Target(TGT) - 2024 Q2 - Quarterly Report

Financial Performance - GAAP diluted earnings per share for Q2 2023 were $1.80, a 357.6% increase compared to$ 0.39 in Q2 2022[45]. - Total revenue for Q2 2023 was $24.8 billion, reflecting a decrease of 4.9% from$ 26.0 billion in Q2 2022, with comparable sales down 5.4%[43][51]. - Operating income for Q2 2023 was $1.2 billion, representing a 273.0% increase from$ 321 million in the prior year[51]. - Non-GAAP adjusted EPS for the three months ended July 29, 2023, was $1.80, compared to$ 0.39 in the prior-year period[71]. - Net earnings for the three months ended July 29, 2023, were $835 million, a 356.5% increase from$ 183 million in the prior-year period[72]. - EBIT for the three months ended July 29, 2023, was $1,213 million, a 268.8% increase from$ 329 million in the prior-year period[72]. Cash Flow and Liquidity - Cash flow from operating activities for the first half of 2023 was $3.4 billion, a significant increase from$ 47 million in the same period of 2022[44]. - Operating cash flows for the six months ended July 29, 2023, were $3.4 billion, a significant increase from$ 47 million for the same period in 2022, driven by higher net earnings and improved working capital[81]. - As of July 29, 2023, the company's cash and cash equivalents balance was $1.6 billion, down from$ 2.2 billion in January 2023 and $1.1 billion in July 2022[80]. - The company has$ 1.0 billion in 364-day and $3.0 billion in unsecured revolving credit facilities, with no outstanding balances as of July 29, 2023[88]. - The company believes its sources of liquidity will be adequate to meet contractual obligations, working capital, and planned capital expenditures for the foreseeable future[90]. Margins and Expenses - The gross margin rate for Q2 2023 was 27.0%, compared to 21.5% in Q2 2022[51]. - Gross margin rate for the three months ended July 29, 2023, was 27.0%, up from 21.5% in the prior-year period[61]. - SG&A expense rate increased to 20.9% for the three months ended July 29, 2023, compared to 19.2% in the prior-year period[64]. - Net interest expense rose to$ 141 million for the three months ended July 29, 2023, compared to $112 million in the prior-year period[67]. - Effective income tax rate increased to 22.2% for the three months ended July 29, 2023, from 15.8% in the prior-year period[68]. Inventory and Sales - Comparable digitally-originated sales decreased by 10.5% in Q2 2023, while comparable stores-originated sales declined by 4.3%[55]. - Inventory levels have decreased as of July 29, 2023, compared to January 28, 2023, reflecting effective inventory management strategies[47]. - Inventory decreased to$ 12.7 billion as of July 29, 2023, from $13.5 billion in January 2023 and$ 15.3 billion in July 2022, reflecting alignment with sales trends and supply chain improvements[82]. Customer Engagement and Loyalty - RedCard penetration decreased to 18.6% in Q2 2023 from 20.1% in Q2 2022, indicating a decline in customer engagement with the loyalty program[58]. Capital Allocation and Investments - Capital allocation priorities include investing in business growth, maintaining competitive dividends, and repurchasing shares[79]. - Cash required for investing activities increased to $2.8 billion for the six months ended July 29, 2023, compared to$ 2.5 billion for the same period in 2022, due to capital investments[82]. - Dividends paid totaled $499 million ($ 1.08 per share) for the three months ended July 29, 2023, and $996 million ($ 2.16 per share) for the six months ended July 29, 2023, representing a 20% increase per share compared to the same periods in 2022[83]. - The company did not repurchase any shares during the six months ended July 29, 2023[84]. Credit Ratings and Risk Management - As of July 29, 2023, the company's credit ratings were A2 from Moody's, A from Standard and Poor's, and A from Fitch, indicating strong creditworthiness[87]. - No material changes in primary risk exposures or management of market risks were reported compared to the previous fiscal year[95].