10-QPeriod: Q2 FY2019

TARGET CORP Quarterly Report for Q2 Ended Aug 4, 2018

Filed August 27, 2018For Securities:TGT

Summary

Target Corporation's (TGT) 10-Q filing for the period ending August 4, 2018, indicates a strong performance with a 7.0% increase in sales for the third quarter, reaching $17.6 billion. This growth was primarily driven by a comparable sales increase of 6.5%, with traffic up 6.4%. Notably, the digital channel saw a significant surge of 41% in sales, contributing 1.5% to the comparable sales growth. The company also demonstrated improved profitability, with diluted earnings per share from continuing operations rising to $1.49, a 22.7% increase year-over-year. This positive financial momentum is supported by effective cost management and strategic investments in the business, as reflected in a healthy return on invested capital of 16.0% for the trailing twelve months. The filing also highlights the adoption of new accounting standards for revenue recognition, leases, and pensions, which have been retrospectively applied. Despite a decrease in operating cash flow, the company maintains a solid financial position, supported by a strong credit rating and a committed revolving credit facility. Target continues its balanced capital allocation strategy, prioritizing reinvestment in the business, a growing dividend, and share repurchases, signaling confidence in its ongoing growth and profitability.

Financial Highlights

50 data points
Beta

Revenue

$17.78B

31.1% Gross Margin

Net Income

$799.00M

4.5% Net Margin

EPS (Diluted)

$1.49

Total Assets

$40.00B

Cash & Equivalents

$1.18B

Free Cash Flow

$1.18B

Financial Statements
Beta
Revenue$17.78B
Cost of Revenue$12.24B
Gross Profit$5.54B
SG&A Expenses$3.87B
Operating Income$1.13B
Interest Expense$115.00M
Net Income$799.00M
EPS (Basic)$1.50
EPS (Diluted)$1.49
Shares Outstanding (Basic)531.70M
Shares Outstanding (Diluted)536.30M

Key Highlights

  • 1Total revenue for the quarter increased by 7.0% to $17.6 billion, compared to the prior year period.
  • 2Comparable sales increased by 6.5%, driven by a 6.4% increase in store traffic.
  • 3Digital channel sales experienced significant growth, increasing by 41% year-over-year.
  • 4Diluted earnings per share from continuing operations rose to $1.49, a 22.7% increase compared to the prior year.
  • 5Operating income increased by 3.6% to $1.13 billion for the quarter.
  • 6Return on invested capital (ROIC) for the trailing twelve months was a strong 16.0%.
  • 7The company adopted new accounting standards for revenue recognition, leases, and pensions, with retrospective adjustments to prior periods.

Frequently Asked Questions

Target reported a comparable sales increase of 6.5% for the quarter ended August 4, 2018. This was driven by a 6.4% increase in traffic.

The digital channel showed very strong performance, with sales increasing by 41% year-over-year. This contributed 1.5% to the total comparable sales growth.

Target adopted new accounting standards for revenue recognition (Topic 606), leases (Topic 842), and pensions (Topic 715). These were adopted using retrospective or modified retrospective approaches, and prior period financial statements have been adjusted to reflect these changes. The adoption of the lease standard resulted in the recognition of significant operating lease assets and liabilities on the balance sheet. The impact on net earnings and cash flows was generally not material, but there were reclassifications and adjustments made to prior period results.

Profitability improved significantly. Diluted earnings per share from continuing operations increased to $1.49, a 22.7% rise from $1.21 in the prior year. Operating income also saw a modest increase of 3.6% to $1.13 billion.