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Target Corporation Reports First Quarter Earnings

The nationwide retailer reports that sales growth led by apparel, home and hardlines, while food and beverage and essentials grew on top of last year’s historic stock-up sales.


MINNEAPOLIS --Target Corporation (NYSE: TGT) today announced its first quarter 2021 financial results, which reflected robust growth in both sales and profitability.

The Company reported first quarter GAAP earnings per share (EPS) of $4.17, up 643.2 percent from $0.56 in 2020. First quarter Adjusted EPS of $3.69, which excluded a $0.53 gain on the sale of Dermstore, grew 525.0 percent compared with $0.59 in 2020. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

“Our performance in the first quarter was outstanding on every measure, and showcased the power of putting our stores at the center of our strategy. Store comp sales grew 18.0 percent in the quarter, even as they also fulfilled more than three quarters of Target’s digital sales - including more than 90-percent growth of our same-day services. Importantly, market-share gains of more than $1 billion in the first quarter, on top of $1 billion in share gains a year ago, demonstrate Target’s continued relevance with our guests, even as they have many more shopping options compared with a year ago,” said Brian Cornell, chairman and chief executive officer of Target Corporation.

“Given the trust we’ve built with our guests quarter after quarter and our commitment to adjusting along with them to the ongoing shifts in the macro environment, we're confident in continued comp growth in the second quarter and through the remainder of the year, as well as a healthy full-year operating margin rate.”


For the second quarter of 2021, the Company expects mid-to-high single digit growth in comparable sales. The Company expects its second-quarter operating margin rate will be well above the second quarter 2019 rate of 7.2 percent, but likely not as high as last year’s unprecedented 10.0 percent.

The Company expects positive single-digit comparable sales growth in the last two quarters of the year, and expects its full-year operating margin rate will be well above the 2020 rate of 7.0 percent, with the potential to reach 8 percent or somewhat higher.


Comparable sales grew 22.9 percent in the first quarter, reflecting comparable store sales growth of 18.0 percent and comparable digital sales growth of 50 percent. Total revenue of $24.2 billion grew 23.4 percent compared with last year, driven by total sales growth of 23.3 percent and a 30.4 percent increase in other revenue. Operating income was $2.4 billion in first quarter 2021, up 407 percent from $0.5 billion in 2020.

First quarter operating income margin rate was 9.8 percent in 2021 compared with 2.4 percent in 2020. First quarter gross margin rate was 30.0 percent, compared with 25.1 percent in 2020. This year's gross margin rate reflected the benefit of favorable category mix and merchandising actions, primarily from low markdown rates, while last year's gross margin rate reflected elevated inventory costs and impairment charges. First quarter SG&A expense rate was 18.6 percent in 2021, compared with 20.7 percent in 2020, reflecting the benefit of leverage from strong sales growth, partially offset by the net impact of other factors, primarily investments in team member pay, benefits, and safety.


The Company’s first quarter 2021 net interest expense was $108 million, compared with $117 million last year. The decrease was primarily due to a lower weighted-average interest rate on the Company's debt portfolio.

First quarter 2021 effective income tax rate was 19.6 percent, compared with 13.9 percent last year. The rate increase was driven by significantly higher earnings, diluting the benefit of fixed and discrete tax items.


The Company paid dividends of $340 million in the first quarter, compared with $332 million last year, reflecting a 3.0 percent increase in the dividend per share, partially offset by a decline in average share count.

The Company resumed share repurchases in first quarter 2021, consistent with its long-standing capital deployment policies and within the limits of its strong, middle-A credit ratings. Share repurchases of $1.2 billion retired 6.1 million shares of common stock at an average price of $190.77.

As of the end of the first quarter, the Company had approximately $3.4 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in September 2019.

For the trailing twelve months through first quarter 2021, after-tax return on invested capital (ROIC) was 30.7 percent, compared with 13.4 percent for the trailing twelve months through first quarter 2020. The increase in ROIC was driven primarily by increased profitability. The tables in this release provide additional information about the Company’s ROIC calculation.
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