10-QPeriod: Q1 FY2026

TARGET CORP Quarterly Report for Q1 Ended May 3, 2025

Filed May 30, 2025For Securities:TGT

Summary

Target Corporation reported its first-quarter results for fiscal year 2025, ending May 3, 2025. Net sales decreased by 2.8% to $23.8 billion, driven by a 3.8% decline in comparable sales, which was a result of a 2.4% decrease in traffic and a 1.4% decrease in average transaction amount. Despite the sales dip, GAAP diluted earnings per share saw a significant increase of 11.7% to $2.27, largely influenced by a substantial one-time gain of $593 million from credit card interchange fee settlements, which positively impacted operating income and SG&A expenses. Management highlighted challenges such as declining consumer confidence, potential tariff impacts, and a shift in consumer spending away from discretionary categories. While comparable store sales declined, digitally originated comparable sales showed resilience with a 4.7% increase. The company maintained its dividend payment and continued its share repurchase program, demonstrating a commitment to returning capital to shareholders amidst a mixed operational environment.

Financial Highlights

47 data points
Beta

Revenue

$23.85B

28.2% Gross Margin

Net Income

$1.04B

4.3% Net Margin

EPS (Diluted)

$2.27

Total Assets

$56.19B

Cash & Equivalents

$2.89B

Free Cash Flow

-$515.00M

Financial Statements
Beta
Revenue$23.85B
Cost of Revenue$17.13B
Gross Profit$6.72B
SG&A Expenses$4.59B
Operating Income$1.47B
Net Income$1.04B
EPS (Basic)$2.28
EPS (Diluted)$2.27
Shares Outstanding (Basic)455.00M
Shares Outstanding (Diluted)456.50M

Key Highlights

  • 1Net sales for the quarter decreased by 2.8% to $23.8 billion, while comparable sales fell by 3.8% due to lower traffic and average transaction amounts.
  • 2GAAP diluted earnings per share (EPS) increased by 11.7% to $2.27, significantly boosted by a $593 million pretax gain from credit card interchange fee settlements.
  • 3Adjusted diluted EPS, excluding the settlement gain, decreased by 35.9% to $1.30, reflecting underlying operational pressures.
  • 4Digitally originated comparable sales grew by 4.7%, indicating continued strength in the company's online channels, while store-originated comparable sales declined by 5.7%.
  • 5Inventory levels increased to $13.0 billion, up from $12.7 billion at the end of the previous quarter and $11.7 billion year-over-year, indicating slower sales velocity.
  • 6The company maintained its quarterly dividend, paying $1.12 per share, and continued its share repurchase program, deploying $251 million during the quarter.
  • 7Operating income increased by 13.6% to $1.5 billion, primarily due to the significant gain from the interchange fee settlements.

Frequently Asked Questions

Net sales actually decreased by 2.8% to $23.8 billion in the first quarter of fiscal year 2025, compared to the same period last year. This decline was primarily due to a 3.8% decrease in comparable sales, driven by lower store traffic and a reduction in the average transaction amount.

The credit card interchange fee settlement resulted in a significant pretax gain of $593 million, which was recorded within SG&A expenses. This gain substantially boosted the reported operating income and GAAP diluted earnings per share, but it is excluded from the Adjusted EPS calculation.

Inventory levels increased to $13.0 billion as of May 3, 2025, which is higher than both the previous quarter and the prior year. Management attributed this increase to lower-than-expected sales across core merchandise categories, indicating slower inventory turnover.

Yes, Target demonstrated its commitment to shareholder returns by maintaining its quarterly dividend, paying $1.12 per share. Additionally, the company continued its share repurchase program, investing $251 million to buy back its stock during the quarter.