Target Corp 10-Q for FY2027 Q2
Target Corp (TGT)
10-Q
2026-08-28
For: 2026-08-01
View Original
Added on
August 28, 2026
About this 10-Q
Target Corp filed this 10-Q on August 28, 2026, covering the quarter ended August 1, 2026 (FY2027 Q2).
Headline figures
Quarter ended August 1, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $26.54B
- up 5.3% from $25.21B a year earlier
- Net income
- $1.88B
- up 100.7% from net income of $935M a year earlier
- Diluted EPS
- $4.11
- up 100.5% from $2.05 a year earlier
| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended August 1, 2026
OR
For the transition period from ____ to ____
Commission File Number 1-6049
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(Address of principal executive offices)
(I.R.S. Employer Identification No.)
(Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Total shares of common stock, par value $0.0833, outstanding at August 21, 2026, were 454,296,736 .
TARGET CORPORATION
TABLE OF CONTENTS
| FINANCIAL STATEMENTS | ||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| Consolidated Statements of Operations | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (millions, except per share data) (unaudited) | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| 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 expense / (income) | ( | ( | ( | ||||||||||||||||||||
| 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 | |||||||||||||||||||||||
| TARGET CORPORATION |  | Q2 2026 Form 10-Q | 1 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Comprehensive Income | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (millions) (unaudited) | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income / (loss), net of tax | |||||||||||||||||||||||
| Pension | |||||||||||||||||||||||
| Cash flow hedges and currency translation adjustment | ( | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income / (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 2 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Financial Position | |||||||||||||||||
| (millions, except footnotes) (unaudited) | August 1, 2026 | January 31, 2026 | August 2, 2025 | ||||||||||||||
| Assets | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Inventory | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Total current assets | |||||||||||||||||
| 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 | |||||||||||||||||
| Total liabilities and shareholders’ investment | $ | $ | $ | ||||||||||||||
Common Stock Authorized 6,000,000,000 0.0833 454,291,461 452,840,187 454,396,092
Preferred Stock Authorized 5,000,000 0.01 no
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 3 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||
| Six Months Ended | ||||||||||||||
| (millions) (unaudited) | August 1, 2026 | August 2, 2025 | ||||||||||||
| Operating activities | ||||||||||||||
| Net earnings | $ | $ | ||||||||||||
| Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Share-based compensation expense | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Noncash (gains) / losses 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 | ( | ( | ||||||||||||
| Other | ||||||||||||||
| Cash used in investing activities | ( | ( | ||||||||||||
| Financing activities | ||||||||||||||
| Additions to long-term debt | ||||||||||||||
| Reductions of long-term debt | ( | ( | ||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Repurchase of stock | ( | ( | ||||||||||||
| Shares withheld for taxes on share-based compensation | ( | ( | ||||||||||||
| Cash used in financing activities | ( | ( | ||||||||||||
| Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
| Supplemental information | ||||||||||||||
| Leased assets obtained in exchange for new finance lease liabilities | $ | $ | ||||||||||||
| Leased assets obtained in exchange for new operating lease liabilities | ||||||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 4 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Shareholders’ Investment | |||||||||||||||||||||||||||||||||||
| Common | Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
| Stock | Par | Paid-in | Retained | Comprehensive | |||||||||||||||||||||||||||||||
| (millions) (unaudited) | Shares | Value | Capital | Earnings | Loss | Total | |||||||||||||||||||||||||||||
| February 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| May 3, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| August 2, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Repurchase of stock | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| November 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| January 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 5 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| Consolidated Statements of Shareholders’ Investment | |||||||||||||||||||||||||||||||||||
| Common | Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
| Stock | Par | Paid-in | Retained | Comprehensive | |||||||||||||||||||||||||||||||
| (millions) (unaudited) | Shares | Value | Capital | Earnings | Loss | Total | |||||||||||||||||||||||||||||
| January 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| May 2, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
| August 1, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 6 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| INDEX | ||||||||
| INDEX TO NOTES | |||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 7 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
Notes to Consolidated Financial Statements (unaudited)
1. Accounting Policies
We use the same accounting policies in preparing quarterly and annual financial statements.
We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Nearly all of our revenues are generated in the U.S. The vast majority of our long-lived assets are located in the U.S.
Due to the seasonal nature of our business, quarterly revenues, expenses, earnings, and cash flows are not necessarily indicative of the results that may be expected for the full year.
2. Net Sales
Merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably advertising revenue and credit card profit-sharing income.
| Net Sales | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| (millions) | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
Apparel & accessories (a) | $ | $ | $ | $ | |||||||||||||||||||
Beauty (b) | |||||||||||||||||||||||
Food & beverage (c) | |||||||||||||||||||||||
Hardlines (Fun 101) (d) | |||||||||||||||||||||||
Home furnishings & décor (e) | |||||||||||||||||||||||
Household essentials (f) | |||||||||||||||||||||||
| Other merchandise sales | |||||||||||||||||||||||
| Merchandise sales | |||||||||||||||||||||||
| Advertising revenue | |||||||||||||||||||||||
| Credit card profit sharing | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
(a)Includes apparel for women, men, young adults, kids, toddlers, and babies, as well as jewelry, accessories, and shoes.
(b)Includes skin and bath care, cosmetics, hair care, oral care, deodorant, and shaving products.
(c)Includes dry and perishable grocery, including snacks, candy, beverages, deli, bakery, meat, produce, food service (primarily Starbucks), and floral in our stores.
(d)Includes electronics, including video games and consoles, toys, trading cards, sporting goods and fan merchandise, pop culture and other entertainment, and luggage.
(e)Includes bed and bath, home décor, school/office supplies, storage, small appliances, kitchenware, greeting cards, party supplies, furniture, lighting, home improvement, and seasonal merchandise.
(f)Includes household cleaning, paper products, over-the-counter healthcare, vitamins and supplements, baby gear, and pet supplies.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 8 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance.
| Gift Card Liability Activity | January 31, 2026 | Gift Cards Issued During Current Period But Not Redeemed (b) | Revenue Recognized From Beginning Liability | August 1, 2026 | |||||||||||||||||||
| (millions) | |||||||||||||||||||||||
Gift card liability (a) | $ | $ | $ | ( | $ | ||||||||||||||||||
(a)Included in Accrued and Other Current Liabilities.
(b)Net of estimated breakage.
Advertising revenue — Primarily represents revenue related to certain advertising services provided via our Roundel digital advertising business offering. Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement.
Credit card profit sharing — We receive payments under a credit card program agreement with TD Bank Group (TD). Under the agreement, we receive a percentage of the profits generated by the Target Circle credit card receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Circle credit card receivables, controls risk management policies, and oversees regulatory compliance.
Other — Includes commissions earned on third-party sales through our Target Plus third-party digital marketplace, Target Circle 360 membership revenue, Shipt membership and service revenues, rental income, and other miscellaneous revenues.
3. Tariff Refunds
Beginning in 2025, we paid tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on certain imported merchandise. Following the February 2026 Supreme Court ruling that the tariffs imposed under IEEPA were not authorized by the statute and subsequent actions establishing a refund process, we began submitting refund claims.
During the three and six months ended August 1, 2026, we recognized $994
4. Interchange Fee Settlements
In March 2025, we entered into settlement agreements to resolve credit card interchange fee litigation matters in which we were a plaintiff. As a result of these lump-sum settlements, during the first quarter of 2025, we recorded gains within SG&A Expenses of $593 million, net of legal fees.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 9 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
5. Fair Value Measurements
Fair value measurements are reported in one of three levels reflecting the significant inputs used to determine fair value.
| Financial Instruments Measured On a Recurring Basis | Fair Value | ||||||||||||||||||||||
| (millions) | Classification | Measurement Level | August 1, 2026 | January 31, 2026 | August 2, 2025 | ||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Short-term investments | Cash and Cash Equivalents | Level 1 | $ | $ | $ | ||||||||||||||||||
| Prepaid forward contracts | Other Current Assets | Level 1 | |||||||||||||||||||||
| Interest rate swaps | Other Noncurrent Assets | Level 2 | |||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swaps | Other Current Liabilities | Level 2 | |||||||||||||||||||||
| Interest rate swaps | Other Noncurrent Liabilities | Level 2 | |||||||||||||||||||||
Significant Financial Instruments Not Measured at Fair Value (a) (millions) | August 1, 2026 | January 31, 2026 | August 2, 2025 | |||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||
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.
(b)The fair value of long-term debt is estimated using Level 2 inputs based on quoted prices for the instruments. Where quoted prices are not available, fair value is estimated using discounted cash flows and market-based expectations for interest rates. These amounts exclude commercial paper, fair value hedge adjustments, and lease liabilities.
6. Property and Equipment
We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable. We recognized impairment charges of $33 34
7. Supplier Finance Programs
We have arrangements with several financial institutions to act as our paying agents to certain vendors. The arrangements also permit the financial institutions to provide vendors with an option, at our vendors' sole discretion, to elect to receive early payment of our payment obligations from the financial institutions at a discounted amount. A vendor’s election to receive early payment does not change the amount that we must remit to the financial institutions or our payment date, which is up to 120 days from the invoice date.
We do not pay any fees or pledge any security to these financial institutions under these arrangements. The arrangements can be terminated by either party with notice ranging up to 120 days.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 10 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
8. Long-Term Debt and Commercial Paper
Our unsecured long-term debt repayments during the six months ended August 1, 2026, were as follows:
Debt Repayments (dollars in millions) | ||||||||||||||||||||
| Repayment Date | Maturity Date | Principal Amount | Interest Rate (Fixed) | |||||||||||||||||
| April 2026 | April 2026 | $ | % | |||||||||||||||||
In August 2026, we obtained a committed $4.0 billion unsecured revolving credit facility that will expire in August 2031. This new facility replaced our $1.0 billion and $3.0 billion unsecured revolving credit facilities that were set to expire in October 2026 and October 2028, respectively. No
We obtain short-term financing from time to time under our commercial paper program. There was no
9. Derivative Financial Instruments
Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk. As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis. Note 5 to the Consolidated Financial Statements provides the fair value and classification of these instruments.
We were party to interest rate swaps with notional amounts totaling $2.45 billion as of August 1, 2026, and $2.20
Effect of Hedges on Debt (millions) | August 1, 2026 | January 31, 2026 | August 2, 2025 | |||||||||||||||||
| Long-term debt and other borrowings | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
| Cumulative hedging adjustments, included in carrying amount | ( | ( | ( | |||||||||||||||||
| Effect of Hedges on Net Interest Expense | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| (millions) | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Gain (loss) on fair value hedges recognized in Net Interest Expense | |||||||||||||||||||||||
| Interest rate swaps designated as fair value hedges | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Hedged debt | ( | ( | |||||||||||||||||||||
| Gain on cash flow hedges recognized in Net Interest Expense | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 11 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
10. Share Repurchase
We periodically repurchase shares of our common stock under a board-authorized repurchase program through a combination of open market transactions, accelerated share repurchase arrangements, and other privately negotiated transactions with financial institutions.
| Share Repurchase Activity | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| (millions, except per share data) | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Number of shares purchased | |||||||||||||||||||||||
Average price paid per share (a) | $ | $ | $ | $ | |||||||||||||||||||
Total investment (a) | $ | $ | $ | $ | |||||||||||||||||||
(a) Amounts include applicable excise tax and commissions.
11. Pension Benefits
We provide pension plan benefits to eligible team members.
| Net Pension Benefits Expense / (Income) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| (millions) | Classification | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||||
| Service cost benefits earned | Cost of Sales and SG&A Expenses | $ | $ | $ | $ | |||||||||||||||||||||
| Net Other Expense / (Income) | ||||||||||||||||||||||||||
| Net Other Expense / (Income) | ( | ( | ( | ( | ||||||||||||||||||||||
| Net Other Expense / (Income) | ||||||||||||||||||||||||||
| Prior service cost | Net Other Expense / (Income) | |||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | |||||||||||||||||||||
12. Accumulated Other Comprehensive Loss
| Change in Accumulated Other Comprehensive Loss | Cash Flow Hedges | Currency Translation Adjustment | Pension | Total | |||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| January 31, 2026 | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||||||||
| Amounts reclassified | ( | ||||||||||||||||||||||
| August 1, 2026 | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Note: Amounts are net of tax.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 12 | ||||||||
| FINANCIAL STATEMENTS | ||||||||
| NOTES | ||||||||
13. Segment Reporting
Our Chief Operating Decision Maker (CODM)—our Chief Executive Officer—monitors our consolidated net earnings and operating income to evaluate performance and make operating decisions including whether to invest profits into capital projects, make equity or other investments, or return capital to shareholders. Consolidated assets as presented on our Consolidated Statements of Financial Position is the only view of assets regularly reviewed by our CODM. We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Virtually all of our consolidated revenues are generated in the United States. The vast majority of our properties and equipment are located in the United States.
| Business Segment Results | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| (millions) | August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
Merchandising cost of sales (a) | |||||||||||||||||||||||
| Supply chain and digital fulfillment costs | |||||||||||||||||||||||
Total cost of sales (a) | |||||||||||||||||||||||
Selling, general, and administrative expenses (b) | |||||||||||||||||||||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) | |||||||||||||||||||||||
Operating income (a)(b) | |||||||||||||||||||||||
| Net interest expense | |||||||||||||||||||||||
| Net other expense / (income) | ( | ( | ( | ||||||||||||||||||||
| Earnings before income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
(a)For the three and six months ended August 1, 2026, includes $994
(b)For the six months ended August 2, 2025, includes $593 million of pretax net gains related to settlements of credit card interchange fee litigation matters. Note 4 provides additional information.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 13 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| FINANCIAL SUMMARY | ||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Summary
Second quarter 2026 included the following:
•Net Sales of $26.5 billion, an increase of 5.3 percent from the comparable prior-year period, driven by:
•A comparable sales increase of 3.8 percent, reflecting a 3.6 percent increase in traffic and a 0.2 percent increase in average transaction amount;
•The sales contribution from new stores; and
•Non-merchandise sales growth of 20.1 percent, primarily driven by growth in our Roundel digital advertising business offering.
•Operating Income of $2.6 billion, an increase of $1.3 billion, or 94.4 percent, compared to the prior year, including $994 million related to tariff refunds received during the period. Excluding the impact of tariff refunds, Operating Income growth was approximately 19 percent.
•GAAP and Adjusted EPS1 of $4.11, an increase of 100.3 percent compared to the prior year, including $1.65 related to after-tax benefits of tariff refunds received during the period.
| Earnings Per Share | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | Change | August 1, 2026 | August 2, 2025 | Change | ||||||||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 4.11 | (a) | $ | 2.05 | 100.3 | % | $ | 5.83 | (a) | $ | 4.32 | 34.8 | % | |||||||||||||||||||||
| Adjustments | — | — | — | (0.97) | |||||||||||||||||||||||||||||||
Adjusted diluted earnings per share1 | $ | 4.11 | (a) | $ | 2.05 | 100.3 | % | $ | 5.83 | (a) | $ | 3.35 | 73.7 | % | |||||||||||||||||||||
1Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 19.
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 August 1, 2026, after-tax ROIC was 15.4 percent, compared with 14.3 percent for the trailing twelve months ended August 2, 2025. The calculation of ROIC is provided on page 21.
Business Environment
During the second quarter of 2026, we received refunds of certain IEEPA tariffs previously paid and recognized $994 million related to these refunds as a reduction of Cost of Sales. Refer to Note 3 and the Gross Margin Rate section for additional information.
We continue to pursue additional refund claims in accordance with the established refund filing and validation process, along with other importers seeking tariff refunds. However, due to uncertainties related to the refund process, timing, and amount of potential refunds, as well as ongoing legal and regulatory developments, we are unable to estimate the ultimate financial effects of any potential additional tariff refunds.
The U.S. administration has instituted new tariffs against most major trading partners. We continue to assess and respond to the evolving consumer, legal and regulatory environment. The collective interaction of tariffs, tariff refunds, sourcing strategies, pricing actions, consumer response and behaviors, and other factors could materially impact our sales, results of operations, and financial condition in future periods.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 14 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Business Transformation Initiatives
Our multi-year business transformation initiatives are discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. We did not incur any significant non-recurring costs or charges related to these initiatives during the three and six months ended August 1, 2026, or the comparable prior-year periods.
We may incur additional costs and charges related to these initiatives in future periods, which may adversely affect our results of operations and financial condition; however, we cannot reasonably estimate the amount or timing of such costs and charges.
Analysis of Results of Operations
| Summary of Operating Income | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| (dollars in millions) | August 1, 2026 | August 2, 2025 | Change | August 1, 2026 | August 2, 2025 | Change | |||||||||||||||||||||||||||||
| Net sales | $ | 26,539 | $ | 25,211 | 5.3 | % | $ | 51,982 | $ | 49,057 | 6.0 | % | |||||||||||||||||||||||
Cost of sales (a) | 17,603 | 17,903 | (1.7) | 35,664 | 35,031 | 1.8 | |||||||||||||||||||||||||||||
| SG&A expenses | 5,725 | 5,359 | 6.8 | 11,286 | 9,950 | 13.4 | |||||||||||||||||||||||||||||
| Depreciation and amortization (exclusive of depreciation included in cost of sales) | 651 | 632 | 3.2 | 1,337 | 1,287 | 3.9 | |||||||||||||||||||||||||||||
Operating income (a) | $ | 2,560 | $ | 1,317 | 94.4 | % | $ | 3,695 | $ | 2,789 | 32.5 | % | |||||||||||||||||||||||
Adjusted SG&A expenses (b) | $ | 5,725 | $ | 5,359 | 6.8 | % | $ | 11,286 | $ | 10,543 | 7.1 | % | |||||||||||||||||||||||
Adjusted operating income (a)(b) | 2,560 | 1,317 | 94.4 | 3,695 | 2,196 | 68.3 | |||||||||||||||||||||||||||||
| Rate Analysis | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
Gross margin rate (a) | 33.7 | % | 29.0 | % | 31.4 | % | 28.6 | % | |||||||||||||||
| SG&A expense rate | 21.6 | 21.3 | 21.7 | 20.3 | |||||||||||||||||||
Adjusted SG&A expense rate (b) | 21.6 | 21.3 | 21.7 | 21.5 | |||||||||||||||||||
| Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) | 2.5 | 2.5 | 2.6 | 2.6 | |||||||||||||||||||
Operating income margin rate (a) | 9.6 | 5.2 | 7.1 | 5.7 | |||||||||||||||||||
Adjusted operating income margin rate (a)(b) | 9.6 | 5.2 | 7.1 | 4.5 | |||||||||||||||||||
Note: Gross margin (GM) is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales.
(a)Includes $994 million related to tariff refunds for the three and six months ended August 1, 2026, which provided a benefit to Gross margin rate, Operating income rate, and Adjusted operating income rate of 3.7 percentage points and 1.9 percentage points for the three and six month periods, respectively. Note 3 to the Financial Statements provides additional information.
(b)Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, which are non-GAAP measures, exclude the impact of certain items. Management believes that these measures are 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 19.
Net Sales
Net sales includes all Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card profit-sharing income.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 15 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Merchandise Sales are net of expected returns and our estimate of gift card breakage. Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed. We use comparable sales to evaluate the performance of our stores and digital channels by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies. Digitally originated sales include all Merchandise Sales initiated through mobile/computer applications and our websites. Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pickup or Drive Up, and Same Day Delivery. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.
Merchandise Sales growth—from both comparable sales and new stores—represents an important driver of our long-term profitability. We expect that comparable sales growth will drive a significant portion of our total sales growth. We believe that our ability to successfully differentiate our guests’ shopping experience through a careful combination of merchandise assortment, price, convenience, guest experience, and other factors will over the long-term drive both increasing shopping frequency (number of transactions, or "traffic") and the amount spent each visit (average transaction amount).
| Comparable Sales | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
| Comparable sales change | 3.8 | % | (1.9) | % | 4.7 | % | (2.8) | % | |||||||||||||||
| Drivers of change in comparable sales | |||||||||||||||||||||||
| Number of transactions (traffic) | 3.6 | (1.3) | 4.0 | (1.8) | |||||||||||||||||||
| Average transaction amount | 0.2 | (0.6) | 0.7 | (1.0) | |||||||||||||||||||
| Comparable Sales by Channel | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
| Stores originated comparable sales change | 2.7 | % | (3.2) | % | 3.7 | % | (4.4) | % | |||||||||||||||
| Digitally originated comparable sales change | 8.7 | 4.3 | 8.8 | 4.5 | |||||||||||||||||||
| Merchandise Sales by Channel | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
| Stores originated | 80.4 | % | 81.1 | % | 80.1 | % | 80.7 | % | |||||||||||||||
| Digitally originated | 19.6 | 18.9 | 19.9 | 19.3 | |||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Merchandise Sales by Fulfillment Channel | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
| Stores | 97.6 | % | 97.7 | % | 97.6 | % | 97.7 | % | |||||||||||||||
| Other | 2.4 | 2.3 | 2.4 | 2.3 | |||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Note: Merchandise Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Same Day Delivery.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 16 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
| Merchandise Sales by Product Category | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
| Apparel & accessories | 16 | % | 16 | % | 16 | % | 16 | % | |||||||||||||||
| Beauty | 14 | 14 | 14 | 14 | |||||||||||||||||||
| Food & beverage | 23 | 23 | 24 | 24 | |||||||||||||||||||
| Hardlines (Fun 101) | 15 | 14 | 15 | 14 | |||||||||||||||||||
| Home furnishings & décor | 14 | 15 | 13 | 14 | |||||||||||||||||||
| Household essentials | 18 | 18 | 18 | 18 | |||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Note 2 to the Financial Statements provides additional product category sales information. The collective interaction of a broad array of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix and the transfer of sales to new stores, makes further analysis of sales metrics infeasible.
Store Data
| Change in Number of Stores | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||
| Beginning store count | 2,002 | 1,981 | 1,995 | 1,978 | |||||||||||||||||||
| Opened | 17 | 1 | 24 | 4 | |||||||||||||||||||
| Ending store count | 2,019 | 1,982 | 2,019 | 1,982 | |||||||||||||||||||
| Number of Stores and | Number of Stores | Retail Square Feet (a) | |||||||||||||||||||||
| Retail Square Feet | August 1, 2026 | January 31, 2026 | August 2, 2025 | August 1, 2026 | January 31, 2026 | August 2, 2025 | |||||||||||||||||
| 170,000 or more sq. ft. | 274 | 273 | 273 | 49,045 | 48,824 | 48,824 | |||||||||||||||||
| 50,000 to 169,999 sq. ft. | 1,598 | 1,576 | 1,562 | 200,321 | 197,274 | 195,436 | |||||||||||||||||
| 49,999 or less sq. ft. | 147 | 146 | 147 | 4,460 | 4,420 | 4,445 | |||||||||||||||||
| Total | 2,019 | 1,995 | 1,982 | 253,826 | 250,518 | 248,705 | |||||||||||||||||
(a)In thousands; reflects total square feet less office, supply chain facility, and vacant space.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 17 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
Gross Margin Rate
Quarter-to-Date
For the three months ended August 1, 2026, our gross margin rate was 33.7 percent compared with 29.0 percent in the comparable prior-year period. The increase reflected benefits from tariff refunds and net merchandising impacts, including lower purchase order cancellation costs compared to the prior year, as well as growth in advertising and other revenues. The Business Environment section provides additional information about tariff refunds.
Year-to-Date
For the six months ended August 1, 2026, our gross margin rate was 31.4 percent compared with 28.6 percent in the comparable prior-year period. The increase reflected benefits from:
•tariff refunds;
•merchandising, including lower purchase order cancellation costs and markdown rates compared to the prior year and growth in advertising and other revenues; and
•supply chain and digital fulfillment, including productivity improvements in supply chain facilities, and the leveraging impact of higher sales.
Selling, General, and Administrative Expense Rate
For the three months ended August 1, 2026, our SG&A expense rate was 21.6 percent compared with 21.3 percent for the comparable prior-year period. The increase reflected higher compensation expense, including stores payroll and incentive compensation, new store and remodel-related expenses, and the net impact of other cost increases. These cost increases were partially offset by the leverage benefit of higher sales.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 18 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF RESULTS OF OPERATIONS | ||||||||
For the six months ended August 1, 2026, our SG&A expense rate was 21.7 percent compared with 20.3 percent for the comparable prior-year period. The comparable prior-period rate included a 1.2 percentage point benefit from interchange fee settlements, which are further described in Note 4 to the Financial Statements. Excluding this item, our Adjusted SG&A expense rate for the six months ended August 2, 2025, was 21.5 percent. The remaining 0.2 percentage point increase in 2026 reflected higher compensation expense, including stores payroll and incentive compensation, new store and remodel-related expenses, and the net impact of other cost increases. These cost increases were partially offset by the leverage benefit of higher sales.
Other Performance Factors
Net Interest Expense
Net interest expense was $98 million and $215 million for the three and six months ended August 1, 2026, respectively, compared with $116 million and $232 million in the comparable prior-year periods. The decrease in net interest expense was primarily due to an increase in interest income.
Provision for Income Taxes
Our effective income tax rates for the three and six months ended August 1, 2026, were 23.7 percent and 23.9 percent, respectively, compared with 23.2 percent and 24.2 percent in the comparable prior-year periods. For the three month period, the increase was driven by higher pretax earnings, partially offset by additional tax credit benefits. For the six month period, the decrease reflects additional tax credit benefits and lower discrete tax expenses related to share-based compensation, partially offset by higher pretax earnings.
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), adjusted SG&A expenses, adjusted SG&A expense rate, adjusted operating income, and adjusted operating income margin rate. These measures exclude certain items presented below. We believe this information is useful in providing period-to-period comparisons of the results of our operations. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the U.S. (GAAP). The most comparable GAAP measures are diluted earnings per share, SG&A expenses, SG&A expense rate, operating income, and operating income margin rate. Adjusted EPS, adjusted SG&A expenses, adjusted SG&A expense rate, adjusted operating income, and adjusted operating income margin rate 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 these measures differently, or not provide similar measures, limiting the usefulness of the measures for comparisons with other companies.
| Reconciliation of Non-GAAP Adjusted EPS | Three Months Ended | |||||||||||||||||||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | |||||||||||||||||||||||||||||||||||||
| (millions, except per share data) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | ||||||||||||||||||||||||||||||||
| GAAP and Adjusted EPS | $ | 4.11 | $ | 2.05 | ||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Adjusted EPS | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | |||||||||||||||||||||||||||||||||||||
| (millions, except per share data) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | ||||||||||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 5.83 | $ | 4.32 | ||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||
Interchange fee settlements (a) | $ | — | $ | — | $ | — | $ | (593) | $ | (441) | $ | (0.97) | ||||||||||||||||||||||||||
| Adjusted EPS | $ | 5.83 | $ | 3.35 | ||||||||||||||||||||||||||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 19 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
| Reconciliation of Non-GAAP Adjusted SG&A Expenses and Adjusted Operating Income | Three Months Ended | ||||||||||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | ||||||||||||||||||||||||||||
| SG&A Expenses | Operating Income (b) | SG&A Expenses | Operating Income | ||||||||||||||||||||||||||
| (dollars in millions) | Dollars | Rate | Dollars | Rate | Dollars | Rate | Dollars | Rate | |||||||||||||||||||||
| GAAP and Adjusted measures | $ | 5,725 | 21.6 | % | $ | 2,560 | 9.6 | % | $ | 5,359 | 21.3 | % | $ | 1,317 | 5.2 | % | |||||||||||||
| Reconciliation of Non-GAAP Adjusted SG&A Expenses and Adjusted Operating Income | Six Months Ended | ||||||||||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | ||||||||||||||||||||||||||||
| SG&A Expenses | Operating Income (b) | SG&A Expenses | Operating Income | ||||||||||||||||||||||||||
| (dollars in millions) | Dollars | Rate | Dollars | Rate | Dollars | Rate | Dollars | Rate | |||||||||||||||||||||
| Reported, GAAP measure | $ | 11,286 | 21.7 | % | $ | 3,695 | 7.1 | % | $ | 9,950 | 20.3 | % | $ | 2,789 | 5.7 | % | |||||||||||||
| Adjustments | |||||||||||||||||||||||||||||
Interchange fee settlements (a) | — | — | — | — | $ | 593 | 1.2 | % | $ | (593) | (1.2) | % | |||||||||||||||||
| Adjusted, Non-GAAP measure | $ | 11,286 | 21.7 | % | $ | 3,695 | 7.1 | % | $ | 10,543 | 21.5 | % | $ | 2,196 | 4.5 | % | |||||||||||||
Note: Amounts may not foot due to rounding. Rates are calculated by dividing the applicable amount by Net Sales.
(a)The adjustment removes the favorable impact of the settlement gains from prior-year SG&A Expenses and Operating Income. Note 4 to the Financial Statements provides additional information.
(b)Note (a) to the Summary of Operating Income and Rate Analysis tables provides information about the impact of tariff refunds on Operating Income and Operating Income margin rate.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 20 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| 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) | ||||||||||||||||||||||||||
| Trailing Twelve Months | ||||||||||||||||||||||||||
| Numerator | August 1, 2026 | August 2, 2025 | ||||||||||||||||||||||||
| Operating income | $ | 6,024 | $ | 5,425 | ||||||||||||||||||||||
| + Net other income | 64 | 99 | ||||||||||||||||||||||||
| EBIT | 6,088 | 5,524 | ||||||||||||||||||||||||
+ Operating lease interest (a) | 172 | 166 | ||||||||||||||||||||||||
- Income taxes (b) | 1,402 | 1,305 | ||||||||||||||||||||||||
| Net operating profit after taxes | $ | 4,858 | $ | 4,385 | ||||||||||||||||||||||
| Denominator | August 1, 2026 | August 2, 2025 | August 3, 2024 | |||||||||||||||||
| Current portion of long-term debt and other borrowings | $ | 1,136 | $ | 1,136 | $ | 1,640 | ||||||||||||||
| + Noncurrent portion of long-term debt | 14,221 | 15,320 | 13,654 | |||||||||||||||||
| + Shareholders' investment | 17,843 | 15,420 | 14,429 | |||||||||||||||||
+ Operating lease liabilities (c) | 3,733 | 3,883 | 3,786 | |||||||||||||||||
| - Cash and cash equivalents | 5,411 | 4,341 | 3,497 | |||||||||||||||||
| Invested capital | $ | 31,522 | $ | 31,418 | $ | 30,012 | ||||||||||||||
Average invested capital (d) | $ | 31,470 | $ | 30,715 | ||||||||||||||||
After-tax return on invested capital (e) | 15.4 | % | 14.3 | % | ||||||||||||||||
(a)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 Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.
(b)Calculated using the effective tax rates, which were 22.4 percent and 22.9 percent for the trailing twelve months ended August 1, 2026, and August 2, 2025, respectively. For the trailing twelve months ended August 1, 2026, and August 2, 2025, includes tax effect of $1.4 billion and $1.3 billion, respectively, related to EBIT, and $39 million and $38 million, respectively, related to operating lease interest.
(c)Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.
(d)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.
(e)For the trailing twelve months ended August 1, 2026, includes the impact of tariff refunds, which increased after-tax ROIC by 2.4 percentage points, and business transformation costs recognized in the trailing twelve-month period, which decreased after-tax ROIC by 0.6 percentage points. For the trailing twelve months ended August 2, 2025, includes the impact of after-tax net gains on interchange fee settlements, which increased after-tax ROIC by 1.4 percentage points.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 21 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF FINANCIAL CONDITION | ||||||||
Analysis of Financial Condition
Liquidity and Capital Resources
Capital Allocation
We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals.
Our cash and cash equivalents balance was $5.4 billion, $5.5 billion, and $4.3 billion as of August 1, 2026, January 31, 2026, and August 2, 2025, respectively. Our cash and cash equivalents balance includes short-term investments of $4.3 billion, $4.6 billion, and $3.3 billion as of August 1, 2026, January 31, 2026, and August 2, 2025, 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 three months 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 $4.5 billion and $2.4 billion for the six months ended August 1, 2026, and August 2, 2025, respectively. The increase was primarily due to higher accounts payable leverage that more than offset increased inventory purchases to support sales growth, as well as higher net earnings.
Inventory
Inventory increased to $13.2 billion as of August 1, 2026, compared with $12.3 billion and $12.9 billion as of January 31, 2026, and August 2, 2025, in support of sales growth.
Investing Cash Flows
Cash used in investing activities increased to $2.4 billion for the six months ended August 1, 2026, compared to $1.9 billion for the six months ended August 2, 2025, due to higher capital expenditures.
Dividends
We paid dividends totaling $518 million ($1.14 per share) and $1,034 million ($2.28 per share) for the three and six months ended August 1, 2026, and $509 million ($1.12 per share) and $1,019 million ($2.24 per share) for the three and six months ended August 2, 2025, a per share increase of 1.8 percent. We declared dividends totaling $539 million ($1.16 per share) during the second quarter of 2026 and $529 million ($1.14 per share) during the second quarter of 2025, a per share increase of 1.8 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.
Share Repurchase
We did not repurchase any shares during the six months ended August 1, 2026. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 10 to the Financial Statements for more information.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 22 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | ||||||||
| ANALYSIS OF FINANCIAL CONDITION | ||||||||
Financing
Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of August 1, 2026, our credit ratings were as follows:
| Credit Ratings | Moody’s | S&P | ||||||
| Long-term debt | A2 | A | ||||||
| Commercial paper | P-1 | A-1 | ||||||
If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit ratings will remain the same as described above.
We repaid $1.0 billion of unsecured debt in April 2026. Note 8 to the Financial Statements provides additional information.
We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In August 2026, we obtained a committed $4.0 billion unsecured revolving credit facility that will expire in August 2031. This new facility replaced our $1.0 billion and $3.0 billion unsecured revolving credit facilities that were set to expire in October 2026 and October 2028, respectively. These credit facilities provide a liquidity backstop to our commercial paper program. No balances were outstanding under any credit facility or our commercial paper program at any time during 2026 or 2025. Note 8 to the Financial Statements provides additional information.
Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of August 1, 2026, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.
We believe our sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital, and planned capital expenditures, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.
New Accounting Pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 23 | ||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS & SUPPLEMENTAL INFORMATION | ||||||||
| FORWARD-LOOKING STATEMENTS & CONTROLS AND PROCEDURES | ||||||||
Forward-Looking Statements
This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "anticipate," "believe," "could," “expect,” “may,” “might,” “seek,” "will," “would,” or similar words. The principal forward-looking statements in this report include statements regarding: our future financial and operational performance, changes in the consumer landscape, evolution in tariffs and global trade policy, the availability, timing, and amount of any tariff refunds, the impacts of business transformation efforts, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.
All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 31, 2026, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our primary risk exposures or management of market risks from those disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk of our Form 10-K for the fiscal year ended January 31, 2026.
Item 4. Controls and Procedures
Changes in Internal Control Over Financial Reporting
There were no changes during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 24 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For the quarterly period ended August 1, 2026, no response is required under Item 103 of Regulation S-K, nor have there been any material developments for any previously reported legal proceedings.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 31, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On August 11, 2021, our Board of Directors authorized a $15 billion share repurchase program with no stated expiration. Under the program, we have repurchased 34.8 million shares of common stock for a total investment of $6.7 billion. As of August 1, 2026, the dollar value of shares that may yet be purchased under the program is $8.3 billion. There were no Target common stock purchases made during the three months ended August 1, 2026, by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 25 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
Item 6. Exhibits
| 3.1 | ||||||||
| 3.2 | ||||||||
| 10.4.7 | * ** | |||||||
| 10.27 | * | |||||||
| 31.1 | ** | |||||||
| 31.2 | ** | |||||||
| 32.1 | *** | |||||||
| 32.2 | *** | |||||||
| 101.INS | ** | Inline XBRL Instance Document | ||||||
| 101.SCH | ** | Inline XBRL Taxonomy Extension Schema Document | ||||||
| 101.CAL | ** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||
| 101.DEF | ** | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||
| 101.LAB | ** | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||
| 101.PRE | ** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||
| 104 | ** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||||
| * | Management contract or compensatory plan or arrangement. | ||||
| ** | Filed herewith. | ||||
| *** | Furnished herewith. | ||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 26 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TARGET CORPORATION | |||||||||||
| Dated: August 28, 2026 | By: | /s/ Jim Lee | |||||||||
| Jim Lee | |||||||||||
| Executive Vice President and | |||||||||||
| Chief Financial Officer | |||||||||||
| (Duly Authorized Officer and | |||||||||||
| Principal Financial Officer) | |||||||||||
| /s/ Matthew A. Liegel | |||||||||||
| Matthew A. Liegel | |||||||||||
| Senior Vice President, Chief Accounting Officer | |||||||||||
| and Controller | |||||||||||
| (Principal Accounting Officer) | |||||||||||
| TARGET CORPORATION | | Q2 2026 Form 10-Q | 27 | ||||||||
EXHIBIT 10.4.7
oTarget Corporation 2020 Long-Term Incentive Plan
RESTRICTED STOCK UNIT AGREEMENT
(Officer)
THIS RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”) is made in Minneapolis, Minnesota as of the date of grant (the “Grant Date”) set forth in the award letter (the “Award Letter”) by and between the Company and the person (the “Team Member”) identified in the Award Letter. This award (the “Award”) of Restricted Stock Units (“RSUs”), provided to you as a Service Provider, is being issued under the Target Corporation 2020 Long-Term Incentive Plan (the “Plan”), subject to the following terms and conditions.
1. Definitions. Except as otherwise provided in this Agreement, the defined terms used in this Agreement shall have the same meaning as in the Plan. The term “Committee” shall also include those persons to whom authority has been delegated under the Plan.
2. Grant of RSUs. Subject to the relevant terms of the Plan and this Agreement, as of the Grant Date, the Company has granted the Team Member the number of RSUs set forth in the Award Letter.
3. Vesting Schedule.
(a) Subject to Section 3(b), one-third (1/3) of the Shares issuable under the RSUs shall vest on each of December 17, 2026, December 17, 2027, and December 17, 2028. Each such date is referred to as a “Vesting Date” and December 17, 2028, is also referred to as the “Final Vesting Date.”
(b) Notwithstanding Section 3(a), the Shares issuable under the applicable number of RSUs shall vest on the earlier of: (i) the date that the conditions for an Accelerated Vesting Event set forth in Section 4 are satisfied; or (ii) as specified in Sections 5 or 6.
(c) All vested RSUs shall be paid out as provided in Section 11, in accordance with and subject to any restrictions set forth in this Agreement, the Plan or any Release Agreement that the Team Member may be required to enter pursuant to Sections 4, 5 or 6. “Release Agreement” means an agreement containing a release of claims and other provisions deemed appropriate by the Committee in its sole discretion.
4. Accelerated Vesting Events. Upon the occurrence of one of the following events (each, an “Accelerated Vesting Event”), the outstanding unvested RSUs subject to this Agreement shall vest as provided below. The Committee, in its sole discretion, makes all determinations required under this Section 4.
(a) Retirement. The applicable number of outstanding unvested RSUs shall vest as of the date the last of the Retirement Conditions is satisfied. The “Retirement Conditions” are: (i) the Team Member attaining age 55 and completing at least 5 years of Service (which 5 years need not be continuous) on or prior to the Team Member’s (1) voluntary termination of Service, or (2) termination of Service resulting from the Company’s elimination of the Team Member’s position (“Position Elimination”); (ii) the Company receiving a valid unrevoked Release Agreement from the Team Member; and (iii) the Team Member commencing discussions with the Company’s Chief Executive Officer or most senior human resources executive regarding the Team Member’s consideration of termination at least six months prior to the Team Member’s voluntary termination of Service. If the Team Member’s termination of Service described in Section 4(a)(i) occurs during the 12 month period immediately following the Grant Date, the Team Member shall vest in a portion of the outstanding unvested RSUs subject to this Agreement. Such vested portion will be determined by multiplying the number of outstanding unvested RSUs in the grant by a fraction, the numerator of which is the number of days from the Grant Date through the date of termination of Service and the denominator of which is the number of days from the Grant Date to the Final Vesting Date. All remaining RSUs shall be cancelled, and the Team Member shall have no rights to such cancelled RSUs. If the Team Member’s termination of Service described in Section 4(a)(i) occurs more than 12 months after the Grant Date but before the Final Vesting Date, the applicable number of outstanding unvested RSUs to vest shall be 100% of the RSUs subject to this Agreement.
(b) Death. In the case of the Team Member’s death prior to the Team Member’s termination of Service, the Team Member shall vest in all outstanding unvested RSUs as of the date of the Team Member’s death.
(c) Disability. In the case of the Team Member’s Disability prior to the Team Member’s termination of Service, the Team Member shall vest in all outstanding unvested RSUs as of the date of the Team Member’s Disability.
5. Involuntary Service Separation. Notwithstanding any other provisions of this Agreement to the contrary, and provided that the Company has received a valid unrevoked Release Agreement from the Team Member, if a Team Member who has not met the Position Elimination Retirement Conditions has their Service involuntarily terminated by the Company or a Subsidiary to which the Team Member is providing Service (the “Service Recipient”) prior to the Final Vesting Date, other than for Cause (an “Involuntary Service Separation”), the Team Member shall vest in a portion of the outstanding unvested RSUs subject to this Agreement. Such vested portion will be determined by multiplying the number of outstanding unvested RSUs in the grant by a fraction, the numerator of which is the number of days from the Grant Date through the date of termination of Service and the denominator of which is the number of days from the Grant Date to the Final Vesting Date. All remaining RSUs shall be cancelled, and the Team Member shall have no rights to such cancelled RSUs.
6. Change in Control. If a Change in Control occurs and the Award is assumed or replaced pursuant to Section 11(b)(1) of the Plan, the Award will continue to be subject to the Vesting Schedule provided in Section 3. Notwithstanding the foregoing and any other contrary provision of this Agreement, if within two years after a Change in Control and prior to the Final
2.
Vesting Date, the Team Member’s Service terminates voluntarily by the Team Member for Good Reason or involuntarily without Cause, and provided that the Company has received a valid unrevoked Release Agreement from the Team Member, the Team Member shall vest in all outstanding unvested RSUs as of the date of the Team Member’s termination of Service.
7. Cause. Notwithstanding any other provisions of this Agreement to the contrary, if the Committee concludes, in its sole discretion, that the Team Member’s Service was terminated in whole or in part for Cause, all of the RSUs subject to the Award that have not previously been converted to Shares shall terminate immediately and the Team Member shall have no rights hereunder.
8. Other Termination; Changes of Service. If at any time prior to the Final Vesting Date, the Team Member’s Service is terminated for Cause, or for any reason not meeting all applicable conditions in Sections 4, 5, or 6, all outstanding unvested RSUs subject to the Award shall terminate effective as of the date of termination of Service and the Team Member shall have no rights hereunder. Service shall not be deemed terminated in the case of (a) any approved leave of absence, or (b) transfers among the Company and any Subsidiaries in the same Service Provider capacity; however, a termination of Service shall occur if (i) the relationship the Team Member had with the Company or a Subsidiary at the Grant Date terminates, even if the Team Member continues in another Service Provider capacity with the Company or a Subsidiary, or (ii) the Team Member experiences a “separation from service” within the meaning of Code Section 409A.
9. Restrictive Covenant. By accepting the Award, the Team Member specifically agrees to the restrictive covenant contained in this Section 9 (the “Restrictive Covenant”) and the Team Member agrees that the Restrictive Covenant and the remedies described herein are reasonable and necessary to protect the legitimate interests of the Company.
(a) Non-Solicitation. The Team Member agrees that for the period beginning on the Grant Date and ending on the date that is one year following the Team Member’s termination of Service, the Team Member will not recruit for employment directly or indirectly, any employee of the Company with whom the Team Member worked, or about whom the Team Member possesses any Company personnel information.
(b) Remedies. The Team Member agrees that immediate irreparable damage will result to Company if the Team Member breaches the Restrictive Covenant set forth in this Agreement. Therefore, in the event the Team Member breaches this Agreement, whether directly or indirectly, the Team Member consents to specific enforcement of this Agreement through an injunction or restraining order. Injunctive relief shall be awarded in addition to any other remedies or damages available at law or in equity. The Team Member specifically agrees that the Company is entitled to the attorneys’ fees and expenses the Company incurs to enforce this Agreement, and that the Team Member is responsible for paying the Company’s costs and attorneys’ fees incurred as a result of enforcing any provisions of this Agreement.
(c) Recovery. Notwithstanding any other provisions of this Agreement to the contrary, if the Committee concludes, in its sole discretion, that the Team Member has breached
3.
the Restrictive Covenant, the Company may take one or more of the following actions with respect to the Award:
(i) immediately terminate all of the RSUs subject to the Award that have not previously been converted to Shares, and the Team Member shall have no rights hereunder; and
(ii) require repayment of all or any portion of the amounts realized or received by the Team Member resulting from the conversion of RSUs to Shares or the sale of Shares related to the Award.
10. Dividend Equivalents. The Team Member shall have the right to receive additional RSUs with a value equal to the regular cash dividend paid on one Share for each RSU held pursuant to this Agreement prior to the conversion of RSUs and issuance of Shares pursuant to Section 11. The number of additional RSUs to be received as dividend equivalents for each RSU held shall be determined by dividing the cash dividend per share by the Fair Market Value of one Share on the dividend payment date; provided, however, that for purposes of avoiding the issuance of fractional RSUs, on each dividend payment date the additional RSUs issued as dividend equivalents shall be rounded up to the nearest whole number. All such additional RSUs received as dividend equivalents shall be subject to forfeiture in the same manner and to the same extent as the original RSUs granted hereby, and shall be converted into Shares on the basis and at the time set forth in Section 11 hereof.
11. Conversion of RSUs and Issuance of Shares.
(a) Timing. Vested RSUs shall be converted to Shares and shall be issued within 90 days following the earliest to occur of (i) each Vesting Date, (ii) the Team Member’s “separation from service” as such term is defined for purposes of Code Section 409A, (iii) the Team Member’s death, or (iv) the Team Member’s Disability (as determined by the Committee in its sole discretion, provided such determination complies with the definition of disability under Code Section 409A).
(b) Limitation for Specified Employees. If any Shares shall be issuable with respect to the RSUs as a result of the Team Member’s “separation from service” at such time as the Team Member is a “specified employee” within the meaning of Code Section 409A, then no Shares shall be issued, except as permitted under Code Section 409A, prior to the first business day after the earlier of (i) the date that is six months after the Team Member’s “separation from service”, or (ii) the Team Member’s death.
(c) Unvested RSUs. All of the RSUs subject to the Award that are unvested as of the time the vested RSUs are converted and Shares are issued under Section 11(a)(ii) shall terminate immediately and the Team Member shall have no rights hereunder with respect to those unvested RSUs.
(d) Code Section 409A. The Committee in its sole discretion may accelerate or delay the distribution of any payment under this Agreement to the extent allowed or required under Code Section 409A. Payment of amounts under this Agreement are intended to comply
4.
with the requirements of Code Section 409A and this Agreement shall in all respects be administered and construed to give effect to such intent.
12. Taxes. The Team Member acknowledges that (a) the ultimate liability for any and all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”) legally due by him or her is and remains the Team Member’s responsibility and may exceed the amount actually withheld by the Company and/or a Subsidiary to which the Team Member is providing Service (the “Service Recipient”) and (b) the Company and/or the Service Recipient or a former Service Recipient, as applicable, (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting and/or conversion of the RSUs and issuance of Shares; (ii) do not commit and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Team Member’s liability for Tax-Related Items; (iii) may be required to withhold or account for Tax-Related Items in more than one jurisdiction if the Team Member has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable event; and (iv) may refuse to deliver the Shares to the Team Member if he or she fails to comply with their obligations in connection with the Tax-Related Items as provided in this Section.
The Team Member authorizes and consents to the Company and/or the Service Recipient, or their respective agents, satisfying all applicable Tax-Related Items which the Company reasonably determines are legally payable by him or her by withholding from the Shares that would otherwise be delivered to the Team Member the highest number of whole Shares that the Company determines has a value less than or equal to the aggregate applicable Tax-Related Items. In lieu thereof, the Team Member may elect at the time of conversion of the RSUs such other then-permitted method or combination of methods established by the Company and/or the Service Recipient to satisfy the Team Member’s Tax-Related Items.
13. Limitations on Transfer. The Award shall not be sold, assigned, transferred, exchanged or encumbered by the Team Member other than pursuant to the terms of the Plan.
14. Recovery Provisions. Notwithstanding any other provision of this Agreement to the contrary, the Award (and any compensation paid or shares issued under the Award) is subject to recovery in accordance with the terms of: (a) the Company’s Recoupment Policy, and (b) the Company’s Clawback Policy (each, the “Policy” and collectively, the “Policies”), in each case to the extent the Policy applies to the Award and the Team Member as the Policies may be in effect from time to time. In addition, this Award may be unilaterally amended by the Committee to comply with any other compensation recovery policy adopted by the Board or the Committee at any time and any listing rules or other rules and regulations implementing the Policies, or as otherwise required by law. The Team Member agrees and consents to the Company’s application, implementation and enforcement of the Policies or any other policy established by the Company or applicable law that may apply to this Award and the Team Member and any provision of applicable law relating to cancellation, rescission, or recoupment of compensation, and expressly agrees that the Company may take such actions as are necessary to effectuate the Policies, any other policies or applicable law without further consent or action being required by the Team Member.
5.
15. No Employment Rights. Nothing in this Agreement, the Plan or the Award Letter shall confer upon the Team Member any right to continued Service with the Company or any Subsidiary, as applicable, nor shall it interfere with or limit in any way any right of the Company or any Subsidiary, as applicable, to terminate the Team Member’s Service at any time with or without Cause or change the Team Member’s compensation, other benefits, job responsibilities or title provided in compliance with applicable local laws and permitted under the terms of the Team Member’s service contract, if any.
(a) The Team Member’s rights to vest in the RSUs or receive Shares after termination of Service shall be determined pursuant to Sections 3 through 11. Those rights and the Team Member’s date of termination of Service will not be extended by any notice period mandated under local law (e.g., active service would not include a period of “garden leave” or similar notice period pursuant to local law).
(b) This Agreement, the Plan and the Award Letter are separate from, and shall not form, any part of the contract of Service of the Team Member, or affect any of the rights and obligations arising from the Service relationship between the Team Member and the Company and/or the Service Recipient.
(c) No Service Provider has a right to participate in the Plan. All decisions with respect to future grants, if any, shall be at the sole discretion of the Company and/or the Service Recipient.
(d) The Team Member will have no claim or right of action in respect of any decision, omission or discretion which may operate to the disadvantage of the Team Member.
16. Nature of Grant. In accepting the grant, the Team Member acknowledges, understands, and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement, and any such modification, amendment, suspension or termination will not constitute a constructive or wrongful dismissal;
(b) the RSUs are extraordinary items and are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or welfare or retirement benefits or similar payments;
(c) in no event should the RSUs be considered as compensation for, or relating in any way to, past services for the Company or the Service Recipient, nor are the RSUs or the underlying Shares intended to replace any pension rights or compensation;
(d) the future value of the underlying Shares is unknown and cannot be predicted with certainty;
6.
(e) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Team Member’s participation in the Plan or the RSUs;
(f) no claim or entitlement to compensation or damages shall arise from forfeiture or recovery of the RSUs or underlying Shares resulting from termination of the Team Member’s Service (for any reason whatsoever and whether or not in breach of local labor laws) or application of the Policies, and in consideration of the grant of the RSUs to which the Team Member is otherwise not entitled, the Team Member (i) agrees not to institute any such claim against the Company or the Service Recipient, (ii) waives the Team Member’s ability, if any, to bring any such claim, and (iii) releases the Company and the Service Recipient from any such claim. If, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Team Member shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims;
(g) this Agreement is not a condition of the Team Member’s employment or continued employment; and
(h) the Team Member is hereby advised to consult with personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the RSUs or the Plan.
17. Governing Law; Venue; Jurisdiction; Severability. To the extent that federal laws do not otherwise control, this Agreement, the Award Letter, the Plan and all determinations made and actions taken pursuant to the Plan shall be governed by the laws of the State of Minnesota without regard to its conflicts-of-law principles and shall be construed accordingly. The exclusive forum and venue for any legal action arising out of or related to this Agreement shall be the United States District Court for the District of Minnesota, and the parties submit to the personal jurisdiction of that court. If neither subject matter nor diversity jurisdiction exists in the United States District Court for the District of Minnesota, then the exclusive forum and venue for any such action shall be the courts of the State of Minnesota located in Hennepin County, and the Team Member, as a condition of this Agreement, consents to the personal jurisdiction of that court. If any provision of this Agreement, the Award Letter or the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, the Award Letter or the Plan, and the Agreement, the Award Letter and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
18. Currencies and Dates. Unless otherwise stated, all dollars specified in this Agreement and the Award Letter shall be in U.S. dollars and all dates specified in this Agreement shall be U.S. dates.
19. Survival. The Team Member agrees that the terms of Sections 9 and 14 shall survive the Team Member’s termination of Service and any conversion of the Award into Shares.
20. Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Team Member’s participation in the Plan, on the RSUs and on any Shares
7.
acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Team Member to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
21. Plan and Award Letter Incorporated by Reference; Electronic Delivery. The Plan, as hereafter amended from time to time, and the Award Letter shall be deemed to be incorporated into this Agreement and are integral parts hereof. In the event there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern. This Agreement, the Plan and the Award Letter embody the entire agreement and understanding between the Company and the Team Member pertaining to this grant of RSUs and supersede all prior agreements and understandings (oral or written) between them relating to the subject matter hereof. The Company or a third party designated by the Company may deliver to the Team Member by electronic means any documents related to their participation in the Plan. The Team Member acknowledges receipt of a copy of the Plan and the Award Letter.
[End of Agreement]
8.
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certifications
I, Michael J. Fiddelke, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Target Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: August 28, 2026 | ||
| /s/ Michael J. Fiddelke | ||
| Michael J. Fiddelke | ||
| Chief Executive Officer | ||
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certifications
I, Jim Lee, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Target Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: August 28, 2026 | ||
| /s/ Jim Lee | ||
| Jim Lee | ||
| Executive Vice President and Chief Financial Officer | ||
Exhibit 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
In connection with the Quarterly Report on Form 10-Q of Target Corporation, a Minnesota corporation (“the Company”), for the quarter ended August 1, 2026, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the officer's knowledge:
1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: August 28, 2026 | ||
| /s/ Michael J. Fiddelke | ||
| Michael J. Fiddelke | ||
| Chief Executive Officer | ||
Exhibit 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
In connection with the Quarterly Report on Form 10-Q of Target Corporation, a Minnesota corporation (“the Company”), for the quarter ended August 1, 2026, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the officer's knowledge:
1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: August 28, 2026 | ||
| /s/ Jim Lee | ||
| Jim Lee | ||
| Executive Vice President and Chief Financial Officer | ||