Target(TGT)2024-08-30 15:54Revenue and Sales Performance - Total revenue for Q2 2024 was 1.6 billion, a 36.6% increase compared to the prior-year period[38] - Gross margin rate improved to 28.9% for Q2 2024, up from 27.0% in the prior-year period, driven by cost improvements and favorable category mix[55] - EBIT increased by 36.3% to 1.213 billion in the prior-year period[64] - EBITDA grew by 26.4% to 1.896 billion in the prior-year period[64] - GAAP and Adjusted EPS for the three months ended August 3, 2024, were 1.80 in the prior-year period[63] Expenses and Investments - SG&A expense rate increased to 21.2% in Q2 2024, up from 20.9% in the prior-year period, due to investments in team member pay and benefits[56] - Net interest expense decreased to 216 million for the six months ended August 3, 2024, primarily due to higher interest income[59] - Effective income tax rates rose to 22.9% for the three months and 22.8% for the six months ended August 3, 2024, driven by higher pretax earnings and lower discrete tax benefits[60] Capital and Liquidity - After-tax ROIC for the trailing twelve months ended August 3, 2024, was 16.6%, compared to 13.7% for the prior-year period[40] - After-tax return on invested capital improved to 16.6% for the trailing twelve months ended August 3, 2024, up from 13.7% in the prior-year period[67] - Cash and cash equivalents stood at 2.5 billion in short-term investments[71] - Dividends paid totaled 1.10 per share) for the three months ended August 3, 2024, a 1.9% per share increase from the prior-year period[73] - The company has a 3.0 billion unsecured revolving credit facility, both of which backstop its commercial paper program, with no outstanding balances in 2023 or 2024[78] - No commercial paper was outstanding as of August 3, 2024, or July 29, 2023[78] - The company believes its liquidity sources, including operating cash flows, credit facility capacity, and access to capital markets, will remain adequate to meet obligations and fund strategic initiatives[80] Store Operations and Inventory - Store count increased to 1,966 as of August 3, 2024, with 3 new stores opened in the three months and 10 new stores opened in the six months[58] - Inventory increased to 11.9 billion as of February 3, 2024[72] Credit and Risk Management - The company expects to remain in compliance with debt covenants, including secured debt level and debt leverage covenants[79] - Certain outstanding notes allow note holders to demand repayment if the company experiences both a change in control and a downgrade to non-investment grade credit ratings[79] - The company’s credit ratings are A2 (Moody’s), A (S&P), and A (Fitch) for long-term debt, with potential adverse impacts if ratings are lowered[77] - No material changes in primary risk exposures or market risk management have occurred since the last disclosure in the Form 10-K[85] Accounting and Forward-Looking Statements - The company does not expect recently issued accounting pronouncements to materially affect its financial statements[81] - Forward-looking statements in the report are protected under the Private Securities Litigation Reform Act of 1995, but actual results could differ materially[84] - Key forward-looking statements include expectations regarding financial performance, liquidity adequacy, debt funding, share repurchases, and capital expenditures[83] Customer and Loyalty Programs - Target Circle Card Penetration was 17.7% for Q2 2024, down from 18.6% in the prior-year period[52]