Target's Q2 Earnings Dip Amidst Sales Slowdown

TL;DR

**Target's Q2 was a miss, with sales and profit down, and that interchange fee settlement just papered over the cracks.**

AI Summary

Target Corporation reported a decline in net sales and net earnings for the three and six months ended August 2, 2025. Net sales decreased by 0.9% to $25.211 billion for the three months ended August 2, 2025, compared to $25.452 billion in the prior year period. Net earnings saw a more significant drop of 21.5% to $935 million, down from $1.192 billion in the same quarter last year. For the six months, net sales were down 1.8% to $49.057 billion, and net earnings fell 7.6% to $1.971 billion. Operating income decreased by 19.4% to $1.317 billion for the three months, and by 4.8% to $2.789 billion for the six months. A key business change was the recording of $593 million in gains from credit card interchange fee settlements in the first quarter of 2025, which positively impacted SG&A Expenses. Inventory increased slightly to $12.881 billion as of August 2, 2025, from $12.740 billion at February 1, 2025. The company issued $2.0 billion in new long-term debt during the six months ended August 2, 2025, with interest rates ranging from 4.35% to 5.25%.

Why It Matters

Target's declining net sales and net earnings signal potential headwinds for investors, suggesting a need for closer scrutiny of consumer spending trends and competitive pressures in the retail sector. The $593 million gain from interchange fee settlements provided a one-time boost, masking a deeper operational decline, which could impact future profitability if core sales continue to struggle. For employees, a sustained downturn could lead to cost-cutting measures, while customers might see changes in pricing or product availability as Target adjusts its strategy. In a highly competitive market with rivals like Walmart and Amazon, Target's performance indicates a challenging environment for traditional retailers.

Risk Assessment

Risk Level: medium — The decline in net sales by 0.9% and net earnings by 21.5% for the three months ended August 2, 2025, indicates a weakening core business performance. While the $593 million interchange fee settlement provided a one-time boost to SG&A, the underlying operational income still decreased significantly, suggesting ongoing challenges in profitability and consumer demand.

Analyst Insight

Investors should exercise caution and closely monitor Target's upcoming earnings calls for management's outlook on consumer spending and strategies to reverse the sales decline. Consider re-evaluating your position if core sales trends do not show signs of improvement in the next quarter, as the one-time settlement gain will not recur.

Financial Highlights

debt To Equity

1.06

revenue

$25.211B

operating Margin

5.2%

total Assets

$57.851B

total Debt

$16.456B

net Income

$935M

eps

$2.05

gross Margin

28.7%

cash Position

$4.341B

revenue Growth

-0.9%

Revenue Breakdown

Key Numbers

• $25.211B — Net sales for Q2 2025 (Down 0.9% from $25.452 billion in Q2 2024)
• $935M — Net earnings for Q2 2025 (Down 21.5% from $1.192 billion in Q2 2024)
• $1.317B — Operating income for Q2 2025 (Down 19.4% from $1.635 billion in Q2 2024)
• $593M — Interchange fee settlement gain (Recorded in Q1 2025, net of legal fees, impacting SG&A Expenses)
• $12.881B — Inventory as of August 2, 2025 (Increased from $12.740 billion at February 1, 2025)
• $2.0B — New long-term debt issued (During the six months ended August 2, 2025)
• 454.4M — Common shares outstanding (As of August 2, 2025)
• $1.14 — Dividends declared per share (For the three months ended August 2, 2025)

Key Players & Entities

• TARGET CORP (company) — Registrant for 10-Q filing
• Bloomberg (company) — Publisher of the analysis
• SEC (regulator) — Regulator for 10-Q filings
• TD Bank Group (company) — Partner in credit card program agreement
• New York Stock Exchange (regulator) — Exchange where TGT common stock is registered
• Walmart (company) — Competitive context
• Amazon (company) — Competitive context

FAQ

Risk Factors

• Consumer Spending Sensitivity [high — market]: Target's performance is highly sensitive to changes in consumer discretionary spending. A slowdown in the economy or reduced consumer confidence, as potentially indicated by the 0.9% net sales decline in Q2 2025, could lead to further revenue and profit erosion.
• Inventory Management Challenges [medium — operational]: An increase in inventory levels to $12.881 billion from $12.740 billion at the start of the year, coupled with declining sales, suggests potential challenges in inventory turnover and increased risk of markdowns or obsolescence.
• Increased Debt Burden [medium — financial]: The issuance of $2.0 billion in new long-term debt during the first six months of 2025 increases the company's leverage and interest expense. This could strain financial flexibility, especially if earnings continue to decline.
• Credit Card Interchange Fee Regulations [low — regulatory]: While Target benefited from a $593 million gain from credit card interchange fee settlements, future regulatory changes or increased competition in payment processing could impact this revenue stream.
• Competitive Retail Landscape [high — market]: Target operates in a highly competitive retail environment. Intense competition from online retailers and other brick-and-mortar stores can pressure pricing and market share, impacting profitability.
• Supply Chain Disruptions [medium — operational]: Although not explicitly detailed in this 10-Q, ongoing global supply chain issues can impact inventory availability, increase costs, and affect delivery times, posing a risk to sales and customer satisfaction.

Industry Context

Target operates in the highly competitive retail sector, facing pressure from both online giants and other brick-and-mortar retailers. The industry is characterized by evolving consumer preferences, a focus on omnichannel strategies, and sensitivity to economic conditions. Recent trends include a shift towards value-oriented offerings and a continued emphasis on digital engagement and convenient fulfillment options.

Regulatory Implications

Target's operations are subject to various regulations, including those related to consumer protection, labor, and financial reporting. The gain from credit card interchange fee settlements highlights a revenue stream that could be subject to future regulatory scrutiny or changes in payment processing fees.

What Investors Should Do

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Key Dates

• 2025-08-02: End of Q2 2025 — Reporting period for the 10-Q, showing a decline in net sales and earnings.
• 2025-02-01: Beginning of Q3 2025 (and end of Q4 2024) — Reference point for inventory comparison and start of the fiscal year for some comparisons.
• 2025-08-03: End of Q2 2024 — Prior year comparable period for Q2 2025 results, showing higher sales and earnings.
• 2025-01-01: Beginning of Q1 2025 — Period during which the $593 million gain from credit card interchange fee settlements was recorded.

Glossary

Net sales

The total revenue generated from sales of goods and services, net of returns, allowances, and discounts. (Key top-line metric indicating the company's sales performance. Decreased by 0.9% to $25.211 billion in Q2 2025.)

Operating income

Profitability from core business operations before interest and taxes. (Measures the efficiency of the company's operations. Decreased by 19.4% to $1.317 billion in Q2 2025.)

SG&A Expenses

Selling, General, and Administrative expenses, which include costs related to marketing, sales, and corporate overhead. (A significant expense category. Positively impacted by a $593 million gain from credit card interchange fee settlements in Q1 2025.)

Inventory

The value of goods held by the company for sale. (Indicates the company's investment in goods available for sale. Increased to $12.881 billion as of August 2, 2025.)

Long-term debt

Money borrowed by the company that is due more than one year from the balance sheet date. (Represents a significant portion of the company's financing. Target issued $2.0 billion in new long-term debt.)

Basic earnings per share (EPS)

Net income divided by the weighted average number of basic common shares outstanding. (Measures the profitability attributable to each outstanding share of common stock. Decreased to $2.05 in Q2 2025.)

Diluted earnings per share (EPS)

Net income divided by the weighted average number of diluted common shares outstanding, including the effect of dilutive securities. (Provides a more conservative measure of profitability per share. Decreased to $2.05 in Q2 2025.)

Comprehensive income

The change in equity during a period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except those resulting from investments by owners and distributions to owners. (Includes net earnings plus other comprehensive income (or loss), such as foreign currency translation adjustments.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Target Corporation experienced a decline in both net sales and net earnings for the three and six months ended August 2, 2025. Net sales decreased by 0.9% for the quarter and 1.8% for the year-to-date, while net earnings saw a more substantial drop of 21.5% and 7.6%, respectively. Operating income also declined, reflecting pressures on profitability. While inventory levels saw a slight increase, the company has taken on significant new debt, increasing its financial leverage.

Key Financial Figures

• $0.0833 — ich registered Common stock, par value $0.0833 per share TGT New York Stock Exchange
• $0 — Total shares of common stock, par value $0.0833, outstanding at August 22, 2025 ,
• $2.05 — nings per share and Adjusted EPS 1 were $2.05. Net Sales were $25.2 billion, a decre
• $25.2 b — usted EPS 1 were $2.05. Net Sales were $25.2 billion, a decrease of 0.9 percent from t
• $1.3 billion — eased 4.3 percent. Operating income of $1.3 billion was 19.4 percent lower than the compara

Filing Documents

• tgt-20250802.htm (10-Q) — 1066KB
• tgt-20250802xexhibit1023.htm (EX-10.23) — 61KB
• tgt-20250802xexhibit1024.htm (EX-10.24) — 55KB
• tgt-20250802xexhibit311.htm (EX-31.1) — 10KB
• tgt-20250802xexhibit312.htm (EX-31.2) — 10KB
• tgt-20250802xexhibit321.htm (EX-32.1) — 5KB
• tgt-20250802xexhibit322.htm (EX-32.2) — 5KB
• tgt-20250802_g1.jpg (GRAPHIC) — 17KB
• tgt-20250802_g2.jpg (GRAPHIC) — 10KB
• tgt-20250802_g3.jpg (GRAPHIC) — 39KB
• tgt-20250802_g4.jpg (GRAPHIC) — 44KB
• 0000027419-25-000118.txt ( ) — 5051KB
• tgt-20250802.xsd (EX-101.SCH) — 29KB
• tgt-20250802_cal.xml (EX-101.CAL) — 40KB
• tgt-20250802_def.xml (EX-101.DEF) — 95KB
• tgt-20250802_lab.xml (EX-101.LAB) — 402KB
• tgt-20250802_pre.xml (EX-101.PRE) — 270KB
• tgt-20250802_htm.xml (XML) — 578KB

Financial Statements (unaudited)

Financial Statements (unaudited) Consolidated Statements of Operations 1 Consolidated Statements of Comprehensive Income 2 Consolidated Statements of Financial Position 3 Consolidated Statements of Cash Flows 4 Consolidated Statements of Shareholders' Investment 5

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 25 Item 4.

Controls and Procedures

Controls and Procedures 25 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 26 Item 1A.

Risk Factors

Risk Factors 26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item 3. Defaults Upon Senior Securities 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 27 Signature s 28

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Statements of Operations Three Months Ended Six Months Ended (millions, except per share data) (unaudited) August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Net sales $ 25,211 $ 25,452 $ 49,057 $ 49,983 Cost of sales 17,903 17,826 35,031 35,297 Selling, general, and administrative expenses 5,359 5,365 9,950 10,511 Depreciation and amortization (exclusive of depreciation included in cost of sales) 632 626 1,287 1,244 Operating income 1,317 1,635 2,789 2,931 Net interest expense 116 110 232 216 Net other income ( 17 ) ( 20 ) ( 43 ) ( 49 ) Earnings before income taxes 1,218 1,545 2,600 2,764 Provision for income taxes 283 353 629 630 Net earnings $ 935 $ 1,192 $ 1,971 $ 2,134 Basic earnings per share $ 2.06 $ 2.58 $ 4.33 $ 4.62 Diluted earnings per share $ 2.05 $ 2.57 $ 4.32 $ 4.60 Weighted average common shares outstanding Basic 454.6 462.5 454.8 462.4 Diluted 455.6 463.5 456.1 463.7 Antidilutive shares 5.0 2.3 2.3 1.8 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q2 2025 Form 10-Q 1

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Comprehensive Income Three Months Ended Six Months Ended (millions) (unaudited) August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Net earnings $ 935 $ 1,192 $ 1,971 $ 2,134 Other comprehensive (loss) / income, net of tax Cash flow hedges and currency translation adjustment ( 6 ) ( 5 ) ( 10 ) ( 10 ) Other comprehensive loss ( 6 ) ( 5 ) ( 10 ) ( 10 ) Comprehensive income $ 929 $ 1,187 $ 1,961 $ 2,124 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q2 2025 Form 10-Q 2

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Financial Position (millions, except footnotes) (unaudited) August 2, 2025 February 1, 2025 August 3, 2024 Assets Cash and cash equivalents $ 4,341 $ 4,762 $ 3,497 Inventory 12,881 12,740 12,604 Other current assets 1,812 1,952 1,817 Total current assets 19,034 19,454 17,918 Property and equipment, net 33,568 33,022 33,075 Operating lease assets 3,694 3,763 3,545 Other noncurrent assets 1,555 1,530 1,457 Total assets $ 57,851 $ 57,769 $ 55,995 Liabilities and shareholders' investment Accounts payable $ 12,019 $ 13,053 $ 12,595 Accrued and other current liabilities 6,068 6,110 5,749 Current portion of long-term debt and other borrowings 1,136 1,636 1,640 Total current liabilities 19,223 20,799 19,984 Long-term debt and other borrowings 15,320 14,304 13,654 Noncurrent operating lease liabilities 3,514 3,582 3,444 Deferred income taxes 2,413 2,303 2,495 Other noncurrent liabilities 1,961 2,115 1,989 Total noncurrent liabilities 23,208 22,304 21,582 Shareholders' investment Common stock 38 38 38 Additional paid-in capital 7,084 6,996 6,831 Retained earnings 8,766 8,090 8,030 Accumulated other comprehensive loss ( 468 ) ( 458 ) ( 470 ) Total shareholders' investment 15,420 14,666 14,429 Total liabilities and shareholders' investment $ 57,851 $ 57,769 $ 55,995 Common Stock Authorized 6,000,000,000 shares, $ 0.0833 par value; 454,396,092 , 455,566,995 , and 461,600,215 shares issued and outstanding as of August 2, 2025, February 1, 2025, and August 3, 2024, respectively. Preferred Stock Authorized 5,000,000 shares, $ 0.01 par value; no shares were issued or outstanding during any period presented. See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q2 2025 Form 10-Q 3

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Cash Flows Six Months Ended (millions) (unaudited) August 2, 2025 August 3, 2024 Operating activities Net earnings $ 1,971 $ 2,134 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 1,558 1,461 Share-based compensation expense 133 149 Deferred income taxes 112 16 Noncash (gains) / losses and other, net 1 22 Changes in operating accounts: Inventory ( 141 ) ( 718 ) Other assets 151 ( 53 ) Accounts payable ( 1,125 ) 522 Accrued and other liabilities ( 302 ) ( 194 ) Cash provided by operating activities 2,358 3,339 Investing activities Expenditures for property and equipment ( 1,864 ) ( 1,313 ) Other 11 8 Cash required for investing activities ( 1,853 ) ( 1,305 ) Financing activities Additions to long-term debt 1,984 — Reductions of long-term debt ( 1,571 ) ( 1,076 ) Dividends paid ( 1,019 ) ( 1,017 ) Repurchase of stock ( 258 ) ( 155 ) Shares withheld for taxes on share-based compensation ( 62 ) ( 94 ) Cash required for financing activities ( 926 ) ( 2,342 ) Net decrease in cash and cash equivalents ( 421 ) ( 308 ) Cash and cash equivalents at beginning of period 4,762 3,805 Cash and cash equivalents at end of period $ 4,341 $ 3,497 Supplemental information Leased assets obtained in exchange for new finance lease liabilities $ 41 $ 304 Leased assets obtained in exchange for new operating lease liabilities 119 362 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q2 2025 Form 10-Q 4

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes 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 3, 2024 461.7 $ 38 $ 6,761 $ 7,093 $ ( 460 ) $ 13,432 Net earnings — — — 942 — 942 Other comprehensive loss — — — — ( 5 ) ( 5 ) Dividends declared, $ 1.10 per share — — — ( 516 ) — ( 516 ) Share-based compensation 0.9 1 ( 14 ) — — ( 13 ) May 4, 2024 462.6 $ 39 $ 6,747 $ 7,519 $ ( 465 ) $ 13,840 Net earnings — — — 1,192 — 1,192 Other comprehensive loss — — — — ( 5 ) ( 5 ) Dividends declared, $ 1.12 per share — — — ( 527 ) — ( 527 ) Repurchase of stock ( 1.1 ) ( 1 ) — ( 154 ) — ( 155 ) Share-based compensation 0.1 — 84 — — 84 August 3, 2024 461.6 $ 38 $ 6,831 $ 8,030 $ ( 470 ) $ 14,429 Net earnings — — — 854 — 854 Other comprehensive loss — — — — ( 4 ) ( 4 ) Dividends declared, $ 1.12 per share — — — ( 521 ) — ( 521 ) Repurchase of stock ( 2.4 ) — — ( 354 ) — ( 354 ) Share-based compensation — — 85 — — 85 November 2, 2024 459.2 $ 38 $ 6,916 $ 8,009 $ ( 474 ) $ 14,489 Net earnings — — — 1,103 — 1,103 Other comprehensive income — — — — 16 16 Dividends declared, $ 1.12 per share — — — ( 516 ) — ( 516 ) Repurchase of stock ( 3.7 ) — — ( 506 ) — ( 506 ) Share-based compensation 0.1 — 80 — — 80 February 1, 2025 455.6 $ 38 $ 6,996 $ 8,090 $ ( 458 ) $ 14,666 TARGET CORPORATION Q2 2025 Form 10-Q 5

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes 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 455.6 $ 38 $ 6,996 $ 8,090 $ ( 458 ) $ 14,666 Net earnings — — — 1,036 — 1,036 Other comprehensive loss — — — — ( 4 ) ( 4 ) Dividends declared, $ 1.12 per share — — — ( 515 ) — ( 515 ) Repurchase of stock ( 2.2 ) — — ( 251 ) — ( 251 ) Share-based compensation 1.0 — 15 — — 15 May 3, 2025 454.4 $ 38 $ 7,011 $ 8,360 $ ( 462 ) $ 14,947 Net earnings — — — 935 — 935 Other comprehensive loss — — — — ( 6 ) ( 6 ) Dividends declared, $ 1.14 per share — — — ( 529 ) — ( 529 ) Share-based compensation — — 73 — — 73 August 2, 2025 454.4 $ 38 $ 7,084 $ 8,766 $ ( 468 ) $ 15,420 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q2 2025 Form 10-Q 6

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents INDEX Index to Notes INDEX TO NOTES

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Note 1 Accounting Policies 8 Note 2 Net Sales 9 Note 3 Interchange Fee Settlements 10 Note 4 Fair Value Measurements 10 Note 5 Property and Equipment 11 Note 6 Supplier Finance Programs 11 Note 7 Commercial Paper and Long-Term Debt 11 Note 8 Derivative Financial Instruments 11 Note 9 Share Repurchase 12 Note 10 Pension Benefits 12 Note 11 Accumulated Other Comprehensive Loss 13 Note 12 Segment Reporting 13 TARGET CORPORATION Q2 2025 Form 10-Q 7

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 1. Accounting Policies These unaudited condensed consolidated financial statements are prepared in accordance with the rules and regulations of the Securities and Exchange Commission applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States (U.S.) generally accepted accounting principles (GAAP) for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in our most recent Form 10-K. We use the same accounting policies in preparing quarterly and annual financial statements. Certain prior-year amounts have been reclassified to conform to the current-year presentation. 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 within 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. TARGET CORPORATION Q2 2025 Form 10-Q 8

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 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 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Apparel & accessories (a) $ 4,086 $ 4,261 $ 7,797 $ 8,158 Beauty (b) 3,396 3,384 6,498 6,503 Food & beverage (c) 5,588 5,538 11,490 11,391 Hardlines (d) 3,522 3,322 6,597 6,482 Home furnishings & dcor (e) 3,662 3,908 6,880 7,427 Household essentials (f) 4,422 4,564 8,779 9,113 Other merchandise sales 43 44 83 90 Merchandise sales 24,719 25,021 48,124 49,164 Advertising revenue 217 162 379 292 Credit card profit sharing 134 144 275 286 Other 141 125 279 241 Net sales $ 25,211 $ 25,452 $ 49,057 $ 49,983 (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 , and food service (primarily Starbucks) in our stores. (d) Includes electronics, including video games and consoles, toys, sporting goods, entertainment, and luggage. (e) Includes bed and bath, home dcor, 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. Merchandise sales — We record almost all retail store revenues at the point of sale. Digitally originated sales may include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. Sales are recognized net of ex

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 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. 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. 4. 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 2, 2025 February 1, 2025 August 3, 2024 Assets Short-term investments Cash and Cash Equivalents Level 1 $ 3,348 $ 3,893 $ 2,465 Prepaid forward contracts Other Current Assets Level 1 17 23 24 Interest rate swaps Other Noncurrent Assets Level 2 1 — 3 Liabilities Interest rate swaps Other Current Liabilities Level 2 3 — — Interest rate swaps Other Noncurrent Liabilities Level 2 60 125 82 Significant Financial Instruments Not Measured at Fair Value (a) (millions) August 2, 2025 February 1, 2025 August 3, 2024 Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current port

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 5. 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 $ 34 million for the three and six months ended August 2, 2025, and $ 36 million for the three and six months ended August 3, 2024. These impairment charges are included in SG&A Expenses. 6. 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. Our outstanding vendor obligations eligible for early payment under these arrangements totaled $ 2.9 billion as of August 2, 2025, and $ 3.7 billion as of both February 1, 2025, and August 3, 2024, and are included within Accounts Payable on our Consolidated Statements of Financial Position. These outstanding vendor obligations do not represent actual early payments made under supplier finance programs, which have historically been lower. 7. Commercial Paper and Long-Term Debt Our unsecured long-term debt issuances during the six months ended August 2, 2025 were as follows: Debt Issuanc

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes Effect of Hedges on Debt (millions) August 2, 2025 February 1, 2025 August 3, 2024 Long-term debt and other borrowings Carrying amount of hedged debt $ 2,132 $ 2,069 $ 2,113 Cumulative hedging adjustments, included in carrying amount ( 63 ) ( 125 ) ( 79 ) Effect of Hedges on Net Interest Expense Three Months Ended Six Months Ended (millions) August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Gain (loss) on fair value hedges recognized in Net Interest Expense Interest rate swaps designated as fair value hedges $ 6 $ 78 $ 62 $ 47 Hedged debt ( 6 ) ( 78 ) ( 62 ) ( 47 ) Gain on cash flow hedges recognized in Net Interest Expense 6 6 12 12 Total $ 6 $ 6 $ 12 $ 12 9. 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 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Number of shares purchased — 1.1 2.2 1.1 Average price paid per share (a) $ — $ 145.94 $ 114.59 $ 145.94 Total investment (a) $ — $ 155 $ 251 $ 155 (a) Amounts include applicable excise tax and commissions. 10. Pension Benefits We provide pension plan benefits to eligible team members. Net Pension Benefits (Income) / Expense Three Months Ended Six Months Ended (millions) Classification August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Service cost benefits earned SG&A Expenses $ 20 $ 19 $ 37 $ 39 Interest cost on projected benefit obligation Net Other Income 42 42 84 83 Expected return on assets Net Other Income ( 68 ) ( 70 ) ( 135 ) ( 140 ) Prior service cost Net Other Income 7 8 7 8 Total $ 1 $ ( 1 ) $ ( 7 ) $ ( 10 ) TARGET CORPORATION Q2 2025 Form 10

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 11. Accumulated Other Comprehensive Loss Change in Accumulated Other Comprehensive Loss Cash Flow Hedges Currency Translation Adjustment Pension Total (millions) February 1, 2025 $ 266 $ ( 27 ) $ ( 697 ) $ ( 458 ) Other comprehensive (loss) income before reclassifications ( 1 ) — — ( 1 ) Amounts reclassified ( 9 ) — — ( 9 ) August 2, 2025 $ 256 $ ( 27 ) $ ( 697 ) $ ( 468 ) Note: Amounts are net of tax. 12. Segment Reporting Our Chief Operating Decision Maker—our Chief Executive Officer—monitors our consolidated operating income and net earnings to evaluate performance and make operating decisions. 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 within the United States. Business Segment Results Three Months Ended Six Months Ended (millions) August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024 Net sales $ 25,211 $ 25,452 $ 49,057 $ 49,983 Cost of sales Merchandising cost of sales 16,177 16,093 31,531 31,939 Supply chain and digital fulfillment costs 1,726 1,733 3,500 3,358 Total cost of sales 17,903 17,826 35,031 35,297 Selling, general and administrative expenses (a) 5,359 5,365 9,950 10,511 Depreciation and amortization (exclusive of depreciation included in cost of sales) 632 626 1,287 1,244 Operating income 1,317 1,635 2,789 2,931 Net interest expense 116 110 232 216 Net other income ( 17 ) ( 20 ) ( 43 ) ( 49 ) Earnings before income taxes 1,218 1,545 2,600 2,764 Provision for income taxes 283 353 629 630 Net earnings $ 935 $ 1,192 $ 1,971 $ 2,134 (a) For the six months ended August 2, 2025, includes $ 593 million of pretax net gains related to settlements of credit card interchange fee litiga

MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents FINANCIAL SUMMARY Index to Notes

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Summary Second quarter 2025 included the following notable items: GAAP diluted earnings per share and Adjusted EPS 1 were $2.05. Net Sales were $25.2 billion, a decrease of 0.9 percent from the comparable prior-year period. Comparable sales decreased 1.9 percent, reflecting a 1.3 percent decrease in traffic and a 0.6 percent decrease in average transaction amount. Comparable stores-originated sales declined 3.2 percent. Comparable digitally-originated sales increased 4.3 percent. Operating income of $1.3 billion was 19.4 percent lower than the comparable prior-year period. Earnings Per Share Three Months Ended Six Months Ended August 2, 2025 August 3, 2024 Change August 2, 2025 August 3, 2024 Change GAAP diluted earnings per share $ 2.05 $ 2.57 (20.2) % $ 4.32 $ 4.60 (6.1) % Adjustments — — (0.97) — Adjusted diluted earnings per share $ 2.05 $ 2.57 (20.2) % $ 3.35 $ 4.60 (27.1) % 1 Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provid ed on page 21 . 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 2, 2025, after-tax ROIC was 14.3 percent , compared with 16.6 percent for the trailing twelve months ended August 3, 2024. The calculation of ROIC is provided on page 22 . Business Environment In April 2025, the U.S. imposed a range of tariffs on the vast majority of products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tarif