01—Abstract
Summary
Summary of the 10-K filed March 13, 2019. Cited figures are marked; the original filing is the authoritative source.
Target Corporation's 2019 Form 10-K highlights a year of solid sales growth and strategic investments.
The company reported total revenue of $75.4 billiona, a 3.6% increase driven by a robust 5.0% comparable sales growth, with digital channels showing particularly strong performance with a 36% increase. This growth was supported by a 5.0% increase in traffic. Financially, Target demonstrated a commitment to shareholder returns, distributing $3.4 billion through dividends and share repurchases.
The company continues to invest in its store remodel program and technology infrastructure to enhance guest experience and operational efficiency. Despite increased digital fulfillment and supply chain costs impacting the gross margin rate, Target maintained a strong focus on its core business, proprietary brands, and seamless omnichannel offerings, positioning itself for continued growth in a competitive retail landscape.
02—Key points
Key Highlights
- Total revenue for fiscal 2018 reached $75.4 billion, a 3.7% increase year-over-year, driven by comparable sales growth.
- Comparable sales increased by 5.0%, with traffic growing by 5.0%, indicating strong customer engagement.
- Digital channel sales saw significant growth of 36%, contributing 1.8 percentage points to overall comparable sales growth.
- Target returned $3.4 billion to shareholders through dividends and share repurchases, underscoring its commitment to capital allocation.
- Gross margin rate decreased slightly to 28.4% from 28.8% in the prior year, primarily due to increased digital fulfillment and supply chain costs.
- SG&A expense rate increased slightly to 20.9% from 20.8%, mainly due to higher compensation costs, particularly store wages.
- The company continued its investment in store remodels and technology, with capital expenditures increasing to support these initiatives.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Target Corp kept $0.04.
- Revenue$75.36B100.0%
- Cost of revenue−$53.30B70.7%
- Gross profit$22.06B29.3%
- Operating costs−$17.95B23.8%
- Operating income$4.11B5.5%
- Interest, other & tax−$1.17B1.6%
- Net income$2.94B3.9%
Where FY2019 revenue went
$75.36B- Cost of revenue: $53.30B, 71% of revenue
- SG&A: $15.72B, 21% of revenue
- Net income: $2.94B, 3.9% of revenue
- Other operating costs: $2.22B, 3.0% of revenue
- Interest, other & tax: $1.17B, 1.6% of revenue
Kept 3.9% as net incomeNet income $2.94B · 3.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 13, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $75.36B$71.88B | +4.8% |
| Cost of Revenue | $53.30B$51.13B | +4.3% |
| Gross Profit | $22.06B$20.75B | +6.3% |
| SG&A Expenses | $15.72B$15.14B | +3.9% |
| Operating Income | $4.11B$4.22B | −2.7% |
| Interest Expense | $461.00M$653.00M | −29.4% |
| Net Income | $2.94B$2.91B | +0.8% |
| EPS (Basic) | $5.55$5.32 | +4.3% |
| EPS (Diluted) | $5.51$5.29 | +4.2% |
| Shares Outstanding (Basic) | 528.60M546.80M | −3.3% |
| Shares Outstanding (Diluted) | 533.20M550.30M | −3.1% |
05—Questions
Frequently Asked Questions
What was Target's comparable sales growth and what drove it in fiscal 2018?
Target reported a comparable sales increase of 5.0% in fiscal 2018, driven by a 5.0% increase in traffic. This growth was fueled by a 3.2% increase in comparable store sales and a significant 36% increase in comparable digital channel sales, which contributed 1.8 percentage points to the total comparable sales growth.
How did Target manage its capital allocation in fiscal 2018?
Target followed a disciplined capital allocation strategy, prioritizing investments in business growth and maintaining operations. They returned $3.4 billion to shareholders through a combination of dividends and share repurchases, demonstrating a commitment to shareholder value.
What factors impacted Target's gross margin rate in fiscal 2018?
Target's gross margin rate decreased to 28.4% in fiscal 2018 from 28.8% in the prior year. The primary drivers for this decrease were increased digital fulfillment and supply chain costs. These were partially offset by benefits from merchandising strategies, cost savings initiatives, and improved pricing and promotions.
How is Target leveraging its stores for digital fulfillment?
Target utilizes its stores as fulfillment points for digital channel sales. This includes options like store pickup (or drive up) and delivery via its subsidiary Shipt. This strategy helps improve product availability, delivery times, and reduce shipping costs.
06—Continue