[10-Q] TARGET CORP Quarterly Earnings Report

Rhea-AI Filing Summary

Target Corporation reported softer results for the quarter ended November 1, 2025. GAAP diluted EPS was $1.51, down from $1.85 a year ago, while Adjusted EPS was $1.78. Net sales were $25.3 billion, a 1.5% decline, as comparable sales fell 2.7%, driven by a 2.2% drop in traffic and a slightly lower average ticket. Operating income was $0.9 billion, down 18.9%, with the quarter including $161 million of business transformation costs, mainly $115 million of headquarters severance and $46 million of asset-related charges.

Year-to-date net earnings were $2.66 billion versus $2.99 billion in 2024, and after-tax ROIC declined to 13.4% from 15.9%. Gross margin rate edged down to 28.2%, pressured by higher markdowns, partly offset by lower inventory shrink and growth in advertising and other revenues. Target maintained strong liquidity with $3.8 billion in cash and cash equivalents, invested $2.8 billion in capital expenditures, repurchased $403 million of stock, and paid $1.5 billion in dividends over the first nine months of 2025.

Insights

Retail equity analyst

Target’s Q3 shows earnings and traffic pressure, partly cushioned by cost actions and strong liquidity.

Target delivered Q3 2025 GAAP diluted EPS of $1.51, down from $1.85, as net sales slipped 1.5% to $25.27 billion. Comparable sales declined 2.7%, with traffic down 2.2%, indicating softer guest demand, while digitally originated comparable sales still grew 2.4%. Operating income fell 18.9% to $948 million, reflecting modestly lower gross margin and higher SG&A as a percentage of sales.

Profitability was shaped by discrete items. The quarter absorbed $161 million of business transformation costs, including $115 million of severance, which management excludes in Adjusted EPS of $1.78. For the nine months, results also include $593 million of gains from interchange fee settlements, helping support EBIT of $3.81 billion and EBITDA of $6.14 billion. After-tax ROIC over the trailing twelve months declined to 13.4% from 15.9%, showing returns remain solid but off recent highs.

The balance sheet and funding profile appear resilient. Cash and cash equivalents were $3.82 billion, inventories of $14.90 billion are lower than a year ago and aligned with sales trends, and invested capital stood at $32.10 billion. Target issued $2.0 billion of new unsecured debt and repaid $1.5 billion in 2025, retains investment-grade ratings (A2/A/A), and added a new $1.0 billion 364-day credit facility. Management continues to prioritize capital spending, dividends of $1.5 billion year-to-date, and $403 million of share repurchases under its $15 billion authorization.

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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 November 1, 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 November 19, 2025, were 452,806,418.

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			15
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			26
Item 4.			Controls and Procedures			26
PART II			OTHER INFORMATION
Item 1.			Legal Proceedings			27
Item 1A.			Risk Factors			27
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 3.			Defaults Upon Senior Securities			27
Item 4.			Mine Safety Disclosures			27
Item 5.			Other Information			27
Item 6.			Exhibits			28
Signatures						29

			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statements of Operations
			Three Months Ended												Nine Months Ended
(millions, except per share data) (unaudited)			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Net sales			$	25,270					$	25,668					$	74,327					$	75,651
Cost of sales			18,137						18,402						53,168						53,700
Selling, general, and administrative expenses			5,536						5,459						15,486						15,969
Depreciation and amortization (exclusive of depreciation included in cost of sales)			649						639						1,936						1,883
Operating income			948						1,168						3,737						4,099
Net interest expense			115						105						346						321
Net other income			(26)						(28)						(68)						(77)
Earnings before income taxes			859						1,091						3,459						3,855
Provision for income taxes			170						237						799						867
Net earnings			$	689					$	854					$	2,660					$	2,988
Basic earnings per share			$	1.52					$	1.86					$	5.85					$	6.47
Diluted earnings per share			$	1.51					$	1.85					$	5.84					$	6.45
Weighted average common shares outstanding
Basic			453.7						460.1						454.4						461.6
Diluted			455.1						461.5						455.7						462.9
Antidilutive shares			2.3						0.5						2.3						0.5

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION Q3 2025 Form 10-Q 1

			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

Consolidated Statements of Comprehensive Income
			Three Months Ended												Nine Months Ended
(millions) (unaudited)			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Net earnings			$	689					$	854					$	2,660					$	2,988
Other comprehensive (loss) / income, net of tax
Cash flow hedges and currency translation adjustment			(3)						(4)						(13)						(14)
Other comprehensive loss			(3)						(4)						(13)						(14)
Comprehensive income			$	686					$	850					$	2,647					$	2,974

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION Q3 2025 Form 10-Q 2

			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)			November 1, 2025						February 1, 2025						November 2, 2024
Assets
Cash and cash equivalents			$	3,822					$	4,762					$	3,433
Inventory			14,896						12,740						15,165
Other current assets			1,984						1,952						1,956
Total current assets			20,702						19,454						20,554
Property and equipment, net			33,710						33,022						32,931
Operating lease assets			3,739						3,763						3,513
Other noncurrent assets			1,840						1,530						1,533
Total assets			$	59,991					$	57,769					$	58,531
Liabilities and shareholders’ investment
Accounts payable			$	13,792					$	13,053					$	14,419
Accrued and other current liabilities			6,317						6,110						5,738
Current portion of long-term debt and other borrowings			1,133						1,636						1,635
Total current liabilities			21,242						20,799						21,792
Long-term debt and other borrowings			15,366						14,304						14,346
Noncurrent operating lease liabilities			3,542						3,582						3,418
Deferred income taxes			2,279						2,303						2,419
Other noncurrent liabilities			2,061						2,115						2,067
Total noncurrent liabilities			23,248						22,304						22,250
Shareholders’ investment
Common stock			38						38						38
Additional paid-in capital			7,157						6,996						6,916
Retained earnings			8,777						8,090						8,009
Accumulated other comprehensive loss			(471)						(458)						(474)
Total shareholders’ investment			15,501						14,666						14,489
Total liabilities and shareholders’ investment			$	59,991					$	57,769					$	58,531

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 452,796,520, 455,566,995, and 459,244,995 shares issued and outstanding as of November 1, 2025, February 1, 2025, and November 2, 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 Q3 2025 Form 10-Q 3

			FINANCIAL STATEMENTS			Table of Contents
						Index to Notes

Consolidated Statements of Cash Flows
			Nine Months Ended
(millions) (unaudited)			November 1, 2025						November 2, 2024
Operating activities
Net earnings			$	2,660					$	2,988
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization			2,331						2,215
Share-based compensation expense			197						229
Deferred income taxes			(21)						(58)
Noncash (gains) / losses and other, net			8						(1)
Changes in operating accounts:
Inventory			(2,156)						(3,279)
Other assets			(294)						(265)
Accounts payable			658						2,362
Accrued and other liabilities			102						(113)
Cash provided by operating activities			3,485						4,078
Investing activities
Expenditures for property and equipment			(2,842)						(1,968)
Other			52						26
Cash required for investing activities			(2,790)						(1,942)
Financing activities
Additions to long-term debt			1,984						741
Reductions of long-term debt			(1,609)						(1,112)
Dividends paid			(1,537)						(1,533)
Repurchase of stock			(408)						(506)
Shares withheld for taxes on share-based compensation			(65)						(98)
Cash required for financing activities			(1,635)						(2,508)
Net decrease in cash and cash equivalents			(940)						(372)
Cash and cash equivalents at beginning of period			4,762						3,805
Cash and cash equivalents at end of period			$	3,822					$	3,433
Supplemental information
Leased assets obtained in exchange for new finance lease liabilities			$	100					$	312
Leased assets obtained in exchange for new operating lease liabilities			291						416

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION Q3 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, $1.10 per share			—						—						—						(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, $1.12 per share			—						—						—						(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, $1.12 per share			—						—						—						(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, $1.12 per share			—						—						—						(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 Q3 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, $1.12 per share			—						—						—						(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
Net earnings			—						—						—						935						—						935
Other comprehensive loss			—						—						—						—						(6)						(6)
Dividends declared, $1.14 per share			—						—						—						(529)						—						(529)
Share-based compensation			—						—						73						—						—						73
August 2, 2025			454.4						$	38					$	7,084					$	8,766					$	(468)					$	15,420
Net earnings			—						—						—						689						—						689
Other comprehensive loss			—						—						—						—						(3)						(3)
Dividends declared, $1.14 per share			—						—						—						(526)						—						(526)
Repurchase of stock			(1.7)						—						—						(152)						—						(152)
Share-based compensation			0.1						—						73						—						—						73
November 1, 2025			452.8						$	38					$	7,157					$	8,777					$	(471)					$	15,501

See accompanying Notes to Consolidated Financial Statements.

TARGET CORPORATION Q3 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						Business Transformation Costs			10
Note 5						Fair Value Measurements			11
Note 6						Property and Equipment			11
Note 7						Supplier Finance Programs			11
Note 8						Commercial Paper and Long-Term Debt			12
Note 9						Derivative Financial Instruments			12
Note 10						Share Repurchase			13
Note 11						Pension Benefits			13
Note 12						Accumulated Other Comprehensive Loss			13
Note 13						Segment Reporting			14

TARGET CORPORATION Q3 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 Q3 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												Nine Months Ended
(millions)			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Apparel & accessories (a)			$	3,838					$	4,003					$	11,635					$	12,161
Beauty (b)			3,232						3,226						9,729						9,729
Food & beverage (c)			6,008						5,917						17,499						17,308
Hardlines (d)			3,190						3,152						9,786						9,634
Home furnishings & décor (e)			3,908						4,185						10,789						11,612
Household essentials (f)			4,542						4,715						13,321						13,828
Other merchandise sales			34						30						117						120
Merchandise sales			24,752						25,228						72,876						74,392
Advertising revenue			241						167						621						459
Credit card profit sharing			119						148						395						433
Other			158						125						435						367
Net sales			$	25,270					$	25,668					$	74,327					$	75,651

(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 November 1, 2025, February 1, 2025, and November 2, 2024, the accrual for estimated returns was $187 million, $172 million, and $204 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						November 1, 2025
(millions)
Gift card liability (a)			$	1,209					$	461					$	(746)					$	924

(a)Included in Accrued and Other Current Liabilities.

(b)Net of estimated breakage.

Advertising revenue — Primarily represents revenue related to certain 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 Q3 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, Target Circle 360 membership revenue, Shipt membership and service revenues, rental income, 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, during the first quarter of 2025, we recorded gains within SG&A Expenses of $593 million, net of legal fees.

4. Business Transformation Costs

In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. Costs incurred in connection with our business transformation initiative include the following:

•Severance and Related Costs — In October 2025, we reduced our headquarters workforce. As a result, we recognized $115 million of severance and related costs within SG&A during the three and nine months ended November 1, 2025. The majority of these costs are expected to be paid during the fourth quarter of 2025.

•Asset-Related Charges — For the three and nine months ended November 1, 2025, we recognized $46 million of impairments and other charges associated with the termination of a commercial partnership. Note 6 provides additional information regarding impairment charges.

TARGET CORPORATION Q3 2025 Form 10-Q 10

			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

5. 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			November 1, 2025						February 1, 2025						November 2, 2024
Assets
Short-term investments			Cash and Cash Equivalents			Level 1			$	2,894					$	3,893					$	2,456
Prepaid forward contracts			Other Current Assets			Level 1			16						23						26
Interest rate swaps			Other Noncurrent Assets			Level 2			2						—						—
Liabilities
Interest rate swaps			Other Current Liabilities			Level 2			1						—						—
Interest rate swaps			Other Noncurrent Liabilities			Level 2			47						125						105

Significant Financial Instruments Not Measured at Fair Value (a) (millions)			November 1, 2025									February 1, 2025									November 2, 2024
			Carrying Amount			Fair Value						Carrying Amount			Fair Value						Carrying Amount			Fair Value
Long-term debt, including current portion (b)			$	14,396		$	13,790					$	13,904		$	12,953					$	13,901		$	13,029

(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.

6. Property and Equipment

We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable. We recognized impairment charges of $35 million and $69 million for the three and nine months ended November 1, 2025, and $1 million and $37 million for the three and nine months ended November 2, 2024. These impairment charges are included in SG&A Expenses.

7. 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 elect to receive early payment of our payment obligations from the financial institutions at a discounted amount. A vendor’s election to receive early payment 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 $3.4 billion, $3.7 billion, and $4.7 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively, and are included within Accounts Payable on our Consolidated Statements of Financial Position. These outstanding vendor obligations do not represent actual early payments made under supplier finance programs, which have historically been lower.

TARGET CORPORATION Q3 2025 Form 10-Q 11

			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

8. Commercial Paper and Long-Term Debt

Our unsecured long-term debt issuances during the nine months ended November 1, 2025 were as follows:

Debt Issuances (dollars in millions)
Issuance Date						Maturity Date						Principal Amount						Interest Rate (Fixed)
March 2025						April 2035						$	1,000					5.00		%
June 2025						June 2028						500						4.35
June 2025						February 2036						500						5.25

Our unsecured long-term debt repayments during the nine months ended November 1, 2025 were as follows:

Debt Repayments (dollars in millions)

Repayment Date

Maturity Date

Principal Amount

Interest Rate (Fixed)

April 2025

April 2025

$

1,500

2.25

%

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 and nine months ended November 1, 2025, or November 2, 2024.

In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day facility. No balances were outstanding under our credit facilities at any time during 2025 or 2024.

9. 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 5 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 November 1, 2025, February 1, 2025, and November 2, 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 and nine months ended November 1, 2025, and November 2, 2024.

Effect of Hedges on Debt (millions)						November 1, 2025						February 1, 2025						November 2, 2024
Long-term debt and other borrowings
Carrying amount of hedged debt						$	2,148					$	2,069					$	2,088
Cumulative hedging adjustments, included in carrying amount						(46)						(125)						(105)

TARGET CORPORATION Q3 2025 Form 10-Q 12

			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

Effect of Hedges on Net Interest Expense			Three Months Ended												Nine Months Ended
(millions)			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swaps designated as fair value hedges			$	16					$	(26)					$	78					$	21
Hedged debt			(16)						26						(78)						(21)
Gain on cash flow hedges recognized in Net Interest Expense			6						6						18						18
Total			$	6					$	6					$	18					$	18

10. 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												Nine Months Ended
(millions, except per share data)			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Number of shares purchased			1.7						2.4						3.8						3.5
Average price paid per share (a)			$	91.59					$	147.43					$	104.70					$	146.97
Total investment (a)			$	152					$	354					$	403					$	509

(a)    Amounts include applicable excise tax and commissions.

11. Pension Benefits

We provide pension plan benefits to eligible team members.

Net Pension Benefits (Income) / Expense						Three Months Ended												Nine Months Ended
(millions)			Classification			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Service cost benefits earned			SG&A Expenses			$	18					$	19					$	55					$	58
Interest cost on projected benefit obligation			Net Other Income			42						41						126						124
Expected return on assets			Net Other Income			(68)						(69)						(203)						(209)
Amortization of losses			Net Other Income			1						—						1						—
Prior service cost			Net Other Income			—						—						7						8
Total						$	(7)					$	(9)					$	(14)					$	(19)

12. 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			(13)						—						—						(13)
November 1, 2025			$	252					$	(26)					$	(697)					$	(471)

Note: Amounts are net of tax.

TARGET CORPORATION Q3 2025 Form 10-Q 13

			FINANCIAL STATEMENTS			Table of Contents
			NOTES			Index to Notes

13. 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												Nine Months Ended
(millions)			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Net sales			$	25,270					$	25,668					$	74,327					$	75,651
Cost of sales
Merchandising cost of sales			16,261						16,447						47,793						48,386
Supply chain and digital fulfillment costs			1,876						1,955						5,375						5,314
Total cost of sales			18,137						18,402						53,168						53,700
Selling, general and administrative expenses (a)			5,536						5,459						15,486						15,969
Depreciation and amortization (exclusive of depreciation included in cost of sales)			649						639						1,936						1,883
Operating income (a)			948						1,168						3,737						4,099
Net interest expense			115						105						346						321
Net other income			(26)						(28)						(68)						(77)
Earnings before income taxes			859						1,091						3,459						3,855
Provision for income taxes			170						237						799						867
Net earnings			$	689					$	854					$	2,660					$	2,988

(a)For the three and nine months ended November 1, 2025, includes $161 million related to business transformation costs described in Note 4. For the nine months ended November 1, 2025, includes $593 million of pretax net gains related to settlements of credit card interchange fee litigation matters. Note 3 provides additional information.

TARGET CORPORATION Q3 2025 Form 10-Q 14

			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

Third quarter 2025 included the following notable items:

•GAAP diluted earnings per share were $1.51 and Adjusted EPS1 were $1.78.

•Net Sales were $25.3 billion, a decrease of 1.5 percent from the comparable prior-year period.

•Comparable sales decreased 2.7 percent, reflecting a 2.2 percent decrease in traffic and a 0.5 percent decrease in average transaction amount.

◦Comparable stores-originated sales declined 3.8 percent.

◦Comparable digitally-originated sales increased 2.4 percent.

•Operating income of $0.9 billion was 18.9 percent lower than the comparable prior-year period.

Earnings Per Share			Three Months Ended																		Nine Months Ended
			November 1, 2025						November 2, 2024						Change						November 1, 2025						November 2, 2024						Change
GAAP diluted earnings per share			$	1.51					$	1.85					(18.2)		%				$	5.84					$	6.45					(9.6)		%
Adjustments			0.26						—												(0.71)						—
Adjusted diluted earnings per share			$	1.78					$	1.85					(3.9)		%				$	5.13					$	6.45					(20.5)		%

Note: Amounts may not foot due to rounding.

1Adjusted 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 provided on page 22.

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 November 1, 2025, after-tax ROIC was 13.4 percent, compared with 15.9 percent for the trailing twelve months ended November 2, 2024. The calculation of ROIC is provided on page 23.

Business Environment

In April 2025, the U.S. imposed a range of tariffs on the vast majority of products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs. The U.S. has indicated that it is actively negotiating or expects to negotiate 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 through our vendors, with China as the single largest source of merchandise we import.

We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed. 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.

Business Transformation Initiatives

In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. The three months ended November 1, 2025, included costs and charges related to our business transformation initiatives, including a reduction in our headquarters workforce. Note 4 to the Financial Statements provides additional information.

We may incur additional business transformation costs and charges in future periods, which may adversely affect our results of operations and financial condition; however, we cannot reasonably estimate the amount of such costs and charges at this time.

TARGET CORPORATION Q3 2025 Form 10-Q 15

			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																		Nine Months Ended
(dollars in millions)			November 1, 2025						November 2, 2024						Change						November 1, 2025						November 2, 2024						Change
Net sales			$	25,270					$	25,668					(1.5)		%				$	74,327					$	75,651					(1.7)		%
Cost of sales (a)			18,137						18,402						(1.4)						53,168						53,700						(1.0)
SG&A expenses (a)(b)			5,536						5,459						1.4						15,486						15,969						(3.0)
Depreciation and amortization (exclusive of depreciation included in cost of sales)			649						639						1.7						1,936						1,883						2.8
Operating income (b)			$	948					$	1,168					(18.9)		%				$	3,737					$	4,099					(8.8)		%

Rate Analysis			Three Months Ended												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Gross margin rate (a)			28.2		%				28.3		%				28.5		%				29.0		%
SG&A expense rate (a)(b)			21.9						21.3						20.8						21.1
Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales)			2.6						2.5						2.6						2.5
Operating income margin rate (b)			3.8						4.6						5.0						5.4

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

(b)SG&A Expenses and Operating Income for the three and nine months ended November 1, 2025, include certain business transformation costs described in Note 4 to the Financial Statements. For the nine months ended November 1, 2025, SG&A Expenses and Operating Income also include gains related to interchange fee settlements described in Note 3. These discretely managed items resulted in a net impact to the SG&A Expense Rate of 0.6 and (0.6) percentage points for the three and nine months ended November 1, 2025, respectively, with an inverse impact on the Operating Income Margin Rate in the respective periods. The Reconciliation of Non-GAAP Adjusted EPS tables provide additional information.

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 periods 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.

TARGET CORPORATION Q3 2025 Form 10-Q 16

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

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).

Comparable Sales			Three Months Ended												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Comparable sales change			(2.7)		%				0.3		%				(2.8)		%				(0.5)		%
Drivers of change in comparable sales
Number of transactions (traffic)			(2.2)						2.4						(1.9)						1.1
Average transaction amount			(0.5)						(2.0)						(0.9)						(1.6)

Comparable Sales by Channel			Three Months Ended												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Stores originated comparable sales change			(3.8)		%				(1.9)		%				(4.2)		%				(2.0)		%
Digitally originated comparable sales change			2.4						10.8						3.8						6.9

Merchandise Sales by Channel			Three Months Ended												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Stores originated			80.7		%				81.5		%				80.7		%				81.8		%
Digitally originated			19.3						18.5						19.3						18.2
Total			100		%				100		%				100		%				100		%

Merchandise Sales by Fulfillment Channel			Three Months Ended												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Stores			97.7		%				97.7		%				97.7		%				97.8		%
Other			2.3						2.3						2.3						2.2
Total			100		%				100		%				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												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Apparel & accessories			16		%				16		%				16		%				16		%
Beauty			13						13						13						13
Food & beverage			24						23						24						23
Hardlines			13						12						14						13
Home furnishings & décor			16						17						15						16
Household essentials			18						19						18						19
Total			100		%				100		%				100		%				100		%

TARGET CORPORATION Q3 2025 Form 10-Q 17

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

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 November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively. For the nine months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 17.0 percent and 17.8 percent, respectively.

TARGET CORPORATION Q3 2025 Form 10-Q 18

			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 November 1, 2025, our gross margin rate was 28.2 percent compared with 28.3 percent in the comparable prior-year period. The decrease reflected the net impact of

•merchandising, primarily due to higher markdown rates partially offset by growth in advertising and other revenues;

•lower inventory shrink; and

•lower supply chain and digital fulfillment costs, reflecting the comparison over costs in 2024 related to timing of receipts and elevated inventory, combined with the benefit of productivity improvements at supply chain facilities and in digital fulfillment, partially offset by the deleveraging impact of lower sales.

Year-to-Date

For the nine months ended November 1, 2025, our gross margin rate was 28.5 percent compared with 29.0 percent in the comparable prior-year period. The decrease reflected the net impact of

•merchandising activities, including higher markdown rates and purchase order cancellation costs, partially offset by growth in advertising and other revenues;

•higher supply chain and digital fulfillment costs, partially due to the combined impact of investments in new supply chain facilities and the deleveraging impact of lower sales; and

•lower inventory shrink.

TARGET CORPORATION Q3 2025 Form 10-Q 19

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

Selling, General, and Administrative Expense Rate

For the three months ended November 1, 2025, our SG&A expense rate was 21.9 percent compared with 21.3 percent for the comparable prior-year period. The increase reflected business transformation costs of approximately 0.6 percentage points. The deleveraging impact of lower Net Sales was offset by a reduction in other costs, including lower incentive compensation expense.

For the nine months ended November 1, 2025, our SG&A expense rate was 20.8 percent compared with 21.1 percent for the comparable prior-year period. The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 0.8 percentage points. This rate benefit was partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs, including 0.2 percentage points related to business transformation costs.

Interchange fee settlements and business transformation costs are further described in Notes 3 and 4, respectively, to the Financial Statements.

Store Data

Change in Number of Stores			Three Months Ended												Nine Months Ended
			November 1, 2025						November 2, 2024						November 1, 2025						November 2, 2024
Beginning store count			1,982						1,966						1,978						1,956
Opened			14						13						18						23
Closed			(1)						(1)						(1)						(1)
Ending store count			1,995						1,978						1,995						1,978

Number of Stores and			Number of Stores												Retail Square Feet (a)
Retail Square Feet			November 1, 2025			February 1, 2025			November 2, 2024						November 1, 2025			February 1, 2025			November 2, 2024
170,000 or more sq. ft.			273			273			273						48,824			48,824			48,824
50,000 to 169,999 sq. ft.			1,576			1,559			1,559						197,274			195,050			195,050
49,999 or less sq. ft.			146			146			146						4,420			4,404			4,404
Total			1,995			1,978			1,978						250,518			248,278			248,278

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

TARGET CORPORATION Q3 2025 Form 10-Q 20

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

Other Performance Factors

Net Interest Expense

Net interest expense was $115 million and $346 million for the three and nine months ended November 1, 2025, respectively, compared with $105 million and $321 million in the comparable prior-year periods. The increase was primarily due to higher average debt levels.

Provision for Income Taxes

Our effective income tax rates for the three and nine months ended November 1, 2025, were 19.8 percent and 23.1 percent, respectively, compared with 21.7 percent and 22.5 percent in the comparable prior-year periods. For the three month period, the decrease primarily reflects benefits from tax credits in the current year. For the nine month period, the increase reflects discrete tax expense in the current year related to share-based compensation and global minimum taxes, partially offset by benefits from tax credits.

TARGET CORPORATION Q3 2025 Form 10-Q 21

			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
						November 1, 2025																		November 2, 2024
(millions, except per share data)						Pretax						Net of Tax						Per Share						Pretax						Net of Tax						Per Share
GAAP diluted earnings per share																		$	1.51																	$	1.85
Adjustments
Business transformation costs (a)						$	161					$	120					$	0.26					$	—					$	—					$	—
Adjusted EPS																		$	1.78																	$	1.85

Reconciliation of Non-GAAP Adjusted EPS						Nine Months Ended
						November 1, 2025																		November 2, 2024
(millions, except per share data)						Pretax						Net of Tax						Per Share						Pretax						Net of Tax						Per Share
GAAP diluted earnings per share																		$	5.84																	$	6.45
Adjustments
Business transformation costs (a)						$	161					$	120					$	0.26					$	—					$	—					$	—
Interchange fee settlements (b)						(593)						(441)						(0.97)						—						—						—
Adjusted EPS																		$	5.13																	$	6.45

Note: Amounts may not foot due to rounding.

(a)Note 4 to the Financial Statements provides additional information.

(b)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																		Nine Months Ended
(dollars in millions)						November 1, 2025						November 2, 2024						Change						November 1, 2025						November 2, 2024						Change
Net earnings						$	689					$	854					(19.3)		%				$	2,660					$	2,988					(11.0)		%
+ Provision for income taxes						170						237						(28.4)						799						867						(7.9)
+ Net interest expense						115						105						8.5						346						321						7.8
EBIT						$	974					$	1,196					(18.7)		%				$	3,805					$	4,176					(8.9)		%
+ Total depreciation and amortization (a)						773						754						2.6						2,331						2,215						5.2
EBITDA						$	1,747					$	1,950					(10.5)		%				$	6,136					$	6,391					(4.0)		%

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

TARGET CORPORATION Q3 2025 Form 10-Q 22

			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												November 1, 2025						November 2, 2024 (a)
Operating income												$	5,204					$	5,964
+ Net other income												97						105
EBIT												5,301						6,069
+ Operating lease interest (b)												167						157
- Income taxes (c)												1,238						1,403
Net operating profit after taxes												$	4,230					$	4,823

Denominator						November 1, 2025						November 2, 2024						October 28, 2023
Current portion of long-term debt and other borrowings						$	1,133					$	1,635					$	1,112
+ Noncurrent portion of long-term debt						15,366						14,346						14,883
+ Shareholders' investment						15,501						14,489						12,514
+ Operating lease liabilities (d)						3,924						3,765						3,351
- Cash and cash equivalents						3,822						3,433						1,910
Invested capital						$	32,102					$	30,802					$	29,950
Average invested capital (e)						$	31,451					$	30,376
After-tax return on invested capital (f)						13.4		%				15.9		%

(a)The trailing twelve months ended November 2, 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 22.6 percent and 22.5 percent for the trailing twelve months ended November 1, 2025, and November 2, 2024, respectively. For the trailing twelve months ended November 1, 2025, and November 2, 2024, includes tax effect of $1.2 billion and $1.4 billion, respectively, related to EBIT and $38 million and $35 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 November 1, 2025, includes the impact of after-tax net gains on interchange fee settlements and business transformation costs, which had a net impact on after-tax ROIC of 1.0 percentage point. Notes 3 and 4 to the Financial Statements provide additional information.

TARGET CORPORATION Q3 2025 Form 10-Q 23

			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 $3.8 billion, $4.8 billion, and $3.4 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. Our cash and cash equivalents balance includes short-term investments of $2.9 billion, $3.9 billion, and $2.5 billion as of November 1, 2025, February 1, 2025, and November 2, 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 $3.5 billion and $4.1 billion for the nine months ended November 1, 2025, and November 2, 2024, respectively. The decrease reflects lower net earnings, as well as the net impact of lower accounts payable leverage and inventory purchases in the current year.

Inventory

Inventory was $14.9 billion as of November 1, 2025, compared with $12.7 billion and $15.2 billion as of February 1, 2025, and November 2, 2024, respectively. The increase from February 1, 2025, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period. The decrease compared to November 2, 2024, reflects alignment of inventory with sales trends, partially offset by higher merchandise costs.

Investing Cash Flows

Cash required for investing activities increased to $2.8 billion for the nine months ended November 1, 2025, compared to $1.9 billion for the nine months ended November 2, 2024, due to higher capital expenditures.

Dividends

We paid dividends totaling $518 million ($1.14 per share) and $1.5 billion ($3.38 per share) for the three and nine months ended November 1, 2025, respectively, and $516 million ($1.12 per share) and $1.5 billion ($3.32 per share) for the three and nine months ended November 2, 2024, respectively, a per share increase of 1.8 percent. We declared dividends totaling $526 million ($1.14 per share) during the third quarter of 2025 and $521 million ($1.12 per share) during the third 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 $403 million to repurchase shares during the nine months ended November 1, 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 10 to the Financial Statements for more information.

TARGET CORPORATION Q3 2025 Form 10-Q 24

			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 November 1, 2025, our credit ratings were as follows:

Credit Ratings			Moody’s			S&P			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.

We issued $1.0 billion of unsecured debt in both March and June 2025, and repaid $1.5 billion of unsecured debt in April 2025. Note 8 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. In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day credit facility. This credit facility and our $3.0 billion unsecured revolving credit facility that will expire in October 2028 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 November 1, 2025, or November 2, 2024. Note 8 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 November 1, 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 Q3 2025 Form 10-Q 25

			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, changes in the consumer landscape, evolution in tariffs and global trade policy, the impacts of business transformation efforts, 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

There were no 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 Q3 2025 Form 10-Q 26

			SUPPLEMENTAL INFORMATION			Table of Contents
						Index to Notes

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On November 14, 2025, the United States District Court for the Middle District of Florida transferred the purported federal securities law class actions naming Target Corporation and current and former members of its Board of Directors to the United States District Court for the District of Minnesota. These proceedings, which were consolidated on July 24, 2025, relate to certain prior disclosures about risks related to Target’s environmental, social, and governance initiatives (including with respect to diversity, equity, and inclusion) and oversight of those risks. These proceedings were previously described in Target’s Annual Report on Form 10-K for the year ended February 1, 2025.

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 34.8 million shares of common stock for a total investment of $6.7 billion. The table below presents information with respect to Target common stock purchases made during the three months ended November 1, 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
August 3, 2025 through August 30, 2025
Open market and privately negotiated purchases			96,300						$	97.99					96,300						$	8,405,041,035
August 31, 2025 through October 4, 2025
Open market and privately negotiated purchases			1,558,284						91.20						1,558,284						8,262,928,791
October 5, 2025 through November 1, 2025
Open market and privately negotiated purchases			—						—						—						8,262,928,791
Total			1,654,584						$	91.59					1,654,584						$	8,262,928,791

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

TARGET CORPORATION Q3 2025 Form 10-Q 27

			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).
10.20			**			364-Day Credit Agreement, dated as of October 9, 2025, among Target Corporation, the Banks listed therein, the Co-Documentation Agents and Syndication Agent listed therein, and Bank of America, N.A., as Administrative Agent.
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 Q3 2025 Form 10-Q 28

			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: November 26, 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 Q3 2025 Form 10-Q 29

FAQ

How did Target (TGT) perform financially in Q3 2025?

For the quarter ended November 1, 2025, Target reported net sales of $25.27 billion, down 1.5% year over year. GAAP diluted EPS was $1.51 versus $1.85 a year ago, and Adjusted EPS was $1.78. Operating income was $948 million, an 18.9% decline from the prior-year quarter.

What happened to Targets comparable sales and traffic in Q3 2025?

Q3 2025 comparable sales declined 2.7%, driven by a 2.2% decrease in the number of transactions (traffic) and a 0.5% decline in average transaction amount. Store-originated comparable sales fell 3.8%, while digitally originated comparable sales increased 2.4%.

How is Targets profitability trending, including margins and ROIC?

Targets Q3 gross margin rate was 28.2%, slightly below 28.3% last year, reflecting higher markdowns partly offset by lower inventory shrink and higher advertising and other revenues. The SG&A rate rose to 21.9% from 21.3%, partly from business transformation costs. After-tax ROIC for the trailing twelve months was 13.4%, down from 15.9% a year earlier.

What are Targets business transformation costs and how do they affect results?

In 2025, Target began a multi-year transformation of its organizational structure, processes, and technology. For Q3 and the nine months ended November 1, 2025, the company recorded $161 million of business transformation costs in SG&A, including $115 million of headquarters severance and $46 million of asset-related charges tied to terminating a commercial partnership. These costs reduce GAAP earnings but are excluded from Adjusted EPS.

How strong is Targets balance sheet and liquidity as of November 1, 2025?

As of November 1, 2025, Target held $3.82 billion in cash and cash equivalents, including $2.89 billion of short-term investments. Inventory was $14.90 billion, below the prior-year level. Long-term debt and other borrowings totaled $16.50 billion (including current portion), and invested capital was $32.10 billion. Target also has a new $1.0 billion 364-day credit facility and a separate $3.0 billion revolving facility, both undrawn.

What shareholder returns did Target provide year-to-date 2025?

During the nine months ended November 1, 2025, Target paid dividends of $1.5 billion ($3.38 per share) and repurchased 3.8 million shares for $403 million. The boards $15 billion repurchase authorization, approved in August 2021, has supported cumulative buybacks of 34.8 million shares for $6.7 billion.

How are tariffs and sourcing risks described in Targets Q3 2025 10-Q?

Target notes that, following U.S. actions in April 2025 imposing and adjusting tariffs on many imported products, approximately one-half of its merchandise is sourced from outside the U.S., with China as its largest import source. The company states that the combined effects of tariffs, sourcing strategies, pricing, and consumer behavior could materially impact future sales and results.