Target(US:TGT)2025-05-30 18:14Financial Performance - GAAP diluted earnings per share were $2.27, an increase of 11.7% from $2.03 in the prior year, while adjusted diluted earnings per share decreased by 35.9% to $1.30[56] - Net sales for the quarter were $23.8 billion, a decrease of 2.8% compared to the same period last year, with comparable sales down 3.8%[61] - Operating income increased by 13.6% to $1.5 billion, benefiting from $593 million in pretax net gains related to interchange fee settlements[61] - Net earnings for the three months ended May 3, 2025, were $1,036 million, a 10.0% increase from $942 million for the same period in 2024[84] - EBIT increased to $1,498 million, reflecting a 13.0% growth compared to $1,325 million in the prior year[84] - EBITDA for the quarter was $2,285 million, up 11.9% from $2,043 million year-over-year[84] Margins and Returns - The gross margin rate was 28.2%, down from 28.8% in the prior year, reflecting higher markdown rates and increased supply chain costs[74] - The after-tax return on invested capital (ROIC) for the trailing twelve months was 15.1%, slightly down from 15.4% in the previous year[57] - After-tax return on invested capital was 15.1% for the trailing twelve months ended May 3, 2025, slightly down from 15.4% in the previous year[87] Cash Flow and Liquidity - Operating cash flows were $300 million for the three months ended May 3, 2025, down from $1,100 million in the same period last year[91] - Cash and cash equivalents stood at $2.9 billion as of May 3, 2025, compared to $3.6 billion a year earlier[90] - Dividends paid totaled $510 million ($1.12 per share) for the quarter, a 1.8% increase from $508 million ($1.10 per share) in the prior year[94] - The company repurchased shares worth $251 million during the three months ended May 3, 2025[95] Inventory and Sales Dynamics - Inventory as of May 3, 2025, was $13.0 billion, an increase from $12.7 billion in February 2025 and $11.7 billion in May 2024, attributed to lower-than-expected sales[92] - Comparable digitally-originated sales increased by 4.7%, while comparable stores-originated sales declined by 5.7%[61] Tax and Compliance - The effective income tax rate rose to 25.0% from 22.7% in the prior year, primarily due to discrete tax expenses related to share-based compensation[78] Store Operations and Strategy - The company opened 3 new stores, bringing the total store count to 1,981, up from 1,978 at the beginning of the quarter[75] - Target Circle Card penetration decreased to 17.4% from 18.0% year-over-year, indicating a slight decline in customer engagement with the loyalty program[70] - The company is actively monitoring the impact of tariffs and adjusting sourcing and pricing strategies to mitigate potential negative effects on sales[60] Debt Management - The company issued $1.0 billion of debt in March 2025 and repaid $1.5 billion in April 2025[98]