailing twelve months ended May 4, 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 22.8 percent and 22.2 percent for the trailing twelve months ended May 3, 2025 and May 4, 2024, respectively. For the trailing twelve months ended May 3, 2025, and May 4, 2024, includes tax effect of $1.3 billion related to EBIT and $38 million and $30 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 May 3, 2025, includes the impact of after-tax net gains on interchange fee settlements, which increased after-tax ROIC by 1.4 percentage points. Note 3 to the Financial Statements provides additional information.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 20

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

Analysis of Financial Condition
Liquidity and Capital Resources
Capital Allocation
We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals.
Our cash and cash equivalents balance was $2.9 billion, $4.8 billion, and $3.6 billion as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively. Our cash and cash equivalents balance includes short-term investments of $2.0 billion, $3.9 billion, and $2.7 billion as of May 3, 2025, February 1, 2025, and May 4, 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 $0.3 billion and $1.1 billion for the three months ended May 3, 2025, and May 4, 2024, respectively. The operating cash flows reflect the net earnings impact of gains on interchange fee settlements, offset by lower sales, as well as increased inventory levels and lower accounts payable leverage in the current year period.
Inventory
Inventory was $13.0 billion as of May 3, 2025, compared with $12.7 billion and $11.7 billion as of February 1, 2025, and May 4, 2024, respectively. The balance as of May 3, 2025, reflects the impact of lower-than-expected sales across all core merchandise categories, with the most significant impacts within Apparel & Accessories, Hardlines, and Home Furnishings & Décor.
Investing Cash Flows
Cash required for investing activities increased to $0.8 billion for the three months ended May 3, 2025, compared to $0.7 billion for the three months ended May 4, 2024, due to higher capital investments.
Dividends
We paid dividends totaling $510 million ($1.12 per share) for the three months ended May 3, 2025, and $508 million ($1.10 per share) for the three months ended May 4, 2024, a per share increase of 1.8 percent. We declared dividends totaling $515 million ($1.12 per share) during the first quarter of 2025 and $516 million ($1.10 per share) during the first 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 $251 million to repurchase shares during the three months ended May 3, 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 8 to the Financial Statements for more information.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 21

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

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 May 3, 2025, our credit ratings were as follows:

Credit Ratings | Moody’s | Standard and Poor’s | Fitch
Long-term debt | A2 | A | A
Commercial paper | P-1 | A-1 | F1

If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit ratings will remain the same as described above.
In March 2025, we issued $1.0 billion of debt, and in April 2025, we repaid $1.5 billion of debt. Note 6 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. Our committed $1.0 billion 364-day and $3.0 billion unsecured revolving credit facilities that will expire in October 2025 and October 2028, respectively, 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 May 3, 2025, or May 4, 2024. Note 6 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 May 3, 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 |  | Q1 2025 Form 10-Q | 22

| MANAGEMENT'S DISCUSSION AND ANALYSIS & SUPPLEMENTAL INFORMATION | Table of Contents
| FORWARD LOOKING STATEMENTS & CONTROLS AND PROCEDURES | Index to Notes

Forward-Looking Statements
This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "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, 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
During the first quarter of 2025, we implemented a new technology platform that supports the transaction processing of our Target Circle Card program. In connection with this implementation, we modified the design of certain internal control processes and procedures. There were no other 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 |  | Q1 2025 Form 10-Q | 23

| SUPPLEMENTAL INFORMATION | Table of Contents
|  | Index to Notes

PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For the quarterly period ended May 3, 2025, no response is required under Item 103 of Regulation S-K, nor have there been any material developments for any previously reported legal proceedings.
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 33.2 million shares of common stock for a total investment of $6.6 billion. The table below presents information with respect to Target common stock purchases made during the three months ended May 3, 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 |  |  |  |
February 2, 2025 through March 1, 2025 |  |  |  |  |  |  |  |
Open market and privately negotiated purchases | — |  |  | $ | — |  |  | — |  |  | $ | 8,665,663,899 |  |
March 2, 2025 through April 5, 2025 |  |  |  |  |  |  |  |
Open market and privately negotiated purchases | 2,192,103 |  |  | 114.60 |  |  | 2,192,103 |  |  | 8,414,443,911 |  |
April 6, 2025 through May 3, 2025 |  |  |  |  |  |  |  |
Open market and privately negotiated purchases | — |  |  | — |  |  | — |  |  | 8,414,443,911 |  |
Total | 2,192,103 |  |  | $ | 114.60 |  |  | 2,192,103 |  |  | $ | 8,414,443,911 |  |

Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 24

| SUPPLEMENTAL INFORMATION | Table of Contents
|  | Index to Notes

Item 6. Exhibits

3.1 |  | Amended and Restated Articles of Incorporation of Target Corporation (as amended through June 9, 2010) (filed as Exhibit (3)A to Target's Current Report on Form 8-K on June 10, 2010 and incorporated herein by reference).
3.2 |  | Bylaws of Target Corporation (as amended and restated through January 15, 2025) (filed as Exhibit 3.2 to Target's Current Report on Form 8-K on January 17, 2025, and incorporated herein by reference).
31.1 | ** | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 | ** | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 | *** | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 | *** | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS | ** | Inline XBRL Instance Document
101.SCH | ** | Inline XBRL Taxonomy Extension Schema Document
101.CAL | ** | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF | ** | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB | ** | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE | ** | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 | ** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

** | Filed herewith.
*** | Furnished herewith.

TARGET CORPORATION |  | Q1 2025 Form 10-Q | 25

| SUPPLEMENTAL INFORMATION | Table of Contents
|  | Index to Notes

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| TARGET CORPORATION
Dated: May 30, 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 |  | Q1 2025 Form 10-Q | 26