¬
Annual Report
2022
View the digital version
of our Annual Report at
Target.com/annualreport.
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Welcome to our
2022 Annual Report
To explore key stories of the past
year and find out what’s ahead,
visit corporate.target.com. You can
view our Annual Report online at
target.com/annualreport.
Financial Highlights
(Note: Reflects amounts attributable to continuing operations. 2017 was a 53-week year.)
Total Revenue
In Millions
Operating Income
In Millions
Net Earnings
In Millions
Diluted EPS
4
1
7
,
2
7
$
6
5
3
,
5
7
$
2
1
,1
8
7
$
1
6
5
,
3
9
$
5
0
0
,
6
0
1
$
0
2
,1
9
0
1
$
4
2
2
,
4
$
0
1
,1
4
$
8
5
6
,
4
$
9
3
5
,
6
$
6
4
9
,
8
$
8
4
8
,
3
$
8
0
9
,
2
$
0
3
9
,
2
$
9
6
2
,
3
$
8
6
3
,
4
$
6
4
9
,
6
$
0
8
7
,
2
$
9
2
.
5
$
0
5
.
5
$
4
3
.
6
$
4
6
.
8
$
0
.1
4
1
$
8
9
.
5
$
’17
’18
’19
’20
’21
’22
’17
’18
’19
’20
’21
’22
’17
’18
’19
’20
’21
’22
’17
’18
’19
’20
’21
’22
2022 Growth: 2.9%
Five-year CAGR: 8.5%
2022 Growth: –57.0%
Five-year CAGR: –1.8%
2022 Growth: –60.0%
Five-year CAGR: –0.9%
2022 Growth: –57.6%
Five-year CAGR: 2.5%
Total 2022 Sales: $107,588 Million
28%
21%
18%
17%
16%
Beauty & Household
Essentials
Food & Beverage
Home Furnishings
& Décor
Hardlines
Apparel &
Accessories
Letter to Shareholders
Dear shareholders,
Steady stewardship has always been a hallmark of our growth
philosophy. Deliver what guests want and need today while anticipating
where they’re headed tomorrow. Invest vigorously in the team, strategy
and capabilities to stay in step with guests. Grow steadily. Grow
profitably. And harvest the benefits of increasing scale to build on
these efforts perpetually.
This discipline and alignment have produced continuous growth
through a wide range of business environments, with ample
opportunity still ahead of us.
But not all of our recent growth has been steady. In the core pandemic
years of 2020 and 2021, we spiked to never-before-seen growth rates
that stretched our model to new limits. Our team was able to support
that unexpected growth because the fundamentals were in place,
and we carefully stewarded capital, capabilities and above all our
connection to guests in an extraordinary moment for our company.
Even in 2022, with constrained consumer demand and massive shifts
in buying behaviors, we grew by more than $3 billion. Today, Target is
more than $30 billion bigger than it was in 2019.
Consistently trusted
A significant part of this growth has been driven by traffic. Last year’s
traffic gain of 2.1% marked the sixth straight year of growth in this
key metric. It demonstrates that even as guests’ day-to-day needs
fluctuate—often rapidly and dramatically—they’re turning to Target
more and more for everything they want and need.
That speaks to the trust and loyalty we’re continuously building with
our guests. Regardless of era or environment, our team takes a lot
of pride in being able to flex into the merchandise categories and
channels that are most relevant to guests—and then being able to
flex again when things change.
For instance, last year, comp sales in frequency categories like
food & beverage, essentials and beauty grew quickly as guests on
tighter budgets prioritized basics. But while navigating high inflation
and rapidly rising interest rates, guests still looked to us for their
discretionary choices, purchasing nearly $55 billion in apparel,
home and hardlines in 2022.
This flexibility and focus on guests consistently delivers growth—
whether in the pre-pandemic years of 2017–2019, or in the peak
of the pandemic, or in this still-unfolding transitional timeframe that
we’re living and leading through.
Anchoring to new excellence
The model we laid out in 2019, before the pandemic, was to grow
total revenue steadily in the mid-single digits, and to translate that into
accelerated growth in operating income and earnings per share.
In broad strokes, after we recover from the unique and significant profit
headwinds we faced in 2022, we believe that this remains the right
trajectory for Target in the long term.
However, a couple of variables in the model have changed significantly
for the better.
First, the revenue gains we anticipate in the years ahead will be built
on a base of nearly $110 billion, not the $78 billion that served as our
starting mark in 2019.
Second, with the new scale of our business and the continuing
maturation of capabilities that barely existed three years ago, we see
tremendous opportunities to streamline and simplify how we run Target.
We expect these advances in efficiency to result in $2 to $3 billion in
savings in the years ahead, providing additional fuel for future growth.
But more importantly, they’ll make it easier for our team to focus on the
fundamentals of delivering a great experience for more guests across
more trips as we continue to grow.
More of what works
Our team moved into this year with a lot of energy, a unified
commitment to guests and growth and a companywide focus on
retail fundamentals and efficiency. In 2023, we’ll continue to:
• Support our team and lean into our culture, knowing they’re at the
heart of our overall success.
• Invest in our store-remodel and expansion plans, in our supply
chain and in digital and same-day fulfillment through our
stores-as-hubs model.
• Deliver a steady cadence of newness in owned and national brands
across our multi-category assortment.
• Bring the magic of Tar-zhay to life, day in and day out, while delivering
affordable joy for our guests.
While the facets of our strategy remain consistent, we’re accelerating
key growth drivers this year. Shareholders will see particular emphasis
on: digital growth, our loyalty ecosystem, our media company Roundel
and our enterprise sustainability strategy, Target Forward.
We recognize that we’re moving through an unpredictable consumer
and economic landscape, with plenty of near-term challenges on the
horizon. But we’re optimistic about what we can deliver as a team.
We believe we’ll be able to flex up the categories and the value
proposition that are most relevant to our guests right now, while
inspiring guests with newness and staying focused on gaining share
across our portfolio to build on our multiyear growth trajectory.
We’re also realistic about how 2023 will keep challenging us to be agile,
resilient and responsive as we sustain our steady record of taking care
of our guests, our team, our communities and our shareholders.
I appreciate your continued support and look forward to the value we’ll
create this year.
Brian Cornell, Chair and CEO
Financial Summary
FINANCIAL RESULTS (in millions)
Sales
Other revenue
Total revenue
Cost of sales
Selling, general and administrative expenses (SG&A)
Depreciation and amortization (exclusive of depreciation
included in cost of sales)
Operating income
Net interest expense (a)
Net other (income) / expense
Earnings from continuing operations before income taxes
Provision for income taxes
Net earnings from continuing operations
Discontinued operations, net of tax
Net earnings
PER SHARE
Basic earnings per share
Continuing operations
Discontinued operations
Net earnings per share
Diluted earnings per share
Continuing operations
Discontinued operations
Net earnings per share
Cash dividends declared
FINANCIAL POSITION (in millions)
Total assets
Capital expenditures
Long-term debt and other borrowings,
including current portion
Less: Short-term investments
Net debt (b)
Shareholders’ investment
FINANCIAL RATIOS
Comparable sales growth (c)
Gross margin (% of sales)
SG&A expenses (% of total revenue)
Operating income margin (% of total revenue)
OTHER
2022
2021
2020
2019
2018
$ 107,588
$ 104,611
$ 92,400
$
77,130
$ 74,433
1,532
109,120
82,229
20,658
2,385
3,848
478
(48)
3,418
638
2,780
—
1,394
106,005
74,963
19,752
2,344
8,946
421
(382)
8,907
1,961
6,946
—
1,161
93,561
66,177
18,615
2,230
6,539
977
16
5,546
1,178
4,368
—
982
78,112
54,864
16,233
2,357
4,658
477
(9)
4,190
921
3,269
12
923
75,356
53,299
15,723
2,224
4,110
461
(27)
3,676
746
2,930
7
$
2,780
$
6,946
$
4,368
$
3,281
$
2,937
$
$
$
$
$
6.02
—
6.02
5.98
—
5.98
4.14
$ 53,335
$
5,528
$
14.23
—
$
14.23
$
$
$
$
$
14.10
—
14.10
3.38
53,811
3,544
$
$
$
$
$
$
$
8.72
—
8.72
8.64
—
8.64
2.70
$
$
$
$
$
6.39
0.02
6.42
6.34
0.02
6.36
2.62
$
$
5.54
0.01
5.55
$
5.50
0.01
5.51
2.54
$
$
51,248
2,649
$ 42,779
$
3,027
$ 41,290
$
3,516
$
16,139
$
13,720
$ 12,680
$
11,499
$ 11,275
1,343
14,796
11,232
$
$
4,985
8,735
12,827
$
$
7,644
1,810
$
$
5,036
14,440
$
$
9,689
11,833
769
$ 10,506
$
11,297
2.2%
23.6%
18.9%
3.5%
12.7%
28.3%
18.6%
8.4%
19.3%
28.4%
19.9%
7.0%
3.4%
28.9%
20.8%
6.0%
5.0%
28.4%
20.9%
5.5%
Common shares outstanding (in millions)
460.3
471.3
500.9
504.2
517.8
Operating cash flow provided by continuing
operations (in millions)
Revenue per square foot (d)
Retail square feet (in thousands)
Square footage growth
Total number of stores
Total number of supply chain centers
$
$
4,018
447
244,584
0.5%
1,948
55
$
$
8,625
437
243,284
0.7%
1,926
48
$
$
10,525
388
241,648
0.5%
1,897
44
$
$
7,099
326
240,516
0.4%
1,868
42
$
$
5,970
314
239,581
0.1%
1,844
40
(a) Includes losses on early retirement of debt of $512 million and $10 million for 2020 and 2019, respectively.
(b) We calculate Net Debt, a non-GAAP measure, as Long-Term Debt and Other Borrowings, Including Current Portion, net of Short-Term Investments. We believe Net Debt is a useful indicator
of our level of financial leverage because short-term investments are available to pay debt maturity obligations. A reconciliation to the most comparable GAAP measure, Long-Term Debt and
Other Borrowings, Including Current Portion, is provided above. Other companies may calculate Net Debt differently than we do, limiting the usefulness of the measure for comparisons with
other companies.
(c) See definition of comparable sales in Form 10-K, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
(d) Represents revenue per retail square foot which is calculated using rolling four quarters average retail square feet.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 28, 2023
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)
Registrant’s telephone number, including area code: (612) 304-6073
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ☒
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 x
Non-accelerated filer o
Accelerated filer o
Smaller reporting company o
Emerging growth company o
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting stock held by non-affiliates of the registrant as of July 29, 2022, was $75,322,105,637 based on the
closing price of $163.38 per share of common stock as reported on the New York Stock Exchange.
Total shares of common stock, par value $0.0833, outstanding as of March 2, 2023, were 460,363,991.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Target's Proxy Statement for the Annual Meeting of Shareholders to be held on June 14, 2023, are incorporated into Part III.
TABLE OF CONTENTS
Table of Contents
Index to Financial Statements
PART I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Item 9C
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Reserved
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10
Item 11
Item 12
Item 13
Item 14
PART IV
Item 15
Item 16
SIGNATURES
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
2
7
14
15
16
16
17
18
19
32
33
62
62
62
62
63
63
63
63
63
64
67
68
1
TARGET CORPORATION
2022 Form 10-K
BUSINESS
PART I
Table of Contents
Index to Financial Statements
Item 1. Business
General
Target Corporation (Target, the Corporation, or the Company) was incorporated in Minnesota in 1902. Our corporate
purpose is to help all families discover the joy of everyday life. We offer to our customers, referred to as "guests,"
everyday essentials and fashionable, differentiated merchandise at discounted prices. We operate as a single
segment designed to enable guests to purchase products seamlessly in stores or through our digital channels.
Since 1946, we have given 5 percent of our profit to communities.
Strategy
Our team, technology, and operations enable us to serve guests, fulfill our purpose, and drive business results
through a durable, growth-focused enterprise strategy that differentiates Target in the marketplace. The six pillars of
our strategy are:
• Differentiating from our competition with our assortment of unique owned brands and curated leading
•
•
•
national brands;
Investing to create an engaging, convenient, safe, and differentiated shopping experience for our guests;
Leveraging our stores as fulfillment hubs to efficiently meet our guests' needs, whether they purchase
online or in-store;
Engaging with our guests through programs like Target Circle and RedCard to maintain and enhance our
relevancy;
• Delivering affordability to our guests; and
•
Leveraging our size and scale to benefit people, the planet, and our business, primarily through Target
Forward, our enterprise sustainability strategy.
Our recent growth in sales demonstrates the strength and relevance of Target’s strategy. Our strategy places stores
at the center of our flexible fulfillment approach, with stores fulfilling more than 96 percent of total sales, which
provides convenience for our guests at a reduced fulfillment cost.
TARGET CORPORATION
2022 Form 10-K
2
Sales (in Billions)$92.4$104.6$107.6$75.8$84.9$87.6$16.6$19.7$20.0Stores OriginatedDigitally Originated202020212022
BUSINESS
Sales by Fulfillment Channel
Table of Contents
Index to Financial Statements
Financial Highlights
For information on key financial highlights, see Part II, Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations (MD&A).
Seasonality
A larger share of annual revenues traditionally occurs in the fourth quarter because it includes the November and
December holiday sales period.
Merchandise
The majority of our stores offer a wide assortment of general merchandise and food. Nearly all of our stores larger
than 170,000 square feet offer a variety of general merchandise and a full line of food items comparable to
traditional supermarkets. Our digital channels include a wide merchandise and food assortment, including many
items found in our stores, along with a complementary assortment sold by Target and third parties. We manage our
business across the five core merchandise categories shown below. Within categories, gross margins vary
depending on the type of merchandise.
Sales by Merchandise Category
Apparel & Accessories
Food & Beverage
Home Furnishings & Décor
Beauty & Household Essentials
Hardlines
3
TARGET CORPORATION
2022 Form 10-K
202096.0%4.0%202196.4%3.6%202296.7%3.3%202016%26%20%18%20%202117%26%20%18%19%202216%28%21%17%18% BUSINESS
Table of Contents
Index to Financial Statements
A significant portion of our sales is from national brand merchandise. Approximately one-third of our sales come
from our owned and exclusive brands, including, but not limited to, the brands listed below.
Owned Brands
A New Day™
All in Motion™
Art Class™
Auden™
Ava & Viv™
Boots & Barkley™
Brightroom™
Bullseye's Playground™
Casaluna™
Cat & Jack™
Cloud Island™
Colsie™
Embark™
Everspring™
Favorite Day™
Future Collective™
Good & Gather™
Goodfellow & Co™
Hearth & Hand™ with Magnolia
Heyday™
Hyde & EEK! Boutique™
JoyLab™
Kindfull™
Knox Rose™
Kona Sol™
Made By Design™
Market Pantry™
Mondo Llama™
More Than Magic™
Opalhouse™
Open Story™
Original Use™
Pillowfort™
Project 62™
Room Essentials™
Shade & Shore™
Smartly™
Smith & Hawken™
Sonia Kashuk™
Spritz™
Stars Above™
Sun Squad™
Threshold™
Universal Thread™
up & up™
Wild Fable™
Wondershop™
Xhilaration™
Exclusive Adult Beverage Brands
California Roots™
Casa Cantina™
Headliner™
Jingle & Mingle™
Photograph™
Rosé Bae™
SunPop™
The Collection™
Wine Cube™
We also sell merchandise through periodic exclusive design and creative partnerships, and shop-in-shop
experiences, with partners such as Apple, Disney, Levi's, and Ulta Beauty, and generate revenue from in-store
amenities such as Starbucks, Target Café, and Target Optical. CVS Pharmacy, Inc. (CVS) operates pharmacies and
clinics in our stores under a perpetual operating agreement from which we generate annual occupancy income.
Customer Loyalty Programs
Our guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they
use their Target Debit Card, RedCard Reloadable Account, Target Credit Card, or Target MasterCard® (collectively,
RedCards™). We also seek to drive customer loyalty and trip frequency through our Target Circle program, where
members earn 1 percent rewards on nearly all non-RedCard purchases, among other benefits.
Distribution
The vast majority of merchandise is distributed to our stores through our network of distribution centers. Common
carriers ship merchandise to and from our distribution centers. Vendors or third-party distributors ship certain food
items and other merchandise directly to our stores. Merchandise sold through our digital channels is distributed to
our guests through guest pick-up at our stores, via common carriers (from stores, distribution centers, vendors, and
third-party distributors), and delivery via our wholly owned subsidiary, Shipt, Inc. (Shipt). Our stores fulfill the
majority of the digitally originated sales, which allows improved product availability, faster fulfillment times, reduced
shipping costs, and allows us to offer guests a suite of same-day fulfillment options such as Order Pickup, Drive Up,
and Shipt.
TARGET CORPORATION
2022 Form 10-K
4
Human Capital Management
BUSINESS
Table of Contents
Index to Financial Statements
In support of our purpose—to help all families discover the joy of everyday life—we invest in our team, our most
important asset, by giving them opportunities to grow professionally, take care of themselves, each other, and their
families, and to make a difference for our guests and our communities. We are among the largest private employers
in the United States (U.S.), and our workforce has varying goals and expectations of their employment relationship,
from team members looking to build a career to students, retirees, and others who are seeking to supplement their
income in an enjoyable atmosphere. We seek to be an employer of choice to attract and retain top talent no matter
their objectives in seeking employment. To that end, we strive to foster an engaged, diverse, inclusive, safe,
purpose-driven culture where employees, referred to as "team members," have equitable opportunities for success.
As of January 28, 2023, we employed approximately 440,000 full-time, part-time, and seasonal team members.
Because of the seasonal nature of the retail business, employment levels peak in the holiday season. We also
engage independent contractors, most notably in our Shipt subsidiary.
Our Board of Directors, through the Compensation and Human Capital Management Committee, oversees human
capital management matters.
Talent Development and Engagement
We offer a compelling work environment with meaningful experiences and abundant growth and career-
development opportunities. This starts with the opportunity to do challenging work and learn on the job and is
supplemented by programs and continuous learning that help our team build skills at all levels, including programs
focused on specialized skill development, leadership opportunities, coaching, and mentoring. Our talent and
succession planning process supports the development of a diverse talent pipeline for leadership and other critical
roles. We monitor our team members’ perceptions of these commitments through a number of surveys and take
steps to address areas needing improvement.
Diversity, Equity, and Inclusion (DE&I)
We embrace diversity and strive to give our team members equitable access to opportunities. We champion
workplace diversity and an inclusive work environment with a focus on attracting, engaging, developing, and
advancing team members equitably in order to reflect the guests and communities we serve. We monitor the
representation of women and racially or ethnically diverse team members at different levels throughout the company
and disclose the composition of our team in our annual Workforce Diversity Report and EEO-1 report. We set
company-wide DE&I goals to drive progress in these areas. Developing environments where all team members feel
seen, heard, and welcome to belong is part of Target's core value of inclusivity and is fundamental to creating an
inclusive guest experience.
Compensation and Benefits
Our compensation and benefits are designed to support the financial, mental, and physical well-being of our team
members and their families. We believe in paying team members equitably, regardless of gender, race, or ethnicity,
and we regularly review the pay data of U.S. team members to confirm that we are doing so. Our compensation
packages include a starting wage range of $15 to $24 per hour for U.S. hourly team members in our stores and
supply chain facilities (who comprise the vast majority of our team), a 401(k) plan with dollar-for-dollar matching
contributions up to five percent of eligible earnings, paid vacation and holidays, family leave, merchandise and other
discounts, disability insurance, life insurance, healthcare and dependent care flexible spending accounts, debt-free
education assistance and tuition reimbursement, free mental health services, an annual short-term incentive
program, long-term equity awards, and health insurance benefits, including free virtual health care visits. Eligibility
for, and the level of, benefits vary depending on team members’ full-time or part-time status, work location,
compensation level, and tenure.
5
TARGET CORPORATION
2022 Form 10-K
Workplace Health and Safety
BUSINESS
Table of Contents
Index to Financial Statements
We strive to maintain a safe and secure work environment and have specific safety programs. This includes
administering a comprehensive occupational injury- and illness-prevention program and training for team members.
Throughout the COVID-19 pandemic, we continued to invest in the well-being, health, and safety of our team
members with a variety of mental, emotional, and physical wellness resources. We also enacted dozens of safety,
social distancing, and cleaning measures designed to protect our team and guests during the COVID-19 pandemic.
Working Capital
Effective inventory management is key to our ongoing success, and we use various techniques including demand
forecasting and planning and various forms of replenishment management. We achieve effective inventory
management by staying in-stock in core product offerings, maintaining positive vendor relationships, and carefully
planning inventory levels for seasonal and apparel items to minimize markdowns. During 2022, rapid changes in
consumer preferences and supply chain volatility resulted in increased working capital needs.
The Business Environment and Liquidity and Capital Resources sections in MD&A provide additional details.
Competition
We compete with traditional and internet retailers, including department stores, off-price general merchandise
retailers, wholesale clubs, category-specific retailers, drug stores, supermarkets, direct-to-consumer brands, and
other forms of retail commerce. Our ability to positively differentiate ourselves from other retailers and provide
compelling value to our guests largely determines our competitive position within the retail industry.
Intellectual Property
Our brand image is a critical element of our business strategy. Our principal trademarks, including Target, our
"Expect More. Pay Less." brand promise, and our "Bullseye Design," have been registered with the U.S. Patent and
Trademark Office. We also seek to obtain and preserve intellectual property protection for our brands.
Geographic Information
Nearly all of our revenues are generated within the U.S. The vast majority of our property and equipment is located
within the U.S.
Available Information
Our internet website is corporate.target.com. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, proxy statements, and amendments to those documents filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are available free of
charge on the Investors section of our website (corporate.target.com/investors) as soon as reasonably practicable
after we file such material with, or furnish it to, the U.S. Securities and Exchange Commission (SEC). In addition,
the SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC. Investors should note that we currently
announce material information to our investors and others using filings with the SEC, press releases, public
conference calls, webcasts, or our corporate website (corporate.target.com). Information that we post on our
corporate website could be deemed material to investors. We encourage investors, the media, and others interested
in us to review the information we post on these channels. The information on our website is not, and shall not be
deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.
TARGET CORPORATION
2022 Form 10-K
6
Information About Our Executive Officers
BUSINESS & RISK FACTORS
Table of Contents
Index to Financial Statements
Executive officers are elected by, and serve at the pleasure of, the Board of Directors. There are no family
relationships between any of the officers named and any other executive officer or member of the Board of
Directors, or any arrangement or understanding pursuant to which any person was selected as an officer.
Name
Title and Recent Business Experience
Katie M. Boylan
Executive Vice President and Chief Communications Officer since February 2021.
Senior Vice President and Chief Communications Officer from January 2019 to
February 2021. Senior Vice President, Communications from June 2017 to January
2019.
Brian C. Cornell
Chair of the Board and Chief Executive Officer since August 2014.
Michael J. Fiddelke Executive Vice President and Chief Financial Officer since November 2019. Senior
A. Christina
Hennington
Vice President, Operations from August 2018 to October 2019. Senior Vice President,
Merchandising Capabilities from March 2017 to August 2018.
Executive Vice President and Chief Growth Officer since February 2021. Executive
Vice President and Chief Merchandising Officer, Hardlines, Essentials and
Capabilities from January 2020 to February 2021. Senior Vice President, Group
Merchandise Manager, Essentials, Beauty, Hardlines and Services from January 2019
to January 2020. Senior Vice President, Merchandising Essentials, Beauty and
Wellness from April 2017 to January 2019.
Melissa K. Kremer
Executive Vice President and Chief Human Resources Officer since January 2019.
Senior Vice President, Talent and Organizational Effectiveness from October 2017 to
January 2019.
Don H. Liu
John J. Mulligan
Cara A. Sylvester
Executive Vice President, Chief Legal & Risk Officer and Corporate Secretary since
October 2017.
Executive Vice President and Chief Operating Officer since September 2015.
Executive Vice President and Chief Guest Experience Officer since May 2022.
Executive Vice President and Chief Marketing & Digital Officer from February 2021 to
May 2022. Senior Vice President, Home from March 2019 to February 2021. Vice
President, Beauty & Dermstore from June 2017 to March 2019.
Age
46
64
46
48
45
61
57
45
Laysha L. Ward
Executive Vice President and Chief External Engagement Officer since January 2017. 55
Item 1A. Risk Factors
Our business is subject to many risks. Set forth below are the material risks we face. Risks are listed in the
categories where they primarily apply, but other categories may also apply.
Competitive and Reputational Risks
If we are unable to positively differentiate ourselves from other retailers, our results of operations and
financial condition could be adversely affected.
We attempt to differentiate our guest experience through a careful combination of price, merchandise assortment,
store environment, convenience, guest service, loyalty programs, and marketing. Our ability to successfully
differentiate ourselves depends on many competitive factors, including guest perceptions regarding the safety and
cleanliness of our stores, the value and exclusivity of our offerings, our in-stock levels, the effectiveness of our
digital channels and fulfillment options, our ability to responsibly source merchandise, and our ability to create a
personalized guest experience. If we fail to differentiate our guest experience from our competitors, our results of
operations and financial condition could be adversely affected.
7
TARGET CORPORATION
2022 Form 10-K
RISK FACTORS
Table of Contents
Index to Financial Statements
The retail industry's continuing migration to digital channels and multiple fulfillment options for consumers has
affected the ways we differentiate from other retailers. Since consumers can quickly comparison shop using digital
tools, they may make decisions based solely on price or convenience, which could limit our ability to differentiate
from our competitors. In addition, providing multiple fulfillment options and implementing new technology is
complex, costly, and may not meet our guests’ expectations. If we are unable to offset the increased costs of new
technology and expanded fulfillment options with improved performance or efficiencies, our results of operations
could be adversely affected. To remain competitive, we must anticipate and adapt to developments and offerings by
other retailers. Consumers may also use third-party channels or devices to initiate shopping searches and place
orders, which could make us dependent on the capabilities and search algorithms of those third parties to reach
those consumers. Any difficulties in executing our differentiation efforts could adversely affect our results of
operations and financial condition.
If we do not anticipate and respond quickly to changing consumer preferences, our results of operations
and financial condition could suffer.
A large part of our business is dependent on our ability to make trend-right decisions in a broad range of
merchandise categories. If we do not predict and quickly respond to changing consumer preferences and spending
patterns, we may experience lower sales, spoilage, and increased inventory markdowns, which could adversely
affect our results of operations. Our ability to predict and adapt to changing consumer preferences depends on
many factors, including obtaining accurate and relevant data on guest preferences, emphasizing relevant
merchandise categories, effectively managing our inventory levels, and implementing competitive and effective
pricing and promotion strategies. We have not always been able to predict rapid changes in consumer preferences
and spending patterns, including those that were impacted by the COVID-19 pandemic, which has previously
resulted in insufficient or excess inventory, increased costs, and adverse impacts on our results of operations. If we
are unable to effectively adapt to future changes in consumer preferences and spending patterns, our results of
operations and financial condition could be adversely affected.
Our continued success is dependent on positive perceptions of Target which, if eroded, could adversely
affect our business and our relationships with our guests and team members.
We believe that one of the reasons our shareholders, guests, team members, and vendors choose Target is the
positive reputation we have built over many years for serving those constituencies and the communities in which we
operate. To be successful in the future, we must continue to preserve Target's reputation. Our reputation is largely
based on perceptions. It may be difficult to address negative publicity across media channels, regardless of whether
it is accurate. Negative incidents involving us, our workforce, or others with whom we do business could quickly
erode trust and confidence and result in consumer boycotts, workforce unrest or walkouts, government
investigations, and litigation. Negative reputational incidents or negative perceptions of us could adversely affect our
business and results of operations, including through lower sales, the termination of business relationships, loss of
new store and development opportunities, and team member retention and recruiting difficulties.
In addition, stakeholder expectations regarding environmental, social, and governance matters continue to evolve
and are not uniform. We have established, and may continue to establish, various goals and initiatives on these
matters, including with respect to diversity, equity, and inclusion topics. We cannot guarantee that we will achieve
these goals and initiatives. Any failure, or perceived failure, by us to achieve these goals and initiatives or to
otherwise meet evolving and varied stakeholder expectations could adversely affect our reputation and result in
legal and regulatory proceedings against us. Any of these outcomes could negatively impact our results of
operations and financial condition.
Reputational harm can also occur indirectly through companies with whom we do business. We have relationships
with a variety of other companies, including Apple, CVS, Disney, Levi’s, Starbucks, and Ulta Beauty. If our guests
have negative experiences with or view unfavorably any of the companies with whom we have relationships, it could
cause them to stop shopping with us.
TARGET CORPORATION
2022 Form 10-K
8
If we are unable to successfully develop, source, and market our owned and exclusive brand products, our
results of operations could be adversely affected.
RISK FACTORS
Table of Contents
Index to Financial Statements
Our owned and exclusive brand products represent approximately one third of our overall sales and generally carry
higher margins than equivalent national brand products. If we are unable to successfully develop, source, and
market our owned and exclusive brands, or if we are unable to successfully protect our related intellectual property
rights, our results of operations could be adversely affected. In addition, our reliance on owned and exclusive brand
products may also amplify other risks discussed in this Item 1A, Risk Factors, because many of these products are
imported and we are more involved in the development and sourcing of those products. For example, owned brand
products involve greater responsible sourcing risk in the selection of vendors, which can exacerbate reputational
risk. In addition, owned brand products generally require longer lead times between order placement and product
delivery and require us to take ownership of those products earlier in the supply chain. This exposes us to
enhanced risks of supply chain disruptions and changing consumer preferences, which could adversely affect our
results of operations.
If we are unable to protect against inventory shrink, our results of operations and financial condition could
be adversely affected.
Our business depends on our ability to effectively manage our inventory. We have historically experienced loss of
inventory (also called shrink) due to damage, theft (including from organized retail crime), and other causes. We
continue to experience elevated levels of inventory shrink relative to historical levels, which have adversely affected,
and could continue to adversely affect, our results of operations and financial condition. To protect against rising
inventory shrink, we have taken, and may continue to take, certain operational and strategic actions that could
adversely affect our reputation, guest experience, and results of operations. In addition, sustained high rates of
inventory shrink at certain stores could impact the profitability of those stores and result in the impairment of long-
term assets.
Investments and Infrastructure Risks
If our capital investments do not achieve appropriate returns, our competitive position, results of
operations, and financial condition could be adversely affected.
Our business depends, in part, on our ability to remodel existing stores and build new stores in a manner that
achieves appropriate returns on our capital investment. When building new stores, we compete with other retailers
and businesses for suitable locations for our stores. Pursuing the wrong remodel or new store opportunities and any
delays, cost increases, or other difficulties related to those projects could adversely affect our results of operations
and financial condition.
We are making, and expect to continue to make, significant investments in technology and supply chain
infrastructure. The effectiveness of these investments can be less predictable than remodeling or building new
stores, and might not provide the anticipated benefits, which could adversely affect our results of operations and
financial condition. For example, our stores-as-hubs strategy depends on adequate replenishment facilities to
receive, store, and move inventory to stores on a timely basis. Underestimating our replenishment capacity needs
could result in lower in-stock levels or increased costs for temporary storage. Conversely, overestimating
replenishment capacity needs could result in inefficient deployment of capital. Any of these outcomes could
adversely affect our results of operations and financial condition.
9
TARGET CORPORATION
2022 Form 10-K
A significant disruption in our computing and information systems and our inability to adequately maintain
and update those systems could adversely affect our operations and negatively affect our guests.
RISK FACTORS
Table of Contents
Index to Financial Statements
We rely extensively on computing and information systems throughout our business. We also rely on continued and
unimpeded access to the Internet to use our systems. Our systems are subject to possible damage or interruption
from many events, including power outages, telecommunications failures, malicious attacks, security breaches, and
implementation errors. If our systems are damaged or disrupted, we may incur substantial costs, experience data
loss or theft, and be unable to manage inventories or process guest transactions, which could adversely affect our
reputation, results of operations, and financial condition. For example, in the past, we have experienced disruptions
in our point-of-sale system that prevented our ability to process debit or credit transactions, which negatively
impacted some guests’ experiences and generated negative publicity. We continually invest to maintain and update
our systems, but implementing significant changes increases the risk of system disruption. Problems and
interruptions associated with implementing technology initiatives could adversely affect our operational efficiency
and negatively impact our guests and their confidence in us.
Information Security, Cybersecurity, and Data Privacy Risks
If our efforts to maintain information security, cybersecurity, and data privacy are unsuccessful or if we are
unable to meet increasingly demanding regulatory requirements, our reputation, results of operations, and
financial condition could be adversely affected.
We regularly receive and store information about our guests, team members, vendors, and other third parties. We
have programs in place to detect, contain, and respond to data security incidents. However, we may be unable to
anticipate security incidents or implement adequate preventive measures. In addition, hardware or software that we
develop or obtain from third parties may contain defects that could compromise information security, cybersecurity,
or data privacy. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third
parties with whom we do business, through fraud, deception, or other bad acts. Although we conduct regular
training as part of our information security, cybersecurity, and data privacy efforts, that training may not be
completely effective in preventing successful attacks.
Our only significant data security incident was a data breach that occurred in 2013 and went undetected for several
weeks. The 2013 data breach adversely affected our reputation and results of operations. Both we and our vendors
have experienced data security incidents since that data breach; however, to date, these other incidents have not
been material to our results of operations. Based on the prominence and notoriety of our prior significant data
breach, additional data security incidents could draw greater scrutiny. If we, our vendors, or other third parties with
whom we do business experience additional significant data security incidents or fail to detect and appropriately
respond to significant incidents, we could be exposed to costly government enforcement actions and private
litigation. In addition, our guests could lose confidence in our ability to protect their information, stop using our
RedCards or loyalty programs, or stop shopping with us altogether, which could adversely affect our reputation,
results of operations, and financial condition.
The legal and regulatory environment regarding information security, cybersecurity, and data privacy is dynamic and
has strict requirements for using and treating personal data. Complying with current or contemplated data protection
laws and regulations, or any failure to comply, could cause us to incur substantial costs, require changes to our
business practices, and expose us to litigation and regulatory risks, each of which could adversely affect our
reputation, results of operations, and financial condition.
Supply Chain and Third-Party Risks
Changes in our relationships with our vendors, changes in tax or trade policy, interruptions in our
operations or supply chain, and increased commodity or supply chain costs could adversely affect our
reputation and results of operations.
We are dependent on our vendors, including common carriers, to supply merchandise to our distribution centers,
stores, and guests. If our replenishment and fulfillment network does not operate properly, if a vendor fails to deliver
on its commitments, or if common carriers have difficulty providing capacity to meet demands for their services like
they experienced in recent years, we could experience merchandise out-of-stocks, delays in shipping and receiving
merchandise, and increased costs, which could adversely affect our reputation and results of operations.
TARGET CORPORATION
2022 Form 10-K
10
RISK FACTORS
Table of Contents
Index to Financial Statements
A large portion of the merchandise that we offer is sourced, directly or indirectly, from outside the U.S., with China
as our single largest source. Any major changes in tax or trade policy between the U.S. and countries from which
we source merchandise, such as the imposition of additional tariffs or duties on imported products, could require us
to take certain actions, including raising prices on products we sell and seeking alternative sources of supply from
vendors in other countries. Any of these actions could adversely affect our reputation and results of operations.
Political or financial instability, currency fluctuations, the outbreak of pandemics or other illnesses, labor shortages,
labor unrest or strikes, transport capacity and costs, inflation, port security, weather conditions, natural disasters,
armed conflicts, or other events that could affect foreign trade are beyond our control and could disrupt our supply
of merchandise, increase our costs, and adversely affect our results of operations. For example, there have been
periodic closings and ship diversions, labor disputes, and congestion disrupting U.S. ports, including in California
where we receive a significant portion of the products we source from outside the U.S. We have from time to time
made alternative arrangements to continue the flow of inventory as a result of supply chain disruptions in the U.S.
and other countries. If these types of events recur, it could increase our costs and adversely affect our supply of
inventory. In addition, prices of fuel and other commodities that our supply chain depends on are historically volatile
and subject to fluctuations based on a variety of international and domestic factors. Rapid and significant changes in
commodity prices, as has occurred in recent years, could further increase our costs and adversely affect our results
of operations.
If services we obtain from third parties are unavailable or fail to meet our standards, our reputation and
results of operations could be adversely affected.
We rely on third parties to support our business operations, including portions of our technology infrastructure,
digital platforms, replenishment and fulfillment operations, store and supply chain infrastructure, delivery services,
guest contact centers, payment processing, and extensions of credit for our RedCard program. If we are unable to
contract with third parties having the specialized skills needed to support our operations or if they fail to meet our
performance standards, then our reputation and results of operations could be adversely affected.
Legal, Regulatory, Global, and Other External Risks
The effects of the COVID-19 pandemic, or other similar public health crises, may continue to amplify the
risks and uncertainties facing our business.
The long-term impacts of the social, economic, and financial disruptions caused by the COVID-19 pandemic and the
government responses to such disruptions are unknown. In addition, the impact on our business of the long-term
effects of the COVID-19 pandemic, or other similar public health crises, will depend on numerous factors that we
cannot accurately predict.
The long-term effects of the COVID-19 pandemic, or other similar public health crises, may also continue to amplify
other risks discussed in this Item 1A, Risk Factors, including risks related to macroeconomic conditions and
consumer confidence and spending, supply chain, information security, cybersecurity, and data privacy, and our
workforce, any of which could have a material effect on us. For example, the rise in remote working arrangements
by our team members, vendors, and other third parties that began during the COVID-19 pandemic increases the
risk of a data security compromise and has amplified our already extensive reliance on computing and information
systems and unimpeded Internet access.
11
TARGET CORPORATION
2022 Form 10-K
Our earnings depend on the state of macroeconomic conditions and consumer confidence and spending in
the U.S.
RISK FACTORS
Table of Contents
Index to Financial Statements
Nearly all of our sales are in the U.S., making our results highly dependent on the health of the U.S. economy and
U.S. consumer confidence and spending, which can be affected by a variety of factors, including inflation, interest
rates, housing prices, unemployment rates, household debt and wage levels, and credit usage. In addition, the
interconnected nature of the global economy means that international events such as armed conflicts, geopolitical
conflicts, public health crises, energy availability, and market volatility can all affect macroeconomic conditions in the
U.S. A deterioration in U.S. macroeconomic conditions or consumer confidence or spending could adversely affect
our business in many ways, including slowing sales growth, reducing overall sales, reducing gross margins, and
lowering our credit card profit-sharing revenue, each of which could adversely affect our results of operations and
financial condition.
Uncharacteristic or significant weather conditions or natural disasters and the impacts of climate change
could adversely affect our results of operations.
Uncharacteristic or significant weather conditions, including the physical impacts of climate change, can affect
consumer shopping patterns, particularly in apparel and seasonal items, which could lead to lower sales or greater
than expected markdowns and adversely affect our results of operations. In addition, we have significant operations
in certain states where natural disasters are more prevalent. Natural disasters in those states or in other areas
where we operate could result in significant physical damage to or closure of one or more of our stores, distribution
centers, facilities, or key vendors. In addition, weather conditions, natural disasters, and other catastrophic events in
areas where we or our vendors operate, or depend upon for continued operations, could adversely affect the
availability and cost of certain products within our supply chain, affect consumer purchasing power, and reduce
consumer demand. Any of these events could adversely affect our results of operations.
The long-term effects of global climate change are expected to be widespread and unpredictable. The potential
impacts of climate change present a variety of risks. The physical effects of climate change, such as extreme
weather conditions, drought, and rising sea levels, could adversely affect our results of operations, including by
increasing our energy costs, disrupting our supply chain, negatively impacting our workforce, damaging our stores,
distribution centers, and inventory, and threatening the habitability of the locations in which we operate. In addition
to physical risks, the potential impacts of climate change also present transition risks, including regulatory and
reputational risks. For example, we use commodities and energy inputs in our operations that may face increased
regulation due to climate change or other environmental concerns, which could increase our costs. Furthermore,
any failure to achieve our goals with respect to reducing our impact on the environment, or perception of a failure to
act responsibly with respect to the environment, could adversely affect our reputation and results of operations.
We rely on a large, global, and changing workforce of team members, contractors, and temporary staffing. If
we do not effectively manage our workforce, our labor costs and results of operations could be adversely
affected.
With over 400,000 team members, our workforce costs represent our largest operating expense, and our business
is dependent on our ability to attract, train, and retain the appropriate mix of qualified team members, contractors,
and temporary staffing. Many team members are in entry-level or part-time positions with high turnover rates
historically. Our ability to meet our changing labor needs while controlling our costs is subject to external factors
such as labor laws and regulations, unemployment levels, prevailing wage rates, benefit costs, changing
demographics, and our reputation within the labor market. If we are unable to attract and retain a workforce meeting
our needs, our operations, guest service levels, support functions, and competitiveness could suffer and our results
of operations could be adversely affected. We are periodically subject to labor organizing efforts and activism, which
could negatively impact how we are perceived by team members and our overall reputation. If we become subject
to one or more collective bargaining agreements in the future, it could adversely affect our labor costs, how we
operate our business, and our results of operations. In addition to our United States operations, we have support
offices in India and China, and any extended disruption of our operations in our different locations, whether due to
labor difficulties or otherwise, could adversely affect our results of operations.
TARGET CORPORATION
2022 Form 10-K
12
Failure to address product safety and sourcing concerns could adversely affect our results of operations.
RISK FACTORS
Table of Contents
Index to Financial Statements
If any of our merchandise offerings do not meet applicable safety standards or Target's or our guests’ expectations
regarding safety, supply chain transparency, and responsible sourcing, we could be exposed to legal and
reputational risks and our results of operations could be adversely affected. Our vendors must comply with
applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all
safety standards. Events that give rise to actual or perceived product safety concerns, including food or drug
contamination and product defects, could expose us to government enforcement actions and private litigation and
result in costly product recalls and other liabilities. Our sourcing vendors, including any third parties selling through
our digital channels, must also meet our expectations across multiple areas of social compliance, including supply
chain transparency and responsible sourcing. We have a social compliance audit process that performs audits
regularly, but we cannot continuously monitor every vendor, so we are also dependent on our vendors to ensure
that the products we buy comply with applicable standards. If we need to seek alternative sources of supply from
vendors with whom we have less familiarity, the risk of our standards not being met may increase. Negative guest
perceptions regarding the safety and sourcing of the products we sell could harm our reputation and adversely
affect our results of operations.
Our failure to comply with applicable laws, or changes in these laws, could adversely affect our results of
operations and financial condition.
Our business is subject to a wide variety of complex laws and regulations.
Our expenses could increase and our operations could be adversely affected by changes in law or adverse judicial
developments involving our workforce, including an employer’s obligation to recognize collective bargaining units,
minimum wage requirements, advance scheduling notice requirements, health care or other mandates, the
classification of exempt and non-exempt employees, and the classification of workers as either employees or
independent contractors. Our Shipt subsidiary is a technology company that connects Shipt members through its
online marketplace with a network of independent contractors who select, purchase, and deliver groceries and
household essentials ordered from Target and other retailers. The classification of workers as employees or
independent contractors, in particular, is an area that is experiencing legal challenges and legislative changes. Our
Shipt subsidiary has faced, and continues to face, legal challenges to its worker classification. If, as a result of
judicial decisions or legislation, Shipt is required to treat its network of independent contractors as employees, we
may experience higher digital fulfillment costs, which could adversely affect our results of operations and financial
condition.
Changes in the legal or regulatory environment affecting any other area of our business, including information
security, cybersecurity, and data privacy, product safety, or payment methods could cause our expenses to increase
and adversely affect our results of operations. In addition, if we fail to comply with other applicable laws and
regulations, including the Foreign Corrupt Practices Act and other anti-bribery laws, we could be subject to legal and
reputational risks, including government enforcement actions and class action civil litigation, which could adversely
affect our results of operations and financial condition.
Financial Risks
Increases in our effective income tax rate could adversely affect our results of operations.
Several factors influence our effective income tax rate, including tax laws and regulations, the related
interpretations, and our ability to sustain our reporting positions on examination. Changes in any of those factors
could change our effective tax rate, which could adversely affect our net income. In addition, changes in our
operations both in and outside of the U.S. may cause greater volatility in our effective tax rate.
13
TARGET CORPORATION
2022 Form 10-K
If we are unable to access the capital markets or obtain bank credit, our financial condition and results of
operations could suffer.
RISK FACTORS & UNRESOLVED STAFF COMMENTS
Table of Contents
Index to Financial Statements
We are dependent on a stable, liquid, and well-functioning financial system to fund our operations and capital
investments. Our continued access to financial markets depends on multiple factors including the condition of debt
capital markets, our operating performance, and our credit ratings. If rating agencies lower our credit ratings, it could
adversely affect our ability to access the debt markets, our cost of funds, and other terms for new debt issuances.
Each of the credit rating agencies reviews its rating periodically, and there is no guarantee that our current credit
ratings will remain the same. In addition, we use a variety of derivative products to manage our exposure to market
risk, principally interest rate fluctuations. Disruptions or turmoil in the financial markets could reduce our ability to
fund our operations and capital investments and lead to losses on derivative positions from counterparty failures,
which could adversely affect our financial condition and results of operations.
Item 1B. Unresolved Staff Comments
Not applicable.
TARGET CORPORATION
2022 Form 10-K
14
PROPERTIES
Table of Contents
Index to Financial Statements
Retail Square
Feet
(in thousands)
Stores
Stores as of
January 28, 2023
Stores
Retail Square
Feet
(in thousands)
Item 2. Properties
Stores as of
January 28, 2023
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
22
3
46
9
314
45
21
4
5
127
51
8
7
100
32
21
17
14
16
6
41
50
54
73
6
35
3,132 Montana
504 Nebraska
6,081 Nevada
1,165 New Hampshire
37,304 New Jersey
6,361 New Mexico
2,732 New York
551 North Carolina
342 North Dakota
17,225 Ohio
6,826 Oklahoma
1,234 Oregon
725 Pennsylvania
12,171 Rhode Island
4,186 South Carolina
2,859 South Dakota
2,385 Tennessee
1,575 Texas
2,195 Utah
741 Vermont
5,070 Virginia
5,546 Washington
6,300 West Virginia
10,332 Wisconsin
743 Wyoming
4,618
Total
7
14
18
10
49
10
100
52
4
65
15
22
78
4
20
5
30
154
15
1
61
40
6
38
3
777
2,005
2,262
1,236
6,189
1,185
10,820
6,653
554
7,863
2,167
2,353
9,260
517
2,389
580
3,815
21,176
1,981
60
7,789
4,424
755
4,614
257
1,948
244,584
Stores
Supply Chain
Facilities (a)
1,530
261
157
1,948
37
18
—
55
Stores and Supply Chain Facilities as of January 28, 2023
Owned
Leased
Owned buildings on leased land
Total
(a)
Supply Chain Facilities includes distribution centers and sortation centers with a total of 59.2 million square
feet.
We own our corporate headquarters buildings located in and around Minneapolis, Minnesota, and we lease and
own additional office space elsewhere in Minneapolis and the U.S. We also lease office space in other countries.
Our properties are in good condition, well maintained, and suitable to carry on our business.
For additional information on our properties, see the Capital Expenditures section in MD&A and Notes 11 and 17 to
the Consolidated Financial Statements.
15
TARGET CORPORATION
2022 Form 10-K
LEGAL PROCEEDINGS & MINE SAFETY DISCLOSURES
Table of Contents
Index to Financial Statements
Item 3. Legal Proceedings
No response is required under Item 103 of Regulation S-K.
Item 4. Mine Safety Disclosures
Not applicable.
TARGET CORPORATION
2022 Form 10-K
16
OTHER INFORMATION
PART II
Table of Contents
Index to Financial Statements
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Our common stock is listed on the New York Stock Exchange under the symbol "TGT." We are authorized to issue
up to 6,000,000,000 shares of common stock, par value $0.0833, and up to 5,000,000 shares of preferred stock,
par value $0.01. As of March 2, 2023, there were 13,187 shareholders of record. Dividends declared per share for
2022, 2021, and 2020, are disclosed in our Consolidated Statements of Shareholders' Investment.
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 23.8 million shares of common at an average price of
$223.52, for a total investment of $5.3 billion. As of January 28, 2023, the dollar value of shares that may yet be
purchased under the program is $9.7 billion. There were no Target common stock purchases made during the three
months ended January 28, 2023 by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3)
under the Exchange Act.
17
TARGET CORPORATION
2022 Form 10-K
OTHER INFORMATION
Table of Contents
Index to Financial Statements
Target
S&P 500 Index
Peer Group
Fiscal Years Ended
February 3,
2018
February 2,
2019
February 1,
2020
January 30,
2021
January 29,
2022
January 28,
2023
$
100.00 $
100.00
100.00
100.82 $
99.94
104.28
161.87 $
121.49
126.36
270.17 $
142.45
175.31
329.06 $
172.36
183.63
260.13
160.94
156.02
The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal
years with (i) the cumulative total return on the S&P 500 Index and (ii) the peer group consisting of 19 online,
general merchandise, department stores, food, and specialty retailers (Albertsons Companies, Inc., Amazon.com,
Inc., Best Buy Co., Inc., Costco Wholesale Corporation, CVS Health Corporation, Dollar General Corporation, Dollar
Tree, Inc., The Gap, Inc., The Home Depot, Inc., Kohl's Corporation, The Kroger Co., Lowe's Companies, Inc.,
Macy's, Inc., Nordstrom, Inc., Rite Aid Corporation, Ross Stores, Inc., The TJX Companies, Inc., Walgreens Boots
Alliance, Inc., and Walmart Inc.) (Peer Group). The Peer Group is consistent with the retail peer group described in
our definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June 14, 2023, excluding
Publix Super Markets, Inc., which is not quoted on a public stock exchange.
The peer group is weighted by the market capitalization of each component company. The graph assumes the
investment of $100 in Target common stock, the S&P 500 Index, and the Peer Group on February 3, 2018, and
reinvestment of all dividends.
Item 6. [Reserved]
TARGET CORPORATION
2022 Form 10-K
18
DollarsComparison of Cumulative Five Year Total ReturnTargetS&P 500 IndexPeer Group2/3/182/2/192/1/201/30/211/29/221/28/23050100150200250300350400
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
EXECUTIVE OVERVIEW & FINANCIAL SUMMARY
Index to Financial Statements
Executive Overview
We continue to make strategic investments to support our durable operating and financial model that further
differentiates Target and is designed to drive sustainable sales and profit growth. During 2022, in support of our
enterprise strategy described in Item 1 on page 2 of this Form 10-K, we
•
•
•
•
Expanded our supply chain capacity and digital fulfillment capabilities, including adding one new distribution
center and six new sortation centers to support our growth and commitment to fast delivery times, while helping
our teams work more efficiently and managing our shipping costs;
Fulfilled over 50 percent of our digital sales through our same-day fulfillment options: Order Pickup, Drive Up,
and delivery via Shipt;
Continued the steady stream of newness across our assortment and continued to introduce new owned and
exclusive brands, including fashion forward brands Future CollectiveTM and Houston White x Target;
Completed 140 full store remodels and invested in hundreds of other stores through projects to increase
efficiency of our Same-Day Services, build-out and open Ulta Beauty shop-in-shops, and expand Apple and
Disney experiences;
• Opened 23 new stores, including a new larger-footprint store with reimagined design elements and additional
•
stores in key urban markets and on college campuses;
Invested in our team through our updated starting wage range, expanded access to health care benefits, and
our debt-free education assistance program;
• Offered compelling promotions, attractive every day price points on key items, and free and easy payment and
fulfillment options, including our new RedCard Reloadable Account, which provides all the benefits of our
RedCard program without the need for a credit check or an existing bank account; and
Launched Target Zero, a collection of products designed to reduce waste and make it easier to shop
sustainably, and completed retrofitting our first store designed to be net zero energy, located in Vista, California.
•
Financial Summary
2022 included the following notable items:
• GAAP diluted earnings per share were $5.98.
•
•
Adjusted diluted earnings per share were $6.02.
Total revenue increased 2.9 percent, reflecting total sales growth of 2.8 percent and a 9.8 percent increase in
other revenue.
Comparable sales increased 2.2 percent, driven by a 2.1 percent increase in traffic.
•
◦
◦
Comparable store originated sales grew 2.4 percent.
Comparable digitally originated sales increased 1.5 percent.
• Operating income of $3.8 billion was 57.0 percent lower than the comparable prior-year period. See Business
Environment below for additional information.
Sales were $107.6 billion for 2022, an increase of $3.0 billion, or 2.8 percent, from the prior year. Operating cash
flow was $4.0 billion for 2022, a decrease of $(4.6) billion, or (53.4) percent, from $8.6 billion for 2021. The drivers
of the operating cash flow decrease are described on page 27.
19
TARGET CORPORATION
2022 Form 10-K
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
FINANCIAL SUMMARY & ANALYSIS OF OPERATIONS
Index to Financial Statements
Earnings Per Share
Percent Change
2022
2021
2020
2022/2021
2021/2020
GAAP diluted earnings per share
Adjustments
Adjusted diluted earnings per share
$
$
5.98 $
0.03
6.02 $
14.10 $
(0.53)
13.56 $
8.64
0.78
9.42
(57.6) %
63.1 %
(55.7) %
44.0 %
Note: Amounts may not foot due to rounding. Adjusted 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 24.
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 January 28, 2023, after-tax
ROIC was 12.6 percent, compared with 33.1 percent for the trailing twelve months ended January 29, 2022. The
calculation of ROIC is provided on page 26.
Business Environment
Following the onset of the COVID-19 pandemic in 2020, we experienced strong comparable sales growth and
significant volatility in our category and channel mix, which continued through 2021, along with increasing supply
chain disruptions. In addition to country of origin production delays, trucker and dockworker shortages, a broad-
based surge in consumer demand, and other factors led to industry-wide U.S. port and ground transportation
delays. In response to the rising guest demand and supply chain constraints, we took various actions, including
ordering merchandise earlier, securing ocean freight routes, adding incremental holding capacity near U.S. ports,
and increasing use of air transport for certain merchandise. Some of these supply chain disruptions and resulting
actions resulted in increased costs.
In 2022, our comparable sales growth slowed significantly, reflecting sales decreases in our Discretionary
categories (Apparel & Accessories, Hardlines, and Home Furnishings & Decor) that substantially offset growth in
our Frequency categories (Beauty & Household Essentials and Food & Beverage). In response to this shift in
demand, we took several actions to address our inventory position and create additional flexibility in a rapidly
changing environment, including increasing promotional and clearance markdowns, removing excess inventory, and
cancelling purchase orders. In addition, during the second half of 2022, port congestion, shipping container
availability, and other supply chain pressures improved. This resulted in some inventory arriving earlier than
anticipated, which resulted in increased costs of managing elevated inventory levels and an increased working
capital investment. These factors, net of the impact of retail price increases taken to address merchandise and
freight cost inflation, resulted in decreased profitability compared to the prior year. The Gross Margin Rate analysis
on page 23 and Inventory section on page 27 provide additional information.
Sale of Dermstore
In February 2021, we sold Dermstore LLC (Dermstore) for $356 million in cash and recognized a $335 million
pretax gain, which is included in Net Other (Income) / Expense. Dermstore represented less than 1 percent of our
consolidated revenues, operating income and net assets.
TARGET CORPORATION
2022 Form 10-K
20
MANAGEMENT'S DISCUSSION AND ANALYSIS
ANALYSIS OF OPERATIONS
Table of Contents
Index to Financial Statements
Percent Change
$
2022
107,588 $
1,532
109,120
82,229
20,658
2021
104,611 $
1,394
106,005
74,963
19,752
2020
92,400
1,161
93,561
66,177
18,615
2022/2021 2021/2020
13.2 %
20.2
13.3
13.3
6.1
2.8 %
9.8
2.9
9.7
4.6
2,385
3,848 $
2,344
8,946 $
2,230
6,539
1.8
(57.0) %
5.1
36.8 %
$
Analysis of Results of Operations
Summary of Operating Income
(dollars in millions)
Sales
Other revenue
Total revenue
Cost of sales
SG&A expenses
Depreciation and amortization (exclusive of
depreciation included in cost of sales)
Operating income
Rate Analysis
Gross margin rate
SG&A expense rate
Depreciation and amortization (exclusive of depreciation included in
cost of sales) expense rate
Operating income margin rate
2022
2021
2020
23.6 %
18.9
28.3 %
18.6
28.4 %
19.9
2.2
3.5
2.2
8.4
2.4
7.0
Note: Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales. All other rates are
calculated by dividing the applicable amount by total revenue.
A discussion regarding Analysis of Results of Operations and Analysis of Financial Condition for 2021, as compared
to 2020, is included in Part II, Item 7, MD&A to our Annual Report on Form 10-K for the year ended January 29,
2022.
Sales
Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage. Note 3 to the
Financial Statements defines gift card "breakage." We use comparable sales to evaluate the performance of our
stores and digital channel sales by measuring the change in sales for a period over the comparable, prior-year
period of equivalent length. Comparable sales include all sales, except sales from stores open less than 13 months,
digital acquisitions we have owned less than 13 months, stores that have been closed, and digital acquisitions that
we no longer operate. 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 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 delivery
via Shipt. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third
parties.
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 the majority 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
Comparable sales change
Drivers of change in comparable sales
Number of transactions (traffic)
Average transaction amount
2022
2021
2020
2.2 %
12.7 %
19.3 %
2.1
0.1
12.3
0.4
3.7
15.0
21
TARGET CORPORATION
2022 Form 10-K
MANAGEMENT'S DISCUSSION AND ANALYSIS
ANALYSIS OF OPERATIONS
Table of Contents
Index to Financial Statements
Comparable Sales by Channel
Stores originated comparable sales change
Digitally originated comparable sales change
Sales by Channel
Stores originated
Digitally originated
Total
Sales by Fulfillment Channel
Stores
Other
Total
2022
2021
2020
2.4 %
1.5
11.0 %
20.8
7.2 %
144.7
2022
2021
2020
81.4 %
18.6
100 %
81.1 %
18.9
100 %
82.1 %
17.9
100 %
2022
2021
2020
96.7 %
3.3
100 %
96.4 %
3.6
100 %
96.0 %
4.0
100 %
Note: 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 Shipt.
Part I, Item 1, Business of this Form 10-K and Note 3 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 transfer of sales to new stores makes further analysis of
sales metrics infeasible.
TD Bank Group offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the
Target MasterCard Credit Card (Target Credit Cards). Additionally, we offer a branded proprietary Target Debit Card
and RedCard Reloadable Account. Collectively, we refer to these products as RedCards™. Guests receive a 5
percent discount on virtually all purchases when they use a RedCard at Target. We monitor the percentage of
purchases that are paid for using RedCards (RedCard Penetration) because our internal analysis has indicated that
a meaningful portion of incremental purchases on our RedCards are also incremental sales for Target. For the years
ended January 28, 2023, January 29, 2022, and January 30, 2021, total RedCard Penetration was 19.8 percent,
20.5 percent, and 21.5 percent, respectively.
TARGET CORPORATION
2022 Form 10-K
22
Gross Margin Rate
MANAGEMENT'S DISCUSSION AND ANALYSIS
ANALYSIS OF OPERATIONS
Table of Contents
Index to Financial Statements
Our gross margin rate was 23.6 percent in 2022 and 28.3 percent in 2021. This decrease reflected the net impact of
• merchandising pressure, including
◦
◦
higher clearance and promotional markdown rates, including the impact of inventory impairments
and other actions taken in our Discretionary categories; and
higher merchandise and freight costs, partially offset by the benefit of retail price increases;
supply chain pressure related to increased compensation and headcount in our distribution centers,
investments in new facilities, and costs of managing excess inventory;
higher inventory shrink; and
favorable mix in the relative growth rates of higher and lower margin categories.
•
•
•
Selling, General and Administrative (SG&A) Expense Rate
Our SG&A expense rate was 18.9 percent in 2022, compared with 18.6 percent in 2021, reflecting the net impact of
cost increases across our business, including investments in hourly team member wages, partially offset by lower
incentive compensation in 2022 compared to the prior year.
Store Data
Change in Number of Stores
Beginning store count
Opened
Closed
Ending store count
Number of Stores and
Retail Square Feet
170,000 or more sq. ft.
50,000 to 169,999 sq. ft.
49,999 or less sq. ft.
Total
(a)
2022
2021
1,926
23
(1)
1,948
1,897
32
(3)
1,926
Number of Stores
Retail Square Feet (a)
January 28,
2023
January 29,
2022
January 28,
2023
January 29,
2022
274
1,527
147
1,948
274
1,516
136
1,926
48,985
191,241
4,358
244,584
49,071
190,205
4,008
243,284
In thousands; reflects total square feet less office, distribution center, and vacant space.
23
TARGET CORPORATION
2022 Form 10-K
28.3%(3.4)%(0.8)%(0.7)%0.2%23.6%2021GM RateMerchandisingDigital Fulfillment &Supply ChainInventoryShrinkCategory Mix2022GM Rate
MANAGEMENT'S DISCUSSION AND ANALYSIS
ANALYSIS OF OPERATIONS
Table of Contents
Index to Financial Statements
Other Performance Factors
Net Interest Expense
Net interest expense was $478 million for 2022, compared with $421 million for 2021. The increase in net interest
expense was primarily due to higher average debt and commercial paper levels in 2022 compared with 2021.
Net Other (Income) / Expense
Net Other (Income) / Expense was $(48) million and $(382) million for 2022 and 2021, respectively. 2021 included
the $335 million gain on the February 2021 sale of Dermstore.
Provision for Income Taxes
Our 2022 effective income tax rate was 18.7 percent compared with 22.0 percent in 2021. The decrease reflects
lower pretax earnings in the current year and the impacts of discrete tax benefits. Our effective tax rate is generally
more volatile at lower amounts of pretax income because the impact of discrete, deductible and nondeductible tax
items and credits is greater.
Note 18 to the Financial Statements provides additional information.
Reconciliation of Non-GAAP Financial Measures to GAAP Measures
To provide additional transparency, we have disclosed 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 than we do,
limiting the usefulness of the measure for comparisons with other companies.
Reconciliation of Non-GAAP
Adjusted EPS
2022
2021
2020
(millions, except per share data)
Pretax
Net of
Tax
Per Share
Amounts
Pretax
Net of
Tax
Per Share
Amounts
Pretax
Net of
Tax
Per Share
Amounts
GAAP diluted earnings per share
$
5.98
$ 14.10
$
8.64
Adjustments
Gain on Dermstore Sale
$ — $ — $
Loss on debt extinguishment
Loss on investment (a)
Other (b)
Income tax matters (c)
—
—
20
—
—
—
15
—
—
—
—
0.03
—
$ (335) $ (269) $
(0.55) $ — $ — $
—
—
9
—
—
—
7
—
—
—
0.01
—
512
19
28
—
379
14
20
(21)
(0.04)
—
0.75
0.03
0.04
Adjusted diluted earnings per share
$
6.02
$ 13.56
$
9.42
Note: Amounts may not foot due to rounding.
(a)
(b)
(c)
Represents a loss on our investment in Casper Sleep Inc., which is not core to our operations.
Other items unrelated to current period operations, none of which were individually significant.
Represents benefits from the resolution of certain income tax matters unrelated to current period
operations.
TARGET CORPORATION
2022 Form 10-K
24
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
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.
Index to Financial Statements
EBIT and EBITDA
(dollars in millions)
Net earnings
+ Provision for income taxes
+ Net interest expense
EBIT
+ Total depreciation and amortization (a)
EBITDA
(a)
Percent Change
2022
2021
2020
2022/2021 2021/2020
$
2,780 $
6,946 $
638
478
1,961
421
3,896 $
9,328 $
2,700
2,642
6,596 $
11,970 $
$
$
4,368
1,178
977
6,523
2,485
9,008
(60.0) %
59.0 %
(67.5)
13.4
66.5
(56.9)
(58.2) %
43.0 %
2.2
6.3
(44.9) %
32.9 %
Represents total depreciation and amortization, including amounts classified within Depreciation and
Amortization and within Cost of Sales.
25
TARGET CORPORATION
2022 Form 10-K
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
Index to Financial Statements
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
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)
Numerator
Operating income
+ Net other income / (expense)
EBIT
+ Operating lease interest (a)
- Income taxes (b)
Net operating profit after taxes
Denominator
Trailing Twelve Months
January 28,
2023
January 29,
2022
$
3,848 $
48
3,896
93
744
$
3,245 $
8,946
382
9,328
87
2,073
7,342
January 28,
2023
January 29,
2022
January 30,
2021
Current portion of long-term debt and other borrowings
$
130 $
171 $
+ Noncurrent portion of long-term debt
+ Shareholders' investment
+ Operating lease liabilities (c)
- Cash and cash equivalents
Invested capital
Average invested capital (d)
After-tax return on invested capital
(a)
16,009
11,232
2,934
2,229
13,549
12,827
2,747
5,911
1,144
11,536
14,440
2,429
8,511
$
$
28,076 $
23,383 $
21,038
25,729 $
22,210
12.6 %
33.1 %
Represents the add-back to operating income driven by the hypothetical interest expense we would incur if
the property under our operating leases were owned or accounted for as finance leases. Calculated using
the discount rate for each lease and recorded as a component of rent expense within SG&A Expenses.
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.
Calculated using the effective tax rates, which were 18.7 percent and 22.0 percent for the trailing twelve
months ended January 28, 2023, and January 29, 2022, respectively. For the trailing twelve months ended
January 28, 2023, and January 29, 2022, includes tax effect of $0.7 billion and $2.1 billion, respectively,
related to EBIT, and $17 million and $19 million, respectively, related to operating lease interest.
Total short-term and long-term operating lease liabilities included within Accrued and Other Current
Liabilities and Noncurrent Operating Lease Liabilities, respectively.
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.
(b)
(c)
(d)
TARGET CORPORATION
2022 Form 10-K
26
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
ANALYSIS OF FINANCIAL CONDITION
Index to Financial Statements
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 year-end cash and cash equivalents balance decreased to $2.2 billion from $5.9 billion in 2021. Our cash and
cash equivalents balance includes short-term investments of $1.3 billion and $5.0 billion as of January 28, 2023,
and January 29, 2022, 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 $4.0 billion in 2022 compared with $8.6 billion in 2021. For 2022,
operating cash flows decreased as a result of lower earnings and lower accounts payable leverage, partially offset
by decreased inventory investment, compared with 2021.
Inventory
Year-end inventory was $13.5 billion, compared with $13.9 billion in 2021. The decrease in inventory levels primarily
reflects the following:
•
•
•
decreased in-transit and late-arriving inventory as lead times improved,
investments in our inventory position in our Frequency categories, offsetting reductions in our Discretionary
categories, and
increases in unit costs across all of our categories.
The Business Environment section on page 20 provides additional information.
27
TARGET CORPORATION
2022 Form 10-K
Capital Expenditures
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
ANALYSIS OF FINANCIAL CONDITION
Index to Financial Statements
Note: Amounts may not foot due to rounding.
Capital expenditures increased in 2022 from the prior year as we invested in our strategic initiatives, including an
increase in investments in both stores and in our supply chain. The increase also reflects the impact of inflation on
these projects. Beyond full-store remodels, we invested in optimizing front-end space in high-volume locations to
increase the efficiency of our Same-Day Services, and built-out and opened approximately 250 Ulta Beauty shop-in-
shops. We have completed over 1,000 full-store remodels since the launch of the current program in 2017, including
140 in 2022.
In addition to these cash investments, we entered into leases related to new stores in 2022, 2021, and 2020 with
total future minimum lease payments of $319 million, $401 million, and $764 million, respectively, and new leases
related to our supply chain with total future minimum lease payments of $1.6 billion, $226 million, and $442 million,
respectively.
We expect capital expenditures in 2023 of approximately $4.0 billion to $5.0 billion to support full-store remodels
and other existing store investments, new stores, and supply chain projects. Supply chain projects will add
replenishment capacity and modernize our network, including the use of sortation centers to enhance our last-mile
delivery capabilities. We expect to complete approximately 70 full-store remodels, open about 20 new stores, and
add additional Ulta Beauty shop-in-shops during 2023. Additionally, we will continue to invest in optimizing front-end
space. We also expect to continue to invest in new store and supply chain leases.
Dividends
We paid dividends totaling $1.8 billion ($3.96 per share) in 2022 and $1.5 billion ($3.16 per share) in 2021, a per
share increase of 25.3 percent. We declared dividends totaling $1.9 billion ($4.14 per share) in 2022 and $1.7 billion
($3.38 per share) in 2021, a per share increase of 22.5 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 Repurchases
During 2022 and 2021 we returned $2.6 billion and $7.2 billion, respectively, to shareholders through share
repurchase. See Part II, Item 5, Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities of this Annual Report on Form 10-K and Note 20 to the Financial Statements for
more information.
TARGET CORPORATION
2022 Form 10-K
28
$ (Billions)$2.6$3.5$5.5$1.4$1.9$3.2$0.3$0.4$0.5$0.5$0.6$1.2$0.4$0.6$0.6Existing Store InvestmentsNew StoresSupply Chain Information Technology and Other202020212022 Financing
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
ANALYSIS OF FINANCIAL CONDITION
Index to Financial Statements
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
January 28, 2023, our credit ratings were as follows:
Credit Ratings
Long-term debt
Commercial paper
Moody's
Standard and Poor's
Fitch
A2
P-1
A
A-1
A
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.
In 2022, we issued $2.7 billion of debt, and we repaid $62 million of debt at maturity.
In 2022, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in
October 2023. We also extended our existing committed $3.0 billion unsecured revolving credit facility, which now
expires in October 2027. No balances were outstanding under either credit facility at any time during 2022 or 2021.
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 January 28, 2023, 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.
Note 15 to the Financial Statements provides additional information.
Future Cash Requirements
We enter into contractual obligations in the ordinary course of business that may require future cash payments.
Such obligations include, but are not limited to, purchase commitments, debt service, leasing arrangements, and
liabilities related to deferred compensation and pensions. The Notes to the Consolidated Financial Statements
provide additional information.
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 capital expenditure
requirements, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and
execute purchases under our share repurchase program for the foreseeable future.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates
and apply judgments that affect the reported amounts. In the Notes to the Consolidated Financial Statements, we
describe the significant accounting policies used in preparing the consolidated financial statements. Our
management has discussed the development, selection, and disclosure of our critical accounting estimates with the
Audit & Risk Committee of our Board of Directors. The following items require significant estimation or judgment:
29
TARGET CORPORATION
2022 Form 10-K
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
ANALYSIS OF FINANCIAL CONDITION
Inventory and cost of sales: The vast majority of our inventory is accounted for under the retail inventory
accounting method using the last-in, first-out method (LIFO). Our inventory is valued at the lower of LIFO cost or
market. We reduce inventory for estimated losses related to shrink and markdowns. Our shrink estimate is based on
historical losses verified by physical inventory counts. Historically, our actual physical inventory count results have
shown our estimates to be reliable. Market adjustments for markdowns are recorded when the salability of the
merchandise has diminished. Salability can be impacted by consumer preferences and seasonality, among other
factors. We believe the risk of inventory obsolescence is largely mitigated because our inventory typically turns in
less than three months. Inventory was $13.5 billion and $13.9 billion as of January 28, 2023, and January 29, 2022,
respectively, and is further described in Note 9 to the Financial Statements.
Index to Financial Statements
Vendor income: We receive various forms of consideration from our vendors (vendor income), principally earned
as a result of volume rebates, markdown allowances, promotions, and advertising allowances. Substantially all
vendor income is recorded as a reduction of cost of sales. Vendor income earned can vary based on a number of
factors, including purchase volumes, sales volumes, and our pricing and promotion strategies.
We establish a receivable for vendor income that is earned but not yet received. Based on historical trending and
data, this receivable is computed by forecasting vendor income collections and estimating the amount earned. The
majority of the year-end vendor income receivables are collected within the following fiscal quarter, and we do not
believe there is a reasonable likelihood that the assumptions used in our estimate will change significantly.
Historically, adjustments to our vendor income receivable have not been material. Vendor income receivable was
$526 million and $518 million as of January 28, 2023, and January 29, 2022, respectively. Vendor income is
described further in Note 5 to the Financial Statements.
Long-lived assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amounts may not be recoverable. The evaluation is performed primarily at the store level.
An impairment loss is recognized when estimated undiscounted future cash flows from the operation and/or
eventual disposition of the asset or asset group is less than its carrying amount, and is measured as the excess of
its carrying amount over fair value. We estimate fair value by obtaining market appraisals, obtaining valuations from
third-party brokers, or using other valuation techniques. We recorded impairments of $66 million, $87 million, and
$62 million in 2022, 2021, and 2020, respectively, which are described further in Note 11 to the Financial
Statements.
Insurance/self-insurance: We retain a substantial portion of the risk related to certain general liability, workers'
compensation, property loss, and team member medical and dental claims. However, we maintain stop-loss
coverage to limit the exposure related to certain risks. Liabilities associated with these losses include estimates of
both claims filed and losses incurred but not yet reported. We use actuarial methods which consider a number of
factors to estimate our ultimate cost of losses. General liability and workers' compensation liabilities are recorded
based on our estimate of their net present value; other liabilities referred to above are not discounted. Our workers'
compensation and general liability accrual was $560 million and $519 million as of January 28, 2023, and
January 29, 2022, respectively. We believe that the amounts accrued are appropriate; however, our liabilities could
be significantly affected if future occurrences or loss developments differ from our assumptions. For example, a
5 percent increase or decrease in average claim costs would have impacted our self-insurance expense by
$28 million in 2022. Historically, adjustments to our estimates have not been material. Refer to Part II, Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, for further disclosure of the market risks associated
with these exposures. We maintain insurance coverage to limit our exposure to certain events, including network
security matters.
Income taxes: We pay income taxes based on the tax statutes, regulations, and case law of the various
jurisdictions in which we operate. Significant judgment is required in determining the timing and amounts of
deductible and taxable items, and in evaluating the ultimate resolution of tax matters in dispute with tax authorities.
The benefits of uncertain tax positions are recorded in our financial statements only after determining it is likely the
uncertain tax positions would withstand challenge by taxing authorities. We periodically reassess these probabilities
and record any changes in the financial statements as appropriate. Gross uncertain tax positions, including interest
and penalties, were $241 million and $138 million as of January 28, 2023, and January 29, 2022, respectively. We
believe the resolution of these matters will not materially affect our consolidated financial statements. Income taxes
are described further in Note 18 to the Financial Statements.
TARGET CORPORATION
2022 Form 10-K
30
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
ANALYSIS OF FINANCIAL CONDITION & NEW ACCOUNTING PRONOUNCEMENTS
Pension accounting: We maintain a funded qualified defined benefit pension plan, as well as nonqualified and
international pension plans that are generally unfunded, for certain current and retired team members. The costs for
these plans are determined based on actuarial calculations using the assumptions described in the following
paragraphs. Eligibility and the level of benefits vary depending on each team member's full-time or part-time status,
date of hire, age, length of service, and/or compensation. The benefit obligation and related expense for these plans
are determined based on actuarial calculations using assumptions about the expected long-term rate of return, the
discount rate, compensation growth rates, mortality, and retirement age. These assumptions, with adjustments
made for any significant plan or participant changes, are used to determine the period-end benefit obligation and
establish expense for the next year.
Index to Financial Statements
Our 2022 expected long-term rate of return on plan assets of 5.60 percent was determined by the portfolio
composition, historical long-term investment performance, and current market conditions. A 1 percentage point
decrease in our expected long-term rate of return would increase annual expense by $42 million.
The discount rate used to determine benefit obligations is adjusted annually based on the interest rate for long-term
high-quality corporate bonds, using yields for maturities that are in line with the duration of our pension liabilities.
Our benefit obligation and related expense will fluctuate with changes in interest rates. A 1 percentage point
decrease in the weighted average discount rate would increase annual expense by $59 million.
Based on our experience, we use a graduated compensation growth schedule that assumes higher compensation
growth for younger, shorter-service pension-eligible team members than it does for older, longer-service pension-
eligible team members.
Pension benefits are further described in Note 23 to the Financial Statements.
Legal and other contingencies: We believe the accruals recorded in our consolidated financial statements properly
reflect loss exposures that are both probable and reasonably estimable. We do not believe any of the currently
identified claims or litigation will materially affect our results of operations, cash flows, or financial condition.
However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling
were to occur, it may cause a material adverse impact on the results of operations, cash flows, or financial condition
for the period in which the ruling occurs, or future periods. Refer to Note 14 to the Financial Statements for further
information on contingencies.
New Accounting Pronouncements
We do not expect that any recently issued accounting pronouncements will have a material effect on our financial
statements.
31
TARGET CORPORATION
2022 Form 10-K
Forward-Looking Statements
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
FORWARD LOOKING STATEMENTS & QUANTITATIVE AND QUALITATIVE DISCLOSURES
Index to Financial Statements
the expected compliance with debt covenants,
This report contains forward-looking statements, which are based on our current assumptions and expectations.
These statements are typically accompanied by the words "expect," "may," "could," "believe," "would," "might,"
"anticipates," or similar words. The principal forward-looking statements in this report include: our financial
performance, statements regarding 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
impact of new accounting
commitments,
pronouncements, our intentions regarding future dividends, the expected contributions and payments related to our
pension plan, the expected return on plan assets, the expected timing and recognition of compensation expenses,
the adequacy of our reserves for general liability, workers' compensation, and property loss, the expected outcome
of, and adequacy of our reserves for claims, litigation, and the resolution of tax matters, our expectations regarding
our contractual obligations, liabilities, and vendor income, the expected ability to recognize deferred tax assets and
liabilities and the timing of such recognition, our expectations regarding arrangements with our partners, and
changes in our assumptions and expectations.
the expected
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 to this Form 10-K, 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 7A. Quantitative and Qualitative Disclosures About Market Risk
As of January 28, 2023, our exposure to market risk was primarily from interest rate changes on our debt
obligations and short-term investments, some of which are at a London Interbank Offered Rate (LIBOR). Our
interest rate exposure is primarily due to differences between our floating rate debt obligations compared to our
floating rate short-term investments. As of January 28, 2023, our floating rate debt exceeded our floating rate short-
term investments by approximately $1.2 billion. Based on our balance sheet position as of January 28, 2023, the
annualized effect of a 0.1 percentage point increase in floating interest rates on our floating rate debt obligations,
net of our floating rate short-term investments, would decrease our earnings before income taxes by $1 million. In
general, we expect our floating rate debt to exceed our floating rate short-term investments over time, but that may
vary in different interest rate and economic environments. See further description of our debt and derivative
instruments in Notes 15 and 16 to the Financial Statements.
The United Kingdom's Financial Conduct Authority has announced the intent to phase out LIBOR by June 2023. We
do not expect the phase out to materially impact our financial statements, liquidity, or access to capital markets.
We record our general liability and workers' compensation liabilities at net present value; therefore, these liabilities
fluctuate with changes in interest rates. Based on our balance sheet position as of January 28, 2023, the annualized
effect of a 0.5 percentage point increase/(decrease) in interest rates would increase/(decrease) earnings before
income taxes by $7 million.
In addition, we are exposed to market return fluctuations on our qualified defined benefit pension plan. The value of
our pension liabilities is inversely related to changes in interest rates. A 1 percentage point decrease in the weighted
average discount rate would increase annual expense by $59 million. To protect against declines in interest rates,
we hold high-quality, long-duration bonds and derivative instruments in our pension plan trust. As of January 28,
2023, we had hedged 70 percent of the interest rate exposure of our plan liabilities.
As more fully described in Note 22 to the Financial Statements, we are exposed to market returns on accumulated
team member balances in our nonqualified, unfunded deferred compensation plans. We control the risk of offering
the nonqualified plans by making investments in life insurance contracts and prepaid forward contracts on our own
common stock that substantially offset our economic exposure to the returns on these plans.
There have been no other material changes in our primary risk exposures or management of market risks since the
prior year.
TARGET CORPORATION
2022 Form 10-K
32
FINANCIAL STATEMENTS
INDEX
Table of Contents
Index to Financial Statements
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders' Investment
Notes to Consolidated Financial Statements
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Summary of Accounting Policies
Dermstore Sale
Revenues
Cost of Sales and Selling, General and Administrative Expenses
Consideration Received from Vendors
Advertising Costs
Fair Value Measurements
Cash and Cash Equivalents
Inventory
Other Current Assets
Property and Equipment
Other Noncurrent Assets
Accrued and Other Current Liabilities
Commitments and Contingencies
Commercial Paper and Long-Term Debt
Derivative Financial Instruments
Leases
Incomes Taxes
Other Noncurrent Liabilities
Share Repurchase
Share-Based Compensation
Defined Contribution Plans
Pension Plans
Accumulated Other Comprehensive Income
33
37
38
39
40
41
42
42
42
43
44
45
45
45
46
46
46
47
47
48
48
49
50
51
53
55
55
55
57
58
62
33
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS
REPORTS
Table of Contents
Index to Financial Statements
Report of Management on the Consolidated Financial Statements
Management is responsible for the consistency, integrity, and presentation of the information in the Annual Report. The consolidated financial
statements and other information presented in this Annual Report have been prepared in accordance with accounting principles generally
accepted in the United States and include necessary judgments and estimates by management.
To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance that assets are
safeguarded and transactions are executed in accordance with established procedures. The concept of reasonable assurance is based upon
recognition that the cost of the controls should not exceed the benefit derived. We believe our systems of internal control provide this reasonable
assurance.
The Board of Directors exercised its oversight role with respect to the Corporation's systems of internal control primarily through its Audit & Risk
Committee, which is comprised of independent directors. The Committee oversees the Corporation's systems of internal control, accounting
practices, financial reporting and audits to assess whether their quality, integrity, and objectivity are sufficient to protect shareholders'
investments.
In addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public accounting firm, whose
report also appears on this page.
Brian C. Cornell
Chair of the Board and Chief Executive Officer
March 8, 2023
Michael J. Fiddelke
Executive Vice President and
Chief Financial Officer
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Target Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Target Corporation (the Corporation) as of January 28, 2023
and January 29, 2022, the related consolidated statements of operations, comprehensive income, cash flows and shareholders' investment for
each of the three years in the period ended January 28, 2023, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation
at January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended
January 28, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Corporation's internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 8,
2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the
Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
TARGET CORPORATION
2022 Form 10-K
34
FINANCIAL STATEMENTS
REPORTS
Table of Contents
Index to Financial Statements
Valuation of Inventory and related Cost of Sales
Description of
the Matter
At January 28, 2023, the Corporation’s inventory was $13,499 million. As described in Note 9 to the consolidated financial
statements, the Corporation accounts for the vast majority of its inventory under the retail inventory accounting method (RIM)
using the last-in, first-out (LIFO) method. RIM is an averaging method that has been widely used in the retail industry due to its
practicality. Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the
inventory retail value.
Auditing inventory requires extensive audit effort including significant involvement of more experienced audit team members,
including the involvement of our information technology (IT) professionals, given the relatively higher level of automation
impacting the inventory process including the involvement of multiple information systems used to capture the high volume of
transactions processed by the Corporation. Further, the inventory process is supported by a number of automated and IT
dependent controls that elevate the importance of the IT general controls that support the underlying information systems
utilized to process transactions.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Corporation’s
inventory process, including the underlying IT general controls. For example, we tested automated controls performed by the
Corporation’s information systems and controls over the completeness of data transfers between information systems used in
performing the Corporation’s RIM calculation. Our audit procedures included, among others, testing the processing scenarios
of the automated controls by evaluating configuration settings and performing a transaction walkthrough for each scenario.
Our audit procedures also included, among others, testing the key inputs into the RIM calculation, including purchases, sales,
shortage, and price changes (markdowns) by comparing the key inputs back to source information such as third-party vendor
invoices, third-party inventory count information and cash receipts. We also performed analytical procedures. For example, we
performed predictive markdown analytics based on inquiries held with members of the merchant organization to assess the
level of price changes within each category. In addition, we tested the existence of inventories by observing physical inventory
counts for a sample of stores and distribution centers.
Valuation of Vendor Income Receivable
Description of
the Matter
At January 28, 2023, the Corporation’s vendor income receivable totaled $526 million. As discussed in Note 5 of the
consolidated financial statements, the Corporation receives consideration for a variety of vendor-sponsored programs, which
are primarily recorded as a reduction of cost of sales when earned. The Corporation records a receivable for amounts earned
but not yet received.
Auditing the Corporation's vendor income receivable was complex due to the estimation required in measuring the receivable.
The estimate was sensitive to significant assumptions, such as forecasted vendor income collections, and estimating the time
period over which the collections have been earned, which is primarily based on historical trending and data.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Corporation’s
vendor income receivable process, including controls over management’s review of the significant assumptions described
above.
To test the estimated vendor income receivable, we performed audit procedures that included, among others, assessing the
estimation methodology used by management and evaluating the forecasted vendor income collections and the time period
over which collections have been earned as used in the receivable estimation model. For a sample of the vendor rebates and
concessions, we evaluated the nature and source of the inputs used and the terms of the contractual agreements. We
recalculated the amount of the vendor income earned based on the inputs and the terms of the agreements. In addition, we
recalculated the time period over which the vendor income collection had been earned to assess the accuracy of
management’s estimates. We also performed sensitivity analyses of significant assumptions to evaluate the significance of
changes in the receivable that would result from changes in assumptions.
/s/ Ernst & Young LLP
We have served as the Corporation's auditor since 1931.
Minneapolis, Minnesota
March 8, 2023
35
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS
REPORTS
Table of Contents
Index to Financial Statements
Report of Management on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our chief executive officer and
chief financial officer, we assessed the effectiveness of our internal control over financial reporting as of January 28, 2023, based on the
framework in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework). Based on our assessment, we conclude that the Corporation's internal control over financial reporting is effective
based on those criteria.
Our internal control over financial reporting as of January 28, 2023, has been audited by Ernst & Young LLP, the independent registered public
accounting firm who has also audited our consolidated financial statements, as stated in their report which appears on this page.
Brian C. Cornell
Chair of the Board and Chief Executive Officer
March 8, 2023
Michael J. Fiddelke
Executive Vice President and
Chief Financial Officer
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Target Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Target Corporation’s internal control over financial reporting as of January 28, 2023, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the
COSO criteria). In our opinion, Target Corporation (the Corporation) maintained, in all material respects, effective internal control over financial
reporting as of January 28, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated statements of financial position of the Corporation as of January 28, 2023 and January 29, 2022, the related consolidated
statements of operations, comprehensive income, cash flows and shareholders' investment for each of the three years in the period ended
January 28, 2023, and the related notes and our report dated March 8, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
March 8, 2023
TARGET CORPORATION
2022 Form 10-K
36
FINANCIAL STATEMENTS
Table of Contents
Index to Financial Statements
Consolidated Statements of Operations
(millions, except per share data)
Sales
Other revenue
Total revenue
Cost of sales
Selling, general and administrative expenses
Depreciation and amortization (exclusive of depreciation included in cost
of sales)
Operating income
Net interest expense
Net other (income) / expense
Earnings before income taxes
Provision for income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Weighted average common shares outstanding
Basic
Diluted
Antidilutive shares
Note: Per share amounts may not foot due to rounding.
See accompanying Notes to Consolidated Financial Statements.
2022
2021
2020
$ 107,588 $ 104,611 $
92,400
1,532
1,394
109,120
106,005
82,229
74,963
20,658
19,752
1,161
93,561
66,177
18,615
2,385
3,848
478
(48)
3,418
638
2,344
8,946
421
(382)
8,907
1,961
$
$
$
2,780 $
6,946 $
6.02 $
5.98 $
14.23 $
14.10 $
462.1
464.7
1.1
488.1
492.7
—
2,230
6,539
977
16
5,546
1,178
4,368
8.72
8.64
500.6
505.4
—
37
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS
Table of Contents
Index to Financial Statements
Consolidated Statements of Comprehensive Income
(millions)
Net earnings
Other comprehensive income / (loss), net of tax
Pension benefit liabilities
Currency translation adjustment and cash flow hedges
Other comprehensive income
Comprehensive income
See accompanying Notes to Consolidated Financial Statements.
2022
2021
2020
$
2,780 $
6,946 $
4,368
(113)
247
134
152
51
203
102
10
112
$
2,914 $
7,149 $
4,480
TARGET CORPORATION
2022 Form 10-K
38
Consolidated Statements of Financial Position
FINANCIAL STATEMENTS
Table of Contents
Index to Financial Statements
(millions, except footnotes)
Assets
Cash and cash equivalents
Inventory
Other current assets
Total current assets
Property and equipment
Land
Buildings and improvements
Fixtures and equipment
Computer hardware and software
Construction-in-progress
Accumulated depreciation
Property and equipment, net
Operating lease assets
Other noncurrent assets
Total assets
Liabilities and shareholders' investment
Accounts payable
Accrued and other current liabilities
Current portion of long-term debt and other borrowings
Total current liabilities
Long-term debt and other borrowings
Noncurrent operating lease liabilities
Deferred income taxes
Other noncurrent liabilities
Total noncurrent liabilities
Shareholders' investment
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders' investment
January 28,
2023
January 29,
2022
$
2,229 $
13,499
2,118
17,846
6,231
34,746
7,439
3,039
2,688
5,911
13,902
1,760
21,573
6,164
32,985
6,407
2,505
1,257
(22,631)
(21,137)
31,512
28,181
2,657
1,320
2,556
1,501
53,335 $
53,811
13,487 $
15,478
$
$
5,883
130
19,500
16,009
2,638
2,196
1,760
6,098
171
21,747
13,549
2,493
1,566
1,629
22,603
19,237
38
6,608
5,005
(419)
11,232
39
6,421
6,920
(553)
12,827
53,811
Total liabilities and shareholders' investment
$
53,335 $
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 460,346,947 shares issued and outstanding
as of January 28, 2023; 471,274,073 shares issued and outstanding as of January 29, 2022.
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.
39
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS
Table of Contents
Index to Financial Statements
Consolidated Statements of Cash Flows
(millions)
Operating activities
Net earnings
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation and amortization
Share-based compensation expense
Deferred income taxes
Gain on Dermstore sale
Loss on debt extinguishment
Noncash losses / (gains) and other, net
Changes in operating accounts:
Inventory
Other assets
Accounts payable
Accrued and other liabilities
Cash provided by operating activities
Investing activities
Expenditures for property and equipment
Proceeds from disposal of property and equipment
Proceeds from Dermstore sale
Other investments
Cash required for investing activities
Financing activities
Additions to long-term debt
Reductions of long-term debt
Dividends paid
Repurchase of stock
Stock option exercises
Cash required for financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental information
Interest paid, net of capitalized interest
Income taxes paid
Leased assets obtained in exchange for new finance lease liabilities
Leased assets obtained in exchange for new operating lease liabilities
See accompanying Notes to Consolidated Financial Statements.
2022
2021
2020
$
2,780 $
6,946 $
4,368
2,700
2,642
220
582
—
—
172
403
22
(2,237)
(624)
4,018
228
522
(335)
—
67
(3,249)
(78)
2,628
(746)
8,625
2,485
200
(184)
—
512
86
(1,661)
(137)
2,925
1,931
10,525
(5,528)
(3,544)
(2,649)
8
—
16
27
356
7
42
—
16
(5,504)
(3,154)
(2,591)
2,625
(163)
(1,836)
(2,826)
4
(2,196)
(3,682)
5,911
1,972
(1,147)
(1,548)
(7,356)
8
(8,071)
(2,600)
8,511
$
$
2,229 $
5,911 $
449 $
213
224
329
414 $
2,063
288
580
2,480
(2,415)
(1,343)
(745)
23
(2,000)
5,934
2,577
8,511
939
1,031
428
262
TARGET CORPORATION
2022 Form 10-K
40
Stock options and awards
2.4 —
103
Consolidated Statements of Shareholders' Investment
FINANCIAL STATEMENTS
Table of Contents
Index to Financial Statements
Common
Stock
Shares
Stock
Par
Value
Additional
Paid-in
Capital
Retained
Earnings
Accumulated Other
Comprehensive
(Loss) / Income
Total
504.2 $ 42 $
6,226 $
6,433 $
(millions)
February 1, 2020
Net earnings
Other comprehensive income
Dividends declared
Repurchase of stock
January 30, 2021
Net earnings
Other comprehensive income
Dividends declared
Repurchase of stock
Stock options and awards
January 29, 2022
Net earnings
Other comprehensive income
Dividends declared
Repurchase of stock
Stock options and awards
January 28, 2023
— —
— —
— —
(5.7) —
—
—
—
—
4,368
—
(1,367)
(609)
—
500.9 $ 42 $
6,329 $
8,825 $
— —
— —
— —
(31.3)
(3)
1.7 —
—
—
—
—
92
6,946
—
(1,655)
(7,196)
—
471.3 $ 39 $
6,421 $
6,920 $
— —
— —
— —
(12.5)
(1)
1.5 —
—
—
—
119
68
2,780
—
(1,931)
(2,764)
—
(868) $ 11,833
—
4,368
112
112
—
(1,367)
—
—
(609)
103
(756) $ 14,440
—
6,946
203
203
—
(1,655)
—
(7,199)
—
92
(553) $ 12,827
—
2,780
134
134
—
(1,931)
—
(2,646)
—
68
460.3 $ 38 $
6,608 $
5,005 $
(419) $ 11,232
We declared $4.14, $3.38, and $2.70 dividends per share for the twelve months ended January 28, 2023,
January 29, 2022, and January 30, 2021, respectively.
See accompanying Notes to Consolidated Financial Statements.
41
TARGET CORPORATION
2022 Form 10-K
Notes to Consolidated Financial Statements
1. Summary of Accounting Policies
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Organization - We are a general merchandise retailer selling products to our guests through our stores and digital
channels.
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 United States (U.S.). The vast majority of our long-lived assets are located within the U.S.
Consolidation - The consolidated financial statements include the balances of Target and its subsidiaries after
elimination of intercompany balances and transactions. All subsidiaries are wholly owned.
Use of estimates - The preparation of our consolidated financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates and assumptions affecting
reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ
significantly from those estimates.
Fiscal year - Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to
years in this report relate to fiscal years, rather than to calendar years. Fiscal 2022, 2021, and 2020 ended
January 28, 2023, January 29, 2022, and January 30, 2021, respectively, and consisted of 52 weeks. Fiscal 2023
will end February 3, 2024, and will consist of 53 weeks.
Accounting policies - Our accounting policies are disclosed in the applicable Notes to the Consolidated Financial
Statements. Certain prior-year amounts have been reclassified to conform to the current-year presentation.
2. Dermstore Sale
In February 2021, we sold our wholly owned subsidiary Dermstore LLC (Dermstore) for $356 million in cash and
recognized a $335 million pretax gain, which is included in Net Other (Income) / Expense. Dermstore represented
less than 1 percent of our consolidated revenues, operating income and net assets.
TARGET CORPORATION
2022 Form 10-K
42
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
3. Revenues
Merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other
sources, most notably credit card profit-sharing income from our arrangement with TD Bank Group (TD).
Revenues
(millions)
Apparel and accessories (a)
Beauty and household essentials (b)
Food and beverage (c)
Hardlines (d)
Home furnishings and décor (e)
Other
Sales
Credit card profit sharing
Other
Other revenue
Total revenue
(a)
2022
2021
2020
$
17,646 $
17,931 $
29,575
22,918
17,739
19,463
247
27,268
20,306
18,614
20,255
237
14,772
24,461
18,135
16,626
18,231
175
107,588
104,611
92,400
734
798
1,532
710
684
1,394
666
495
1,161
$
109,120 $
106,005 $
93,561
(b)
(c)
(d)
(e)
Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as jewelry,
accessories, and shoes.
Includes beauty and personal care, baby gear, cleaning, paper products, and pet supplies.
Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and food
service in our stores.
Includes electronics (including video game hardware and software), toys, entertainment, sporting goods,
and luggage.
Includes furniture, lighting, storage, kitchenware, small appliances, home décor, bed and bath, home
improvement, school/office supplies, greeting cards and party supplies, and other seasonal merchandise.
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. Total
revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes.
Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive
brands within one year of purchase. Sales are recognized net of expected returns, which we estimate using
historical return patterns and our expectation of future returns. As of January 28, 2023, and January 29, 2022, the
liability for estimated returns was $174 million and $165 million, respectively.
We routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until the
merchandise is ultimately sold to a guest. Under the vast majority of these arrangements, which represent less than
5 percent of consolidated sales, we record revenue and related costs gross. We concluded that we are the principal
in these transactions for a number of reasons, most notably because we 1) control the overall economics of the
transactions, including setting the sales price and realizing the majority of cash flows from the sale, 2) control the
relationship with the customer, and 3) are responsible for fulfilling the promise to provide goods to the customer.
Merchandise received under these arrangements is not included in Inventory because the purchase and sale of this
inventory are virtually simultaneous.
Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of
issuance. Our gift cards do not expire. Based on historical redemption rates, a small and relatively stable
percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is
recognized over time in proportion to actual gift card redemptions.
43
TARGET CORPORATION
2022 Form 10-K
Gift Card Liability Activity
(millions)
Gift card liability (a)
(a)
(b)
Included in Accrued and Other Current Liabilities.
Net of estimated breakage.
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Gift Cards
Issued During
Current Period
But Not
Redeemed (b)
Revenue
Recognized
From
Beginning
Liability
January 29,
2022
January 28,
2023
$
1,202 $
927 $
(889) $
1,240
Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use
their Target Debit Card, RedCard Reloadable Account, Target Credit Card, or Target MasterCard (collectively,
RedCards).
Target Circle program members earn 1 percent rewards on nearly all non-RedCard purchases and rewards on
various other transactions. As of January 28, 2023, and January 29, 2022, deferred revenue of $112 million and
$89 million, respectively, related to this loyalty program was included in Accrued and Other Current Liabilities.
Credit card profit sharing – We receive payments under a credit card program agreement with TD. Under the
agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard
receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds,
and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees
regulatory compliance.
Other – Includes advertising revenue, Shipt membership and service revenues, commissions earned on third-party
sales through Target.com, rental income, and other miscellaneous revenues.
4. Cost of Sales and Selling, General and Administrative Expenses
The following table illustrates the primary items classified in each major expense category:
Cost of Sales
Total cost of products sold including
• Freight expenses associated with moving
merchandise from our vendors to and between our
distribution centers and our retail stores
• Vendor income that is not reimbursement of
specific, incremental, and identifiable costs
Inventory shrink
Markdowns
Outbound shipping and handling expenses
associated with sales to our guests
Payment term cash discounts
Distribution center costs, including compensation
and benefits costs and depreciation
Compensation and benefit costs associated with
shipment of merchandise from stores
Import costs
Selling, General and Administrative Expenses
Compensation and benefit costs for stores and
headquarters, except ship from store costs classified
as cost of sales
Occupancy and operating costs of retail and
headquarters facilities
Advertising, offset by vendor income that is a
reimbursement of specific, incremental, and
identifiable costs
Pre-opening and exit costs of stores and other facilities
Credit cards servicing expenses
Costs associated with accepting third-party bank issued
payment cards
Litigation and defense costs and related insurance
recoveries
Other administrative costs
Note: The classification of these expenses varies across the retail industry.
TARGET CORPORATION
2022 Form 10-K
44
5. Consideration Received from Vendors
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
We receive consideration for a variety of vendor-sponsored programs—such as volume rebates, markdown
allowances, promotions, certain advertising activities, and for our compliance programs—referred to as "vendor
income." Additionally, under our compliance programs, vendors are charged for merchandise shipments that do not
meet our requirements (violations), such as late or incomplete shipments. Substantially all vendor income is
recorded as a reduction of Cost of Sales.
We establish a receivable for vendor income that is earned but not yet received. Based on historical trending and
data, this receivable is computed by forecasting vendor income collections and estimating the amount earned. The
majority of the year-end vendor income receivables are collected within the following fiscal quarter, and we do not
believe there is a reasonable likelihood that the assumptions used in our estimate will change significantly. Note 10
provides additional information.
6. Advertising Costs
Advertising costs, which primarily consist of digital advertisements and media broadcast, are generally expensed at
first showing or distribution of the advertisement. Reimbursements from vendors that are for specific, incremental,
and identifiable advertising costs are recognized as offsets of these advertising costs within Selling, General and
Administrative Expenses (SG&A Expenses). Net advertising costs were $1.5 billion in 2022, 2021, and 2020.
7. Fair Value Measurements
Fair value measurements are reported in one of three levels based on the lowest level of significant input used:
Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices
included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).
Fair Value Measurements - Recurring Basis
Fair Value as of
(millions)
Assets
Short-term investments (a)
Prepaid forward contracts (b)
Interest rate swaps (c)
Interest rate swaps (c)
Liabilities
Interest rate swaps (c)
Classification
Measurement
Level
January 28,
2023
January 29,
2022
Cash and Cash Equivalents
Level 1 $
1,343 $
4,985
Other Current Assets
Other Current Assets
Other Noncurrent Assets
Level 1
Level 2
Level 2
Other Noncurrent Liabilities
Level 2
27
—
7
81
35
17
135
—
(a)
(b)
(c)
Carrying value approximates fair value because maturities are less than three months.
Initially valued at transaction price. Subsequently valued by reference to the market price of Target common
stock.
Valuations are based on observable inputs to the valuation model (e.g., interest rates and credit spreads).
See Note 16 for additional information on interest rate swaps.
Significant Financial Instruments Not Measured at Fair Value (a)
(millions)
Long-term debt, including current portion (b)
(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.
The fair value of debt is generally measured using a discounted cash flow analysis based on current market
interest rates for the same or similar types of financial instruments and would be classified as Level 2.
These amounts exclude commercial paper, unamortized swap valuation adjustments, and lease liabilities.
As of January 28,
2023
As of January 29,
2022
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
$ 14,141 $ 13,688 $ 11,568 $ 12,808
TARGET CORPORATION
2022 Form 10-K
(b)
45
8. Cash and Cash Equivalents
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of
purchase. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card
transactions. These receivables typically settle in five days or less.
Cash and Cash Equivalents
(millions)
Cash
January 28,
2023
January 29,
2022
$
286 $
349
577
4,985
5,911
Receivables from third-party financial institutions for credit and debit card transactions
Short-term investments
Cash and Cash Equivalents (a)
(a)
We have access to these funds without any significant restrictions, taxes or penalties.
$
600
1,343
2,229 $
As of January 28, 2023, and January 29, 2022, we reclassified book overdrafts of $248 million and $366 million,
respectively, to Accounts Payable and $14 million and $19 million, respectively, to Accrued and Other Current
Liabilities.
9. Inventory
The vast majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the
last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Inventory cost includes the
amount we pay to our suppliers to acquire inventory, freight costs incurred to deliver product to our distribution
centers and stores, and import costs, reduced by vendor income and cash discounts. Distribution center operating
costs, including compensation and benefits, are expensed in the period incurred. Inventory is also reduced for
estimated losses related to shrink and markdowns. The LIFO provision is calculated based on inventory levels,
markup rates, and internally measured retail price indices, and was $132 million and $33 million as of January 28,
2023, and January 29, 2022, respectively.
Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the
inventory retail value. RIM is an averaging method that has been widely used in the retail industry due to its
practicality. The use of RIM will result in inventory being valued at the lower of cost or market because permanent
markdowns are taken as a reduction of the retail value of inventory.
10. Other Current Assets
Other Current Assets
(millions)
Accounts and other receivables
Vendor income receivable
Prepaid expenses
Other
Other Current Assets
January 28,
2023
January 29,
2022
$
1,169 $
526
188
235
835
518
170
237
$
2,118 $
1,760
TARGET CORPORATION
2022 Form 10-K
46
11. Property and Equipment
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line
method over estimated useful lives or lease terms if shorter. We amortize leasehold improvements purchased after
the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the
remaining initial lease term, plus any renewals that are reasonably certain at the date the leasehold improvements
are acquired. Total depreciation expense, including depreciation expense included in Cost of Sales, was $2.7 billion,
$2.6 billion, and $2.5 billion for 2022, 2021, and 2020, respectively. For income tax purposes, accelerated
depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility pre-
opening costs, including supplies and payroll, are expensed as incurred.
Estimated Useful Lives
Buildings and improvements
Fixtures and equipment
Computer hardware and software
Life (Years)
8-39
2-15
2-7
We review long-lived assets for impairment when 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 losses of $66 million, $87 million, and $62 million during 2022, 2021, and 2020, respectively. For asset
groups classified as held for sale, measurement of an impairment loss is based on the excess of the carrying
amount of the asset group over its fair value. We estimate fair value by obtaining market appraisals, obtaining
valuations from third-party brokers, or using other valuation techniques. Impairments are recorded in SG&A
Expenses.
12. Other Noncurrent Assets
Other Noncurrent Assets
(millions)
Goodwill and intangible assets (a)
Company-owned life insurance investments, net of loans (b)
Other
Other Noncurrent Assets
(a)
January 28,
2023
January 29,
2022
$
$
645 $
440
235
656
470
375
1,320 $
1,501
Goodwill totaled $631 million as of both January 28, 2023, and January 29, 2022. No impairments were
recorded in 2022, 2021, or 2020 as a result of the annual goodwill impairment tests performed.
Note 22 provides more information on company-owned life insurance investments.
(b)
47
TARGET CORPORATION
2022 Form 10-K
13. Accrued and Other Current Liabilities
Accrued and Other Current Liabilities
(millions)
Wages and benefits
Gift card liability, net of estimated breakage
Real estate, sales, and other taxes payable
Dividends payable
Current portion of operating lease liabilities
Workers' compensation and general liability (a)
Interest payable
Other
Accrued and Other Current Liabilities
(a)
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
January 28,
2023
January 29,
2022
$
1,319 $
1,240
772
497
296
173
94
1,492
$
5,883 $
1,620
1,202
1,042
424
254
169
77
1,310
6,098
We retain a substantial portion of the risk related to general liability and workers' compensation claims. We
estimate our ultimate cost based on analysis of historical data and actuarial estimates. General liability and
workers' compensation liabilities are recorded at our estimate of their net present value. Note 19 provides
the noncurrent balance of these liabilities.
14. Commitments and Contingencies
Contingencies
We are exposed to claims and litigation arising in the ordinary course of business and use various methods to
resolve these matters in a manner that we believe serves the best interest of our shareholders and other
constituents. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of
loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss
and, if material, disclose the estimated range of loss. We do not record liabilities for reasonably possible loss
contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to
estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that
prevent us from determining such a range. Historically, adjustments to our estimates have not been material. We
believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and
estimable liabilities. We do not believe that any of these identified claims or litigation will be material to our results of
operations, cash flows, or financial condition.
Commitments
Purchase obligations, which include all legally binding contracts such as merchandise royalties, equipment
purchases, marketing-related contracts, software acquisition/license commitments, firm minimum commitments for
inventory purchases, and service contracts, were $1.0 billion and $944 million as of January 28, 2023, and
January 29, 2022, respectively. These purchase obligations are primarily due within three years and recorded as
liabilities when goods are received or services are rendered. Real estate obligations, which include legally binding
minimum lease payments for leases signed but not yet commenced, and commitments for the purchase,
construction, or remodeling of real estate and facilities, were $5.3 billion and $2.5 billion as of January 28, 2023,
and January 29, 2022, respectively. Approximately half of these real estate obligations are due within one year, a
portion of which are recorded as liabilities.
We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase
that are cancellable by their terms. We do not consider purchase orders to be firm inventory commitments. If we
choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred
prior to cancellation.
TARGET CORPORATION
2022 Form 10-K
48
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
We also issue letters of credit and surety bonds in the ordinary course of business. Trade letters of credit totaled
$1.6 billion and $2.6 billion as of January 28, 2023, and January 29, 2022, respectively, a portion of which are
reflected in Accounts Payable. Standby letters of credit and surety bonds, primarily related to insurance and
regulatory requirements, totaled $519 million and $517 million as of January 28, 2023, and January 29, 2022,
respectively.
15. Commercial Paper and Long-Term Debt
Debt Maturities
(dollars in millions)
Due 2022
Due 2023-2027
Due 2028-2032
Due 2033-2037
Due 2038-2042
Due 2043-2047
Due 2048-2052
Total notes and debentures
Swap valuation adjustments
Finance lease liabilities
Less: Amounts due within one year
Long-term debt and other borrowings
Weighted-Average Interest
Rate at January 28, 2023
January
28, 2023
January
29, 2022
— % $
— $
2.6
4.6
6.8
4.0
3.8
3.9
4,582
4,297
937
1,087
1,119
2,119
63
4,578
2,807
937
1,085
1,118
980
14,141
11,568
(74)
2,072
(130)
77
2,075
(171)
$
16,009 $
13,549
Required Principal Payments
(millions)
2023
2024
2025
2026
2027
Thereafter
Total required principal payments
$
— $
1,000 $
1,500 $
2,000 $
97 $
9,655
In January 2023, we issued unsecured fixed rate debt of $1.15 billion at 4.8 percent that matures in January 2053
and $500 million at 4.4 percent that matures in January 2033. In connection with this issuance, we terminated our
remaining forward-starting interest rate swaps. Note 16 provides additional information.
In September 2022, we issued unsecured fixed rate debt of $1.0 billion at 4.5 percent that matures in September
2032. In connection with this issuance, we terminated certain of our forward-starting interest rate swaps. Note 16
provides additional information.
In January 2022, we issued unsecured fixed rate debt of $1.0 billion at 1.95 percent that matures in January 2027
and $1.0 billion at 2.95 percent that matures in January 2052. Furthermore, we repaid $1.0 billion of 2.9 percent
unsecured fixed rate debt at maturity.
In October 2020, we repurchased $1.77 billion of unsecured fixed rate debt before its maturity at a market value of
$2.25 billion. We recognized a loss on early retirement of $512 million, which was recorded in Net Interest Expense.
In March 2020, we issued unsecured fixed rate debt of $1.5 billion at 2.25 percent that matures in April 2025 and
$1.0 billion at 2.65 percent that matures in September 2030.
We obtain short-term financing from time to time under our commercial paper program. For the year ended
January 28, 2023, the maximum amount outstanding was $2.3 billion, and the average daily amount outstanding
was $709 million, at a weighted average annual interest rate of 2.4 percent. As of January 28, 2023, there was no
commercial paper outstanding. No balances were outstanding under our commercial paper program at any time
during 2021 or 2020.
49
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS
Table of Contents
NOTES
In October 2022, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will
expire in October 2023. We also extended our existing committed $3.0 billion unsecured revolving credit facility,
which now expires in October 2027. No balances were outstanding under either facility at any time during 2022,
2021, or 2020.
Index to Financial Statements
Substantially all of our outstanding borrowings are senior, unsecured obligations. 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,
which have no practical effect on our ability to pay dividends.
16. 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 7
provides the fair value and classification of these instruments.
During 2022, we entered into interest rate swaps with a total notional amount of $950 million. Under the swap
agreements, we pay a floating rate equal to the daily Secured Overnight Financing Rate (SOFR) compounded over
six months and receive a weighted average fixed rate of 3.1 percent. The agreements have a weighted average
remaining maturity of 7.6 years. For other existing swap agreements, with a total notional amount of $1.5 billion, we
pay a floating rate equal to 1-month LIBOR and receive a weighted average fixed rate of 2.6 percent. The
agreements have a weighted average remaining maturity of 4.9 years. As of January 28, 2023, and January 29,
2022, interest rate swaps with notional amounts totaling $2.45 billion and $1.5 billion were designated as fair value
hedges, and all were considered to be perfectly effective under the shortcut method during 2022 and 2021.
During 2022, we were party to forward-starting interest rate swaps to hedge the interest rate exposure of anticipated
future debt issuances. We designated these derivative financial instruments as cash flow hedges. In January 2023,
we terminated forward-starting interest rate swap agreements that hedged $1.45 billion of the $1.65 billion debt
issuance described in Note 15. In September 2022, we terminated forward-starting interest rate swap agreements
that hedged $700 million of the $1 billion debt issuance described in Note 15. The resulting gains upon termination
of these swap agreements in January 2023 and September 2022 were $310 million and $109 million, respectively,
which were recorded in Accumulated Comprehensive Loss (AOCI) and will be recognized as a reduction to Net
Interest Expense over the respective term of the debt. The cash flows related to forward-starting interest rate swaps
are included within operating activities in the Consolidated Statements of Cash Flows.
Effect of Hedges on Debt
(millions)
Long-term debt and other borrowings
Carrying amount of hedged debt
Cumulative hedging adjustments, included in carrying amount
January 28,
2023
January 29,
2022
$
2,366 $
1,572
(74)
77
Effect of Hedges on Net Interest Expense
(millions)
Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swap designated as fair value hedges
Hedged debt
Gain on cash flow hedges recognized in Net Interest Expense
Total
2022
2021
2020
$
$
(151) $
151
4
4 $
(106) $
106
—
— $
46
(46)
—
—
TARGET CORPORATION
2022 Form 10-K
50
17. Leases
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
We lease certain retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an
initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these
leases on a straight-line basis over the lease term. We combine lease and nonlease components for new and
reassessed leases.
Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to
50 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include
options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are
limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of
exercise. We use our incremental borrowing rate based on the information available at the commencement date in
determining the present value of lease payments.
Certain of our lease agreements require reimbursement of real estate taxes, common area maintenance, and
insurance, as well as rental payments based on a percentage of retail sales over contractual levels and others
include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material
residual value guarantees or material restrictive covenants.
We rent or sublease certain real estate to third parties. Our lease and sublease portfolio consists mainly of
operating leases with CVS Pharmacy Inc. (CVS) for space within our stores.
Leases
(millions)
Assets
Operating
Finance
Total leased assets
Liabilities
Current
Operating
Finance
Noncurrent
Operating
Finance
Total lease liabilities
(a)
Classification
Operating Lease Assets
Buildings and Improvements, net of Accumulated
Depreciation (a)
January 28,
2023
January 29,
2022
$
2,657 $
1,673
2,556
1,652
$
4,330 $
4,208
Accrued and Other Current Liabilities
Current Portion of Long-term Debt and Other Borrowings
$
296 $
129
Noncurrent Operating Lease Liabilities
Long-term Debt and Other Borrowings
2,638
1,943
$
5,006 $
254
108
2,493
1,967
4,822
Finance lease assets are recorded net of accumulated amortization of $623 million and $670 million as of
January 28, 2023, and January 29, 2022, respectively.
Lease Cost
(millions)
Operating lease cost (a)
Finance lease cost
Classification
SG&A Expenses
2022
2021
2020
$
467 $
387 $
332
Amortization of leased assets
Interest on lease liabilities
Depreciation and Amortization (b)
Net Interest Expense
Other Revenue
Sublease income (c)
Net lease cost
(a)
133
68
(19)
649 $
127
68
(18)
564 $
105
62
(15)
484
$
2022, 2021, and 2020 include $101 million, $64 million, and $44 million, respectively, of short-term and
variable lease costs.
Supply chain-related amounts are included in Cost of Sales.
Sublease income excludes rental income from owned properties of $49 million for 2022, and $48 million for
each of 2021 and 2020, which is included in Other Revenue.
TARGET CORPORATION
2022 Form 10-K
(b)
(c)
51
Maturity of Lease Liabilities
(millions)
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
(a)
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Operating
Leases (a)
Finance
Leases (b)
Total
$
386 $
194 $
379
362
345
331
1,826
3,629 $
695
2,934 $
175
174
175
175
1,847
2,740 $
668
2,072
$
$
580
554
536
520
506
3,673
6,369
(b)
Operating lease payments include $878 million related to options to extend lease terms that are reasonably
certain of being exercised and exclude $1.8 billion of legally binding minimum lease payments for leases
signed but not yet commenced.
Finance lease payments include $195 million related to options to extend lease terms that are reasonably
certain of being exercised and exclude $813 million of legally binding minimum lease payments for leases
signed but not yet commenced.
Lease Term and Discount Rate
Weighted average remaining lease term (years)
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
Other Information
(millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
January 28,
2023
January 29,
2022
11.4
15.4
12.2
15.2
3.52 %
3.56 %
3.28 %
3.49 %
2022
2021
2020
$
364 $
63
100
316 $
64
91
284
59
70
TARGET CORPORATION
2022 Form 10-K
52
18. Income Taxes
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Earnings before income taxes were $3.4 billion, $8.9 billion, and $5.5 billion during 2022, 2021, and 2020,
respectively, including $1.3 billion, $896 million, and $764 million earned by our foreign entities subject to tax
outside of the U.S.
Tax Rate Reconciliation
Federal statutory rate
State income taxes, net of the federal tax benefit
International
Excess tax benefit related to share-based payments
Federal tax credits
Other
Effective tax rate
Provision for Income Taxes
(millions)
Current:
Federal
State
International
Total current
Deferred:
Federal
State
International
Total deferred
Total provision
2022
2021
2020
21.0 %
21.0 %
21.0 %
3.0
(2.1)
(1.6)
(1.5)
(0.1)
3.9
(1.3)
(0.8)
(0.5)
(0.3)
3.3
(1.2)
(1.0)
(0.6)
(0.3)
18.7 %
22.0 %
21.2 %
2022
2021
2020
$
(84) $
1,111 $
1,013
33
107
56
501
82
(1)
582
325
3
281
68
1,439
1,362
423
98
1
522
(118)
(64)
(2)
(184)
$
638 $
1,961 $
1,178
53
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS
NOTES
Net Deferred Tax Asset / (Liability)
(millions)
Gross deferred tax assets:
Accrued and deferred compensation
Accruals and reserves not currently deductible
Self-insured benefits
Deferred occupancy income
Lease liabilities
Other
Total gross deferred tax assets
Gross deferred tax liabilities:
Property and equipment
Leased assets
Inventory
Other
Total gross deferred tax liabilities
Total net deferred tax liability (a)
(a)
Table of Contents
Index to Financial Statements
January 28,
2023
January 29,
2022
$
365 $
233
156
125
1,316
142
2,337
(2,613)
(1,115)
(594)
(205)
(4,527)
(2,190) $
$
441
211
141
133
1,245
18
2,189
(2,265)
(1,089)
(266)
(130)
(3,750)
(1,561)
$6 million of the balance as of January 28, 2023, and January 29, 2022, is included in Other Noncurrent
Assets.
We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S.
Internal Revenue Service (IRS) has completed exams on the U.S. federal income tax returns for years 2020 and
prior. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax
authorities for years before 2015.
Reconciliation of Gross Unrecognized Tax Benefits
(millions)
2022
2021
2020
Balance at beginning of period
$
Additions based on tax positions related to the current year
125 $
115
21
(23)
(5)
181 $
32
11
(95)
(4)
$
233 $
125 $
160
35
32
(36)
(10)
181
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Balance at end of period
If we were to prevail on all unrecognized tax benefits recorded, the amount that would benefit the effective tax rate
was $107 million, $67 million, and $99 million as of January 28, 2023, January 29, 2022, and January 30, 2021,
respectively. In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate.
Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During
2022, 2021, and 2020, we recorded an expense / (benefit) from accrued interest and penalties of $(4) million, $1
million, and $(12) million, respectively. As of January 28, 2023, January 29, 2022, and January 30, 2021, total
accrued interest and penalties were $7 million, $13 million, and $12 million, respectively.
It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized tax
positions will increase or decrease during the next twelve months; however, an estimate of the amount or range of
the change cannot be made at this time.
TARGET CORPORATION
2022 Form 10-K
54
19. Other Noncurrent Liabilities
Other Noncurrent Liabilities
(millions)
Deferred compensation
Deferred occupancy income (a)
Workers' compensation and general liability
Income and other taxes payable
Pension benefits
Other
Other Noncurrent Liabilities
(a)
To be amortized evenly through 2038.
20. Share Repurchase
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
January 28,
2023
January 29,
2022
$
550 $
449
387
168
37
169
572
479
350
139
45
44
$
1,760 $
1,629
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
(millions, except per share data)
Total number of shares purchased
Average price paid per share
Total investment
21. Share-Based Compensation
2022
2021
2020
12.5
31.3
5.7
$
$
211.57 $
230.07 $
107.58
2,646 $
7,190 $
609
We maintain a long-term incentive plan for key team members and non-employee members of our Board of
Directors. This plan allows us to grant equity-based compensation awards, including stock options, stock
appreciation rights, performance share units, restricted stock units, restricted stock awards, or a combination of
awards (collectively, share-based awards). The number of unissued common shares reserved for future grants
under this plan was 32.5 million as of January 28, 2023.
Compensation expense associated with share-based awards is recognized on a straight-line basis over the required
service period and reflects estimated forfeitures. Share-based compensation expense recognized in SG&A
Expenses was $224 million, $238 million, and $210 million, and the related income tax benefit was $52 million, $45
million, and $39 million, in 2022, 2021, and 2020, respectively.
55
TARGET CORPORATION
2022 Form 10-K
Restricted Stock Units
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
We issue restricted stock units and performance-based restricted stock units generally with 3-year cliff or 4-year
graduated vesting from the grant date (collectively restricted stock units) to certain team members. The final number
of shares issued under performance-based restricted stock units is based on our total shareholder return relative to
a retail peer group over a 3-year performance period. We also regularly issue restricted stock units to our Board of
Directors, which vest quarterly over a 1-year period and are settled in shares of Target common stock upon
departure from the Board. The fair value for restricted stock units is calculated based on our stock price on the date
of grant, incorporating an analysis of the total shareholder return performance measure where applicable. The
weighted average grant date fair value for restricted stock units was $208.80, $186.98, and $110.80 in 2022, 2021,
and 2020, respectively.
Restricted Stock Unit Activity
Total Nonvested Units
Represents the number of shares of restricted stock units, in thousands. For performance-based restricted
stock units, assumes attainment of maximum payout rates as set forth in the performance criteria. Applying
actual or expected payout rates, the number of outstanding restricted stock units and performance-based
restricted stock units as of January 28, 2023 was 3.25 million.
(b)
Weighted average per unit.
The expense recognized each period is partially dependent upon our estimate of the number of shares that will
ultimately be issued. As of January 28, 2023, there was $267 million of total unrecognized compensation expense
related to restricted stock units, which is expected to be recognized over a weighted average period of 2.6 years.
The fair value of restricted stock units vested and converted to shares of Target common stock was $321 million,
$323 million, and $151 million in 2022, 2021, and 2020, respectively.
Performance Share Units
We issue performance share units to certain team members that represent shares potentially issuable in the future.
Issuance is based upon our performance, generally relative to a retail peer group, over a 3-year or 4-year
performance period on certain measures primarily including sales growth, after-tax return on invested capital, and
earnings per share growth. The fair value of performance share units is calculated based on our stock price on the
date of grant. The weighted average grant date fair value for performance share units was $216.63, $179.58, and
$106.00 in 2022, 2021, and 2020, respectively.
Performance Share Unit Activity
Total Nonvested Units
Restricted
Stock (a)
Grant Date
Fair Value (b)
123.74
3,599 $
1,591
(291)
(1,578)
3,321 $
208.80
161.64
106.64
167.25
Performance
Share Units (a)
Grant Date
Fair Value (b)
111.82
2,257 $
524
(67)
(827)
1,887 $
216.63
159.04
78.32
152.26
January 29, 2022
Granted
Forfeited
Vested
January 28, 2023
(a)
January 29, 2022
Granted
Forfeited
Vested
January 28, 2023
(a)
Represents the number of performance share units, in thousands. Assumes attainment of maximum payout
rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of
outstanding performance share units as of January 28, 2023 was 1.26 million.
Weighted average per unit.
(b)
TARGET CORPORATION
2022 Form 10-K
56
FINANCIAL STATEMENTS
Table of Contents
NOTES
The expense recognized each period is partially dependent upon our estimate of the number of shares that will
ultimately be issued. Future compensation expense for unvested awards could reach a maximum of $120 million
assuming payout of all unvested awards. The unrecognized expense is expected to be recognized over a weighted
average period of 1.4 years. The fair value of performance share units vested and converted to shares of Target
common stock was $178 million, $127 million, and $82 million in 2022, 2021, and 2020, respectively.
Index to Financial Statements
Stock Options
In the past, we granted stock options to certain team members. All outstanding stock options are vested and
currently exercisable.
Stock Option Activity
January 29, 2022
Exercised / issued
January 28, 2023
(a)
Stock Options
Total Outstanding & Exercisable
Exercise
Price (b)
Intrinsic
Value (c)
Number of
Options (a)
210 $
(88)
122 $
58.17 $
61.07
56.07 $
33
14
(b)
(c)
In thousands.
Weighted average per share.
Represents stock price appreciation subsequent to the grant date, in millions.
Stock Option Exercises
(millions)
Cash received for exercise price
Intrinsic value
Income tax benefit
2022
2021
2020
$
4 $
11
2
8 $
45
11
23
161
41
As of January 28, 2023, there was no unrecognized compensation expense related to stock options. The weighted
average remaining life of exercisable and outstanding options is 1.2 years.
22. Defined Contribution Plans
Team members who meet eligibility requirements can participate in a defined contribution 401(k) plan by investing
up to 80 percent of their eligible earnings, as limited by statute or regulation. We match 100 percent of each team
member's contribution up to 5 percent of eligible earnings. Company match contributions are made to funds
designated by the participant, none of which are based on Target common stock.
In addition, we maintain an unfunded, nonqualified deferred compensation plan for a broad management group
whose participation in our 401(k) plan is limited by statute or regulation. These team members choose from a menu
of crediting rate alternatives that are generally the same as the investment choices in our 401(k) plan, but also
includes a fund based on Target common stock. We credit an additional 2 percent per year to the accounts of all
active participants, excluding members of our executive leadership team, in part to recognize the risks inherent to
their participation in this plan. We also maintain a frozen, unfunded, nonqualified deferred compensation plan
covering less than 50 participants. Our total liability under these plans was $600 million and $632 million as of
January 28, 2023, and January 29, 2022, respectively.
We mitigate our risk of offering the nonqualified plans through investing in company-owned life insurance and
prepaid forward contracts that substantially offset our economic exposure to the returns of these plans. These
investments are general corporate assets and are marked to market with the related gains and losses recognized in
the Consolidated Statements of Operations in the period they occur.
57
TARGET CORPORATION
2022 Form 10-K
Plan Expenses
(millions)
401(k) plan matching contributions expense
Nonqualified deferred compensation plans
Benefits (income) / expense
Related investment (income) / expense
Nonqualified plans net expense
23. Pension Plans
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
2022
2021
2020
335 $
307 $
281
(15) $
40
25 $
59 $
(27)
32 $
86
(58)
28
$
$
$
We have a U.S. qualified defined benefit pension plan covering team members who meet eligibility requirements.
This plan is closed to new participants. Active participants accrue benefits under a final average pay feature or a
cash balance feature. We also have unfunded, nonqualified pension plans for team members with qualified plan
compensation restrictions, as well as international plans. Eligibility and the level of benefits under all plans vary
depending on each team member's full-time or part-time status, date of hire, age, length of service, and/or
compensation.
Funded Status
(millions)
Projected benefit obligations
Fair value of plan assets
Funded / (underfunded) status
Qualified Plan
Nonqualified and
International Plans
2022
2021
2022
2021
$
$
3,616 $
4,305 $
3,691
4,433
75 $
128 $
64 $
17
(47) $
72
16
(56)
Contributions and Estimated Future Benefit Payments
Our obligations to plan participants can be met over time through a combination of company contributions to these
plans and earnings on plan assets. In 2022 we made a discretionary contribution of $150 million to our qualified
defined benefit pension plan. In 2021 we made no contributions to our qualified defined benefit pension plan. We
are not required to make any contributions to our qualified defined benefit pension plan in 2023. However,
depending on investment performance and plan funded status, we may elect to make a contribution.
Estimated Future Benefit Payments
(millions)
2023
2024
2025
2026
2027
2028 - 2032
Pension
Benefits
$
330
232
238
243
249
1,310
TARGET CORPORATION
2022 Form 10-K
58
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Cost of Plans
Net Pension Benefits Expense
(millions)
Service cost benefits earned
Classification
SG&A Expenses
2022
2021
2020
$
94 $
100 $
103
118
Interest cost on projected benefit obligation
Net Other (Income) / Expense
117
96
Expected return on assets
Amortization of losses
Amortization of prior service cost
Settlement charges
Total
Assumptions
Net Other (Income) / Expense
(234)
(238)
(242)
Net Other (Income) / Expense
Net Other (Income) / Expense
Net Other (Income) / Expense
61
10
—
113
—
—
$
48 $
71 $
127
(11)
1
96
Benefit Obligation Weighted Average Assumptions
Discount rate
Average assumed rate of compensation increase
Cash balance plan interest crediting rate
Net Periodic Benefit Expense Weighted Average Assumptions
Discount rate
Expected long-term rate of return on plan assets
Average assumed rate of compensation increase
Cash balance plan interest crediting rate
2022
2021
4.83 %
3.00
4.64
3.30 %
3.00
4.64
2022
2021
2020
3.30 % 2.84 % 3.13 %
5.60
3.00
4.64
5.80
3.00
4.64
6.10
3.00
4.64
The weighted average assumptions used to measure net periodic benefit expense each year are the rates as of the
beginning of the year (i.e., the prior measurement date). Our most recent compound annual rate of return on
qualified plan assets was 1.2 percent, 4.2 percent, 4.5 percent, and 6.7 percent for the 5-year, 10-year, 15-year, and
20-year time periods, respectively.
The market-related value of plan assets is used in calculating the expected return on assets. Historical differences
between expected and actual returns are deferred and recognized in the market-related value over a 5-year period
from the year in which they occur.
We review the expected long-term rate of return annually and revise it as appropriate. Additionally, we monitor the
mix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and
reduce volatility in our assets. Our 2022 expected annualized long-term rate of return assumptions were 6.0 percent
for domestic equity securities, 7.0 percent for international equity securities, 3.0 percent for long-duration debt
securities, 7.0 percent for diversified funds, and 7.0 percent for other investments. These estimates are a
judgmental matter in which we consider the composition of our asset portfolio, our historical long-term investment
performance, and current market conditions.
59
TARGET CORPORATION
2022 Form 10-K
Benefit Obligation
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Change in Projected Benefit Obligation
(millions)
Qualified Plan
Nonqualified and
International Plans
2022
2021
2022
2021
Benefit obligation at beginning of period
$
4,305 $
4,594 $
72 $
Service cost
Interest cost
Actuarial gain (a)
Participant contributions
Benefits paid
Benefit obligation at end of period (b)
(a)
89
116
(602)
2
94
95
(247)
5
(294)
(236)
5
2
(9)
—
(6)
$
3,616 $
4,305 $
64 $
74
6
1
(4)
—
(5)
72
(b)
The actuarial gain was primarily driven by changes in the weighted average discount rate.
Accumulated benefit obligation—the present value of benefits earned to date assuming no future salary
growth—is materially consistent with the projected benefit obligation in each period presented.
Plan Assets
Change in Plan Assets
(millions)
Qualified Plan
Nonqualified and
International Plans
2022
2021
2022
2021
Fair value of plan assets at beginning of period
$
4,433 $
4,588 $
16 $
Actual return on plan assets
Employer contributions
Participant contributions
Benefits paid
(600)
150
2
76
—
5
(294)
(236)
(3)
10
—
(6)
Fair value of plan assets at end of period
$
3,691 $
4,433 $
17 $
11
—
10
—
(5)
16
Our asset allocation policy is designed to reduce the long-term cost of funding our pension obligations. The plan
invests with both passive and active investment managers depending on the investment. The plan also seeks to
reduce the risk associated with adverse movements in interest rates by employing an interest rate hedging program,
which includes the use of derivative instruments.
Asset Category
Domestic equity securities (a)
International equity securities
Debt securities
Diversified funds
Other (b)
Total
(a)
Actual Allocation
Current Targeted
Allocation
2022
2021
12 %
12 %
12 %
8
50
25
5
8
51
23
6
8
50
25
5
100 %
100 %
100 %
(b)
Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets
in both periods presented.
Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds,
derivative instruments, and real estate.
TARGET CORPORATION
2022 Form 10-K
60
Fair Value Measurements
(millions)
Cash and cash equivalents
Derivatives
Government securities (a)
Fixed income (b)
Investments valued using NAV per share (c)
Fixed income
Private equity funds
Cash and cash equivalents
Common collective trusts
Diversified funds
Other
Total plan assets
(a)
(b)
(c)
FINANCIAL STATEMENTS
NOTES
Table of Contents
Index to Financial Statements
Fair Value as of
Measurement
Level
January 31,
2023
January 31,
2022
Level 1 $
13 $
Level 2
Level 2
Level 2
6
619
1,214
1,852
6
64
240
594
844
108
8
(9)
740
1,447
2,186
10
68
100
860
1,105
120
$
3,708 $
4,449
Investments in government securities and long-term government bonds.
Investments in corporate and municipal bonds.
Certain investments that are measured at fair value using the net asset value per share (or its equivalent)
practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in
this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the
statement of financial position.
Position
Cash and cash equivalents
Derivatives
Government securities
and fixed income
Carrying value approximates fair value.
Valuation Technique
Swap derivatives - Valuations are based on observable inputs to the valuation
model (e.g., interest rates and credit spreads). Model inputs are changed only
when corroborated by market data. A credit risk adjustment is made on each
swap using observable market credit spreads.
Option derivatives - Initially valued at transaction price. Subsequent valuations
are based on observable inputs to the valuation model (e.g., underlying
investments).
Valued using matrix pricing models and quoted prices of securities with similar
characteristics.
Amounts Included in Shareholders' Investment
Amounts in Accumulated Other Comprehensive Loss
(millions)
Net actuarial loss
Prior service credits
Amounts in Accumulated Other Comprehensive Loss (a)
(a)
$696 million and $583 million, net of tax, at the end of 2022 and 2021, respectively.
2022
2021
$
$
937 $
—
937 $
783
—
783
61
TARGET CORPORATION
2022 Form 10-K
FINANCIAL STATEMENTS & SUPPLEMENTAL INFORMATION
Table of Contents
NOTES
Index to Financial Statements
24. Accumulated Other Comprehensive Loss
Change in Accumulated Other Comprehensive Loss
(millions)
January 29, 2022
Other comprehensive income / (loss) before
reclassifications, net of tax
Amounts reclassified from AOCI, net of tax
Cash Flow
Hedges
Currency
Translation
Adjustment
Pension
Total
$
49
$
(19)
$
(583)
$
(553)
254
(3) (a)
(4)
—
(159)
46 (b)
91
43
January 28, 2023
$
300
$
(23)
$
(696)
$
(419)
(a)
(b)
Represents amortization of gains and losses on cash flow hedges, net of taxes, which is recorded in Net
Interest Expense.
Represents amortization of pension gains and losses, net of $16 million of taxes, which is recorded in Net
Other (Income) / Expense. See Note 23 for additional information.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there were no changes which 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 Annual 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.
For the Report of Management on Internal Control and the Report of Independent Registered Public Accounting
Firm on Internal Control over Financial Reporting, see Part II, Item 8, Financial Statements and Supplementary
Data.
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
TARGET CORPORATION
2022 Form 10-K
62
SUPPLEMENTAL INFORMATION
PART III
Table of Contents
Index to Financial Statements
Certain information required by Part III is incorporated by reference from Target's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held on June 14, 2023 (our Proxy Statement). Except for those portions
specifically incorporated in this Form 10-K by reference to the Proxy Statement, no other portions of the Proxy
Statement are deemed to be filed as part of this Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance
The following sections of the Proxy Statement are incorporated herein by reference:
Item one—Election of directors
•
• General information about corporate governance and the Board—
◦
◦
Committees
Business ethics and conduct
Stock ownership information—Delinquent Section 16(a) reports
•
• Questions and answers about the 2023 Annual Meeting—Access to information—Question 16
• Questions and answers about the 2023 Annual Meeting—Communications—Question 19
See also Part I, Item 1, Business of this Form 10-K.
Item 11. Executive Compensation
The following sections of the Proxy Statement are incorporated herein by reference:
•
•
•
•
Item one—Election of directors—Director compensation
Compensation Discussion and Analysis
Compensation tables (exclusive of Compensation tables—Pay versus performance disclosure)
Compensation & Human Capital Management Committee Report
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The following sections of the Proxy Statement are incorporated herein by reference:
•
•
Stock ownership information—
◦
◦
Beneficial ownership of directors and executive officers
Beneficial ownership of Target’s largest shareholders
Compensation tables—Equity compensation plan information
Item 13. Certain Relationships and Related Transactions, and Director Independence
The following sections of the Proxy Statement are incorporated herein by reference:
• General information about corporate governance and the Board—
◦
◦
◦
Committees
Director independence
Policy on transactions with related persons
Item 14. Principal Accountant Fees and Services
The following section of the Proxy Statement is incorporated herein by reference:
•
Item two—Ratification of appointment of Ernst & Young LLP as independent registered public accounting
firm—Audit and non-audit fees
63
TARGET CORPORATION
2022 Form 10-K
SUPPLEMENTAL INFORMATION
PART IV
Table of Contents
Index to Financial Statements
Item 15. Exhibits, Financial Statement Schedules
The following information required under this item is filed as part of this report:
a)
Financial Statements
•
•
•
•
•
•
•
Consolidated Statements of Operations for the Years Ended January 28, 2023, January 29, 2022, and
January 30, 2021
Consolidated Statements of Comprehensive Income for the Years Ended January 28, 2023, January 29,
2022, and January 30, 2021
Consolidated Statements of Financial Position as of January 28, 2023, and January 29, 2022
Consolidated Statements of Cash Flows for the Years Ended January 28, 2023, January 29, 2022, and
January 30, 2021
Consolidated Statements of Shareholders' Investment for the Years Ended January 28, 2023, January 29,
2022, and January 30, 2021
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB
ID: 42)
Financial Statement Schedules
None.
Other schedules have not been included either because they are not applicable or because the information is
included elsewhere in this Report.
TARGET CORPORATION
2022 Form 10-K
64
b)
Exhibits (1)
SUPPLEMENTAL INFORMATION
Table of Contents
Index to Financial Statements
3.1
3.2
4.1
4.1.1
4.2
10.1 *
10.2 *
10.2.1 *
10.2.2 *
10.3 *
10.3.1 *
10.4 *
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).
Bylaws of Target Corporation (as amended and restated through January 11, 2023) (filed as Exhibit
3.2 to Target's Current Report on Form 8-K on January 12, 2023 and incorporated herein by
reference).
Indenture, dated as of August 4, 2000 between Target Corporation and Bank One Trust Company,
N.A. (filed as Exhibit 4.1 to Target's Current Report on Form 8-K on August 10, 2000 and
incorporated herein by reference).
First Supplemental Indenture dated as of May 1, 2007 to Indenture dated as of August 4, 2000
between Target Corporation and The Bank of New York Trust Company, N.A. (as successor in
interest to Bank One Trust Company N.A.) (filed as Exhibit 4.1 to Target’s Current Report on Form
8-K on May 1, 2007 and incorporated herein by reference).
Description of Securities (filed as Exhibit (4)D to Target's Annual Report on Form 10-K for the year
ended January 30, 2021 and incorporated herein by reference).
Target Corporation Executive Officer Cash Incentive Plan (filed as Exhibit (10)A to Target's Annual
Report on Form 10-K for the year ended January 30, 2021 and incorporated herein by reference).
Target Corporation Long-Term Incentive Plan (as amended and restated effective June 8, 2011)
(filed as Exhibit (10)B to Target's Quarterly Report on Form 10-Q for the quarter ended July 30,
2011 and incorporated herein by reference).
Form of Amended and Restated Executive Non-Qualified Stock Option Agreement (filed as Exhibit
(10)V to Target's Annual Report on Form 10-K for the year ended January 31, 2015 and
incorporated herein by reference).
Form of Non-Employee Director Non-Qualified Stock Option Agreement (filed as Exhibit (10)EE to
Target's Current Report on Form 8-K on January 11, 2012 and incorporated herein by reference).
Amended and Restated Target Corporation 2011 Long-Term Incentive Plan (as amended and
restated effective September 1, 2017) (filed as Exhibit (10)C to Target's Quarterly Report on Form
10-Q for the quarter ended July 29, 2017 and incorporated herein by reference).
Form of Price-Vested Stock Option Agreement (filed as Exhibit (10)JJ to Target's Quarterly Report
on Form 10-Q for the quarter ended April 29, 2017 and incorporated herein by reference).
Target Corporation 2020 Long-Term Incentive Plan (filed as Exhibit (10)D to Target's Current
Report on Form 8-K on June 11, 2020 and incorporated herein by reference).
10.4.1 * ** Form of Restricted Stock Unit Agreement.
10.4.2 * ** Form of Performance-Based Restricted Stock Unit Agreement.
10.4.3 * ** Form of Performance Share Unit Agreement.
10.4.4 *
Form of Non-Employee Director Restricted Stock Unit Agreement (filed as Exhibit (10)Y to Target's
Quarterly Report on Form 10-Q for the quarter ended August 1, 2020 and incorporated herein by
reference).
10.5 *
10.6 *
10.7 *
10.7.1 *
10.8 *
Target Corporation SPP I (2022 Plan Statement) (as amended and restated effective May 1, 2022)
(filed as Exhibit (10)E to Target's Quarterly Report on Form 10-Q for the quarter ended July 30,
2022 and incorporated herein by reference).
Target Corporation SPP II (2022 Plan Statement) (as amended and restated effective May 1, 2022)
(filed as Exhibit (10)F to Target's Quarterly Report on Form 10-Q for the quarter ended July 30,
2022 and incorporated herein by reference).
Target Corporation SPP III (2014 Plan Statement) (as amended and restated effective January 1,
2014) (filed as Exhibit (10)E to Target's Annual Report on Form 10-K for the year ended February
1, 2014 and incorporated herein by reference).
Amendment to Target Corporation SPP III (2014 Plan Statement) (effective April 3, 2016) (filed as
Exhibit (10)NN to Target's Quarterly Report on Form 10-Q for the quarter ended April 30, 2016 and
incorporated herein by reference).
Target Corporation Officer Deferred Compensation Plan (as amended and restated effective June
8, 2011) (filed as Exhibit (10)F to Target's Quarterly Report on Form 10-Q for the quarter ended
July 30, 2011 and incorporated herein by reference).
10.9 * ** Target Corporation Officer EDCP (2023 Plan Statement) (as amended and restated effective
January 1, 2023).
65
TARGET CORPORATION
2022 Form 10-K
10.10 *
10.11 *
10.12 *
10.13 *
10.14 *
10.15 *
10.15.1 *
10.15.2 *
10.15.3 *
10.16 *
SUPPLEMENTAL INFORMATION
Table of Contents
Index to Financial Statements
Target Corporation Deferred Compensation Plan Directors (filed as Exhibit (10)I to Target's Annual
Report on Form 10-K for the year ended February 3, 2007 and incorporated herein by reference).
Target Corporation DDCP (2022 Plan Statement) (as amended and restated effective January 1,
2022) (filed as Exhibit (10)L to Target's Quarterly Report on Form 10-Q for the quarter ended
October 30, 2021 and incorporated herein by reference).
Target Corporation Officer Income Continuation Plan (as amended and restated effective
September 1, 2017) (filed as Exhibit (10)L to Target's Quarterly Report on Form 10-Q for the
quarter ended July 29, 2017 and incorporated herein by reference).
Target Corporation Executive Excess Long Term Disability Plan (as restated effective January 1,
2010) (filed as Exhibit (10)A to Target's Quarterly Report on Form 10-Q for the quarter ended
October 30, 2010 and incorporated herein by reference).
Director Retirement Program (filed as Exhibit (10)O to Target's Annual Report on Form 10-K for the
year ended January 29, 2005 and incorporated herein by reference).
Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective
January 1, 2009) (filed as Exhibit (10)O to Target's Annual Report on Form 10-K for the year ended
January 31, 2009 and incorporated herein by reference).
Amendment dated June 8, 2011 to Target Corporation Deferred Compensation Trust Agreement
(as amended and restated effective January 1, 2009) (filed as Exhibit (10)AA to Target's Quarterly
Report on Form 10-Q for the quarter ended July 30, 2011 and incorporated herein by reference).
Amendment dated October 25, 2017 to Target Corporation Deferred Compensation Trust
Agreement (as amended and restated effective January 1, 2009) (filed as Exhibit (10)MM to
Target's Quarterly Report on Form 10-Q for the quarter ended October 28, 2017 and incorporated
herein by reference).
Amendment dated December 18, 2020 to Target Corporation Deferred Compensation Trust
Agreement (as amended and restated effective January 1, 2009) (filed as Exhibit (10)S to Target's
Annual Report on Form 10-K for the year ended January 30, 2021 and incorporated herein by
reference).
Form of Cash Retention Award (filed as Exhibit (10)W to Target’s Annual Report on Form 10-K for
the year ended February 2, 2013 and incorporated herein by reference).
10.17 * ‡ Aircraft Time Sharing Agreement as of October 4, 2022 among Target Corporation and Brian C.
Cornell (filed as Exhibit (10)BB to Target's Quarterly Report on Form 10-Q for the quarter ended
October 29, 2022 and incorporated herein by reference).
Transition Agreement dated May 4, 2022 (filed as Exhibit (10)KK to Target's Quarterly Report on
Form 10-Q for the quarter ended July 30, 2022 and incorporated herein by reference).
10.18 *
10.19
10.19.1 ‡
10.20 ‡
10.21 +
10.21.1 +
10.21.2 +
Five-Year Credit Agreement dated as of October 18, 2021 among Target Corporation, Bank of
America, N.A. as Administrative Agent and the Banks listed therein (filed as Exhibit (10)DD to
Target's Quarterly Report on Form 10-Q for the quarter ended October 30, 2021 and incorporated
herein by reference).
Amendment No. 1 to Five-Year Credit Agreement dated as of October 25, 2022 among Target
Corporation, Bank of America, N.A., as Administrative Agent, and the Banks listed therein (filed as
Exhibit (10)EE to Target's Quarterly Report on Form 10-Q for the quarter ended October 29, 2022
and incorporated herein by reference).
364-Day Credit Agreement dated as of October 25, 2022 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 (filed as Exhibit (10)FF to Target's Quarterly Report on
Form 10-Q for the quarter ended October 29, 2022 and incorporated herein by reference).
Credit Card Program Agreement dated October 22, 2012 among Target Corporation, Target
Enterprise, Inc. and TD Bank USA, N.A. (filed as Exhibit (10)X to Target’s Quarterly Report on
Form 10-Q/A for the quarter ended May 4, 2013 and incorporated herein by reference).
First Amendment dated February 24, 2015 to Credit Card Program Agreement among Target
Corporation, Target Enterprise, Inc. and TD Bank USA, N.A. (filed as Exhibit (10)II to Target's
Quarterly Report on Form 10-Q for the quarter ended May 2, 2015 and incorporated herein by
reference).
Second Amendment dated November 19, 2019 to Credit Card Program Agreement among Target
Corporation, Target Enterprise, Inc. and TD Bank USA, N.A. (filed as Exhibit (10)HH to Target's
Annual Report on Form 10-K for the year ended February 1, 2020 and incorporated herein by
reference).
TARGET CORPORATION
2022 Form 10-K
66
SUPPLEMENTAL INFORMATION
Table of Contents
Index to Financial Statements
10.21.3 +
10.22 +
10.22.1 +
10.22.2
Third Amendment dated November 1, 2022 to Credit Card Program Agreement among Target
Corporation, Target Enterprise, Inc. and TD Bank USA, N.A. (filed as Exhibit (10)JJ to Target's
Quarterly Report on Form 10-Q for the quarter ended October 29, 2022 and incorporated herein by
reference).
Pharmacy Operating Agreement dated December 16, 2015 between Target Corporation and CVS
Pharmacy, Inc. (filed as Exhibit (10)KK to Target's Annual Report on Form 10-K for the year ended
January 30, 2016 and incorporated herein by reference).
First Amendment dated November 30, 2016 to Pharmacy Operating Agreement between Target
Corporation and CVS Pharmacy, Inc. (filed as Exhibit (10)CC to Target's Annual Report on Form
10-K for the year ended January 28, 2017 and incorporated herein by reference).
Second Amendment dated January 9, 2018 to Pharmacy Operating Agreement between Target
Corporation and CVS Pharmacy, Inc. (filed as Exhibit (10)HH to Target's Annual Report on Form
10-K for the year ended February 3, 2018 and incorporated herein by reference).
List of Subsidiaries
21.1 **
23.1 ** Consent of Independent Registered Public Accounting Firm
24.1 **
31.1 ** Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
Powers of Attorney
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
101.CAL **
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF **
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB **
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE **
Inline XBRL Taxonomy Extension Presentation Linkbase
104 ** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
____________________________________________________________________
*
**
***
+
‡
(1)
Management contract or compensatory plan or arrangement.
Filed herewith.
Furnished herewith.
Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish
supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.
Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of such
schedules and exhibits to the Securities and Exchange Commission upon its request.
Certain instruments defining the rights of holders of long-term debt securities of the Company have been omitted pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K. The Company agrees to furnish copies of any such instruments to the Securities and Exchange
Commission upon its request.
Item 16. Form 10-K Summary
Not applicable.
67
TARGET CORPORATION
2022 Form 10-K
SUPPLEMENTAL INFORMATION
SIGNATURES
Table of Contents
Index to Financial Statements
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Target has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TARGET CORPORATION
By:
Date: March 8, 2023
Michael J. Fiddelke
Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of Target and in the capacities and on the dates indicated.
Date: March 8, 2023
Date: March 8, 2023
Date: March 8, 2023
DAVID P. ABNEY
DOUGLAS M. BAKER, JR.
GEORGE S. BARRETT
GAIL K. BOUDREAUX
ROBERT L. EDWARDS
MELANIE L. HEALEY
DONALD R. KNAUSS
CHRISTINE A. LEAHY
MONICA C. LOZANO
GRACE PUMA
DERICA W. RICE
DMITRI L. STOCKTON
Brian C. Cornell
Chair of the Board and Chief Executive Officer
Michael J. Fiddelke
Executive Vice President and Chief Financial Officer
Matthew A. Liegel
Senior Vice President, Chief Accounting Officer
and Controller
Constituting a majority of the Board of Directors
Michael J. Fiddelke, by signing his name hereto, does hereby sign this document pursuant to powers of attorney
duly executed by the Directors named, filed with the Securities and Exchange Commission on behalf of such
Directors, all in the capacities and on the date stated.
By:
Date: March 8, 2023
Michael J. Fiddelke
Attorney-in-fact
TARGET CORPORATION
2022 Form 10-K
68
Shareholder Information
Annual Meeting
The 2023 Annual Meeting of Shareholders is scheduled for June 14, 2023 at 9:00 a.m.
(Central Daylight Time) at Hotel ZaZa Austin, 400 Lavaca Street, Austin, TX 78701.
Shareholder Information
Quarterly and annual shareholder information (including the Form 10-Q Quarterly
Reports and Form 10-K Annual Report, which are filed with the Securities and
Exchange Commission) is available at no charge to shareholders on the Internet at
corporate.target.com/investors. To obtain copies of these materials, you may send
an e-mail to investorrelations@target.com, call 1-800-775-3110, or write to: Target
Corporation, Attn: John Hulbert, VP, Investor Relations, 1000 Nicollet Mall (TPN-0841),
Minneapolis, Minnesota 55403.
Target Corporation’s corporate governance documents, including our Articles of
Incorporation, Bylaws, Corporate Governance Guidelines (includes Director Code of
Ethics), Board Committee Charters, and Team Member Code of Ethics are available
on the Internet at corporate.target.com/sustainability-ESG/governance-and-reporting/
corporate-governance. Target Corporation’s annual ESG Report is available on the Internet
at corporate.target.com/sustainability-ESG/governance-and-reporting/reporting-progress.
Transfer Agent, Registrar and
Dividend Disbursing Agent
EQ Shareowner Services
Stock Exchange Listing
Trading Symbol: TGT
New York Stock Exchange
Shareholder Assistance
For assistance regarding individual stock records, lost certificates, name or address
changes, dividend or tax questions, call EQ Shareowner Services at 1-800-794-9871,
access their website at www.shareowneronline.com, or write to: EQ Shareowner
Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874.
Direct Stock Purchase/
Dividend Reinvestment Plan
EQ Shareowner Services administers a direct purchase plan that allows interested
investors to purchase Target Corporation stock directly, rather than through a broker,
and become a registered shareholder of the company. The program offers many features
including dividend reinvestment. For detailed information regarding this program, call
EQ Shareowner Services toll free at 1-800-794-9871 or write to: EQ Shareowner Services,
P.O. Box 64874, St. Paul, Minnesota 55164-0874.
©2023 Target Brands, Inc. The Bullseye Design and Target are trademarks of Target Brands, Inc.
Directors and Management
Directors
David P. Abney
Former Chairman & Chief Executive
Officer, United Parcel Service, Inc. (1) (4)
Douglas M. Baker, Jr.
Founding Partner, E2SG Partners, LP /
Former Chairman & Chief Executive
Officer, Ecolab Inc. (2) (3)
George S. Barrett
Founder, The Overtone Group, L.L.C. /
Former Chairman & Chief Executive
Officer, Cardinal Health, Inc. (2) (3)
Gail K. Boudreaux
President & Chief Executive Officer,
Elevance Health, Inc. (1) (4)
Brian C. Cornell
Chair & Chief Executive Officer,
Target Corporation
Robert L. Edwards
Former President & Chief Executive
Officer, Safeway Inc. (1) (4)
Melanie L. Healey**
Former Group President, North
America, The Procter & Gamble
Company (2) (3)
Donald R. Knauss
Former Chairman & Chief Executive
Officer, The Clorox Company (2) (4)
Christine A. Leahy
Chair, President & Chief Executive
Officer, CDW Corporation (2) (3)
Monica C. Lozano
Former Chair & Chief Executive Officer,
ImpreMedia, LLC (2) (3)
Grace Puma
Former Executive Vice President, Chief
Operations Officer, PepsiCo, Inc. (1) (4)
Derica W. Rice
Former Executive Vice President,
CVS Health Corporation / Former
President, CVS Caremark (1) (4)
Dmitri L. Stockton
Former Senior Vice President &
Special Advisor to the Chairman,
General Electric Company (1) (3)
Leadership Team
Katie M. Boylan
Executive Vice President &
Chief Communications Officer*
Brian C. Cornell
Chair & Chief Executive Officer*
Brett R. Craig
Executive Vice President &
Chief Information Officer
Michael J. Fiddelke
Executive Vice President
& Chief Financial Officer*
Richard H. Gomez
Executive Vice President &
Chief Food & Beverage Officer
A. Christina Hennington
Executive Vice President
& Chief Growth Officer*
Melissa K. Kremer
Executive Vice President &
Chief Human Resources Officer*
Don H. Liu
Executive Vice President, Chief Legal
& Risk Officer & Corporate Secretary*
Gretchen S. McCarthy
Executive Vice President & Chief
Supply Chain & Logistics Officer
John J. Mulligan
Executive Vice President
& Chief Operating Officer*
Jill K. Sando
Executive Vice President &
Chief Merchandising Officer
Mark J. Schindele
Executive Vice President
& Chief Stores Officer
Cara A. Sylvester
Executive Vice President &
Chief Guest Experience Officer*
Prat Vemana
Executive Vice President &
Chief Digital & Product Officer
Laysha L. Ward
Executive Vice President &
Chief External Engagement Officer*
Matthew L. Zabel
Executive Vice President
& General Counsel
(1) Audit & Risk Committee
(2) Compensation & Human Capital Management Committee
(3) Governance & Sustainability Committee
(4) Infrastructure & Finance Committee
* Denotes an Executive Officer subject to Section 16 of the Securities Exchange Act of 1934.
** Ms. Healey will not seek re-election and will leave the Board when her current term ends at the 2023 Annual Meeting.
¬
Annual Report
2022
View the digital version
of our Annual Report at
Target.com/annualreport.
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