Summary
Target Corporation's first-quarter 2018 results, ending May 5, 2018, show a revenue increase driven by comparable sales growth and a significant surge in digital channel sales, which grew by 28%. While total revenue rose to $16.78 billion from $16.22 billion year-over-year, operating income saw a decline of 9.9% to $1.04 billion, impacting profitability. Despite a revenue increase, the company experienced a decrease in operating cash flow from continuing operations by 59% to $512 million, largely due to higher inventory levels and timing of payments. The effective tax rate significantly decreased to 22.6% from 34.5% in the prior year, primarily due to the Tax Cuts and Jobs Act. The company continued its capital return program, paying out $334 million in dividends and actively repurchasing shares, including an accelerated share repurchase program. Key financial statement changes were influenced by the adoption of new accounting standards for revenue recognition, leases, and pensions, which are detailed in the notes to the financial statements. Investors should note the shift in revenue presentation for certain credit card profit-sharing income and the balance sheet impact of lease accounting changes.
Financial Highlights
51 data points| Revenue | $16.78B |
| Cost of Revenue | $11.63B |
| Gross Profit | $5.16B |
| SG&A Expenses | $3.54B |
| Operating Income | $1.04B |
| Interest Expense | $121.00M |
| Net Income | $718.00M |
| EPS (Basic) | $1.34 |
| EPS (Diluted) | $1.33 |
| Shares Outstanding (Basic) | 536.90M |
| Shares Outstanding (Diluted) | 541.00M |
Key Highlights
- 1Total revenue increased by 3.4% to $16.78 billion, with comparable sales up 3.0% driven by a 3.7% increase in traffic.
- 2Digital channel sales experienced robust growth, increasing by 28% and contributing 5.2% of total sales, up from 4.2% in the prior year.
- 3Operating income decreased by 9.9% to $1.04 billion, and operating income margin declined to 6.2% from 7.1% year-over-year.
- 4Operating cash flow from continuing operations saw a substantial decrease of 59% to $512 million, attributed to increased inventory and timing of payments.
- 5The effective income tax rate decreased significantly to 22.6% from 34.5%, largely due to the Tax Cuts and Jobs Act.
- 6The company returned $334 million to shareholders through dividends and repurchased shares, including an accelerated share repurchase program.
- 7Adoption of new accounting standards (ASC Topic 606 for revenue recognition, ASC Topic 842 for leases, and ASU No. 2017-07 for pensions) impacted prior period comparatives and balance sheet presentation, notably increasing lease assets and liabilities.