Target's Q3 Earnings Dip Amid Sales Slowdown, Transformation Costs

TL;DR

**Target's Q3 was a miss, with sales and profit down, but their aggressive transformation could set them up for a rebound if executed well.**

AI Summary

Target Corporation reported a decline in net sales and net earnings for both the three and nine months ended November 1, 2025. Net sales decreased by 1.55% to $25.27 billion for the three months ended November 1, 2025, compared to $25.67 billion in the prior year, and by 1.75% to $74.33 billion for the nine months, down from $75.65 billion. Net earnings saw a more significant drop, falling 19.32% to $689 million for the quarter from $854 million, and 11.01% to $2.66 billion for the nine-month period from $2.99 billion. Operating income also decreased, by 18.84% to $948 million for the quarter and 8.83% to $3.74 billion for the nine months. The company incurred $115 million in severance and related costs due to a headquarters workforce reduction in October 2025, and $46 million in asset-related charges from a terminated commercial partnership as part of a multi-year business transformation initiative. Despite these challenges, Target's cash and cash equivalents increased to $3.82 billion as of November 1, 2025, from $3.43 billion a year prior, and the company issued $2 billion in new long-term debt while repaying $1.5 billion.

Why It Matters

Target's declining sales and net income, coupled with significant business transformation costs, signal a challenging retail environment and strategic shifts that could impact investor confidence. The $115 million in severance costs and $46 million in asset impairments reflect a proactive, albeit costly, effort to streamline operations and adapt to market pressures, potentially leading to long-term efficiency gains. For employees, the headquarters workforce reduction indicates ongoing organizational restructuring. Customers might see changes in product offerings or store experiences as Target optimizes its assets. Competitively, these moves suggest Target is bracing for a tougher market, potentially impacting its ability to compete on price or innovation against rivals like Walmart and Amazon.

Risk Assessment

Risk Level: medium — The company experienced a 19.32% decline in net earnings for the three months ended November 1, 2025, to $689 million from $854 million, and a 1.55% decrease in net sales to $25.27 billion. Additionally, Target incurred $115 million in severance costs and $46 million in asset impairment charges related to its business transformation, indicating ongoing operational restructuring and potential near-term headwinds.

Analyst Insight

Investors should closely monitor Target's progress on its business transformation initiative, particularly how it impacts future sales growth and profitability. While the current quarter shows declines, the strategic investments and cost-cutting measures could position the company for long-term recovery. Consider holding TGT shares, but be prepared for continued volatility as the transformation unfolds.

Financial Highlights

revenue

$25.27B

operating Margin

3.75%

total Assets

$59.99B

total Debt

$16.50B

net Income

$689M

eps

$1.51

cash Position

$3.82B

revenue Growth

-1.55%

Revenue Breakdown

Key Numbers

• $25.27B — Net Sales (Decreased 1.55% for the three months ended November 1, 2025, compared to $25.67 billion in the prior year.)
• $689M — Net Earnings (Decreased 19.32% for the three months ended November 1, 2025, compared to $854 million in the prior year.)
• $1.51 — Diluted EPS (Decreased from $1.85 in the prior year for the three months ended November 1, 2025.)
• $115M — Severance Costs (Incurred due to headquarters workforce reduction in October 2025.)
• $46M — Asset-Related Charges (Recognized for the three and nine months ended November 1, 2025, due to a terminated commercial partnership.)
• $3.82B — Cash and Cash Equivalents (Increased from $3.43 billion at November 2, 2024, to November 1, 2025.)
• $2.0B — Additions to Long-Term Debt (Issued during the nine months ended November 1, 2025.)
• $1.5B — Reductions of Long-Term Debt (Repaid during the nine months ended November 1, 2025.)
• 452.8M — Common Shares Outstanding (As of November 1, 2025, down from 459.2 million at November 2, 2024.)
• $14.90B — Inventory (As of November 1, 2025, compared to $15.17 billion at November 2, 2024.)

Key Players & Entities

• TARGET CORP (company) — registrant
• New York Stock Exchange (regulator) — exchange where common stock is registered
• TD Bank Group (company) — partner for credit card program agreement
• $25.27 billion (dollar_amount) — Net sales for three months ended November 1, 2025
• $689 million (dollar_amount) — Net earnings for three months ended November 1, 2025
• $115 million (dollar_amount) — Severance and related costs incurred in October 2025
• $46 million (dollar_amount) — Asset-related charges for three and nine months ended November 1, 2025
• $3.82 billion (dollar_amount) — Cash and cash equivalents at November 1, 2025
• $2.20 billion (dollar_amount) — Notional amount of interest rate swaps as of November 1, 2025
• $1.0 billion (dollar_amount) — New committed 364-day unsecured revolving credit facility obtained in October 2025

FAQ

Industry Context

Target operates in the highly competitive retail sector, facing pressure from both traditional brick-and-mortar rivals and e-commerce giants. The industry is characterized by evolving consumer preferences, supply chain complexities, and the ongoing need for digital integration. Recent trends include a focus on value, convenience, and personalized shopping experiences, alongside efforts to manage inventory effectively in a dynamic market.

Regulatory Implications

Target, like all large retailers, is subject to various regulations concerning consumer protection, data privacy, labor laws, and environmental standards. Changes in these regulations, or the company's ability to comply with them, could impact operational costs and business practices. For instance, evolving data privacy laws require careful management of customer information.

What Investors Should Do

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Key Dates

• 2025-11-01: End of Q3 2025 reporting period — Marks the end of the period for which financial results are reported, showing a decline in net sales and earnings.
• 2025-10-01: Headquarters workforce reduction — Resulted in $115 million in severance and related costs, impacting operating income.
• 2024-11-02: End of Q3 2024 reporting period — Provides the comparative period for the current quarter's financial performance.

Glossary

Diluted earnings per share

A company's profit divided by the diluted number of common shares outstanding. Diluted shares include all potential common shares that could be issued from stock options, warrants, and convertible securities. (Indicates the profitability on a per-share basis, accounting for potential dilution from outstanding equity awards.)

Operating income

A measure of a company's profit after deducting operating expenses such as cost of goods sold, selling, general, and administrative expenses, and depreciation and amortization. (Shows the profitability of the company's core business operations before interest and taxes.)

Comprehensive income

Includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. It comprises net income and other comprehensive income (loss). (Provides a broader view of a company's financial performance by including unrealized gains and losses.)

Share-based compensation

Compensation provided to employees in the form of stock options, restricted stock units, or other equity-based awards. (Represents a non-cash expense that impacts net earnings and is a component of employee compensation.)

Operating lease assets

Assets recognized on the balance sheet under ASC 842 for the right to use an underlying asset for the lease term. (Reflects the company's long-term rental commitments for properties and equipment.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Target's net sales have declined by 1.55% to $25.27 billion for the three months ended November 1, 2025. Net earnings saw a more significant drop of 19.32% to $689 million, with diluted EPS falling from $1.85 to $1.51. Operating income also decreased by 18.84%. These declines were partly attributed to $115 million in severance costs and $46 million in asset-related charges related to business transformation initiatives.

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 November 19, 2025
• $1.51 — GAAP diluted earnings per share were $1.51 and Adjusted EPS 1 were $1.78. Net Sal
• $1.78 — hare were $1.51 and Adjusted EPS 1 were $1.78. Net Sales were $25.3 billion, a decre
• $25.3 b — usted EPS 1 were $1.78. Net Sales were $25.3 billion, a decrease of 1.5 percent from t
• $0.9 billion — eased 2.4 percent. Operating income of $0.9 billion was 18.9 percent lower than the compara

Filing Documents

• tgt-20251101.htm (10-Q) — 1128KB
• tgt-20251101xexhibit1020.htm (EX-10.20) — 602KB
• tgt-20251101xexhibit311.htm (EX-31.1) — 10KB
• tgt-20251101xexhibit312.htm (EX-31.2) — 10KB
• tgt-20251101xexhibit321.htm (EX-32.1) — 5KB
• tgt-20251101xexhibit322.htm (EX-32.2) — 5KB
• tgt-20251101_g1.jpg (GRAPHIC) — 17KB
• tgt-20251101_g2.jpg (GRAPHIC) — 10KB
• tgt-20251101_g3.jpg (GRAPHIC) — 41KB
• tgt-20251101_g4.jpg (GRAPHIC) — 41KB
• 0000027419-25-000126.txt ( ) — 5777KB
• tgt-20251101.xsd (EX-101.SCH) — 30KB
• tgt-20251101_cal.xml (EX-101.CAL) — 41KB
• tgt-20251101_def.xml (EX-101.DEF) — 99KB
• tgt-20251101_lab.xml (EX-101.LAB) — 413KB
• tgt-20251101_pre.xml (EX-101.PRE) — 278KB
• tgt-20251101_htm.xml (XML) — 597KB

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 15 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 Item 4.

Controls and Procedures

Controls and Procedures 26 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 27 Item 1A.

Risk Factors

Risk Factors 27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27 Item 3. Defaults Upon Senior Securities 27 Item 4. Mine Safety Disclosures 27 Item 5. Other Information 27 Item 6. Exhibits 28 Signature s 29

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 Nine Months Ended (millions, except per share data) (unaudited) November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Net sales $ 25,270 $ 25,668 $ 74,327 $ 75,651 Cost of sales 18,137 18,402 53,168 53,700 Selling, general, and administrative expenses 5,536 5,459 15,486 15,969 Depreciation and amortization (exclusive of depreciation included in cost of sales) 649 639 1,936 1,883 Operating income 948 1,168 3,737 4,099 Net interest expense 115 105 346 321 Net other income ( 26 ) ( 28 ) ( 68 ) ( 77 ) Earnings before income taxes 859 1,091 3,459 3,855 Provision for income taxes 170 237 799 867 Net earnings $ 689 $ 854 $ 2,660 $ 2,988 Basic earnings per share $ 1.52 $ 1.86 $ 5.85 $ 6.47 Diluted earnings per share $ 1.51 $ 1.85 $ 5.84 $ 6.45 Weighted average common shares outstanding Basic 453.7 460.1 454.4 461.6 Diluted 455.1 461.5 455.7 462.9 Antidilutive shares 2.3 0.5 2.3 0.5 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q3 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 Nine Months Ended (millions) (unaudited) November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Net earnings $ 689 $ 854 $ 2,660 $ 2,988 Other comprehensive (loss) / income, net of tax Cash flow hedges and currency translation adjustment ( 3 ) ( 4 ) ( 13 ) ( 14 ) Other comprehensive loss ( 3 ) ( 4 ) ( 13 ) ( 14 ) Comprehensive income $ 686 $ 850 $ 2,647 $ 2,974 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q3 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) November 1, 2025 February 1, 2025 November 2, 2024 Assets Cash and cash equivalents $ 3,822 $ 4,762 $ 3,433 Inventory 14,896 12,740 15,165 Other current assets 1,984 1,952 1,956 Total current assets 20,702 19,454 20,554 Property and equipment, net 33,710 33,022 32,931 Operating lease assets 3,739 3,763 3,513 Other noncurrent assets 1,840 1,530 1,533 Total assets $ 59,991 $ 57,769 $ 58,531 Liabilities and shareholders' investment Accounts payable $ 13,792 $ 13,053 $ 14,419 Accrued and other current liabilities 6,317 6,110 5,738 Current portion of long-term debt and other borrowings 1,133 1,636 1,635 Total current liabilities 21,242 20,799 21,792 Long-term debt and other borrowings 15,366 14,304 14,346 Noncurrent operating lease liabilities 3,542 3,582 3,418 Deferred income taxes 2,279 2,303 2,419 Other noncurrent liabilities 2,061 2,115 2,067 Total noncurrent liabilities 23,248 22,304 22,250 Shareholders' investment Common stock 38 38 38 Additional paid-in capital 7,157 6,996 6,916 Retained earnings 8,777 8,090 8,009 Accumulated other comprehensive loss ( 471 ) ( 458 ) ( 474 ) Total shareholders' investment 15,501 14,666 14,489 Total liabilities and shareholders' investment $ 59,991 $ 57,769 $ 58,531 Common Stock Authorized 6,000,000,000 shares, $ 0.0833 par value; 452,796,520 , 455,566,995 , and 459,244,995 shares issued and outstanding as of November 1, 2025, February 1, 2025, and November 2, 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 Q3 2025 Form 10-Q 3

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents Index to Notes Consolidated Statements of Cash Flows Nine Months Ended (millions) (unaudited) November 1, 2025 November 2, 2024 Operating activities Net earnings $ 2,660 $ 2,988 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 2,331 2,215 Share-based compensation expense 197 229 Deferred income taxes ( 21 ) ( 58 ) Noncash (gains) / losses and other, net 8 ( 1 ) Changes in operating accounts: Inventory ( 2,156 ) ( 3,279 ) Other assets ( 294 ) ( 265 ) Accounts payable 658 2,362 Accrued and other liabilities 102 ( 113 ) Cash provided by operating activities 3,485 4,078 Investing activities Expenditures for property and equipment ( 2,842 ) ( 1,968 ) Other 52 26 Cash required for investing activities ( 2,790 ) ( 1,942 ) Financing activities Additions to long-term debt 1,984 741 Reductions of long-term debt ( 1,609 ) ( 1,112 ) Dividends paid ( 1,537 ) ( 1,533 ) Repurchase of stock ( 408 ) ( 506 ) Shares withheld for taxes on share-based compensation ( 65 ) ( 98 ) Cash required for financing activities ( 1,635 ) ( 2,508 ) Net decrease in cash and cash equivalents ( 940 ) ( 372 ) Cash and cash equivalents at beginning of period 4,762 3,805 Cash and cash equivalents at end of period $ 3,822 $ 3,433 Supplemental information Leased assets obtained in exchange for new finance lease liabilities $ 100 $ 312 Leased assets obtained in exchange for new operating lease liabilities 291 416 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q3 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 Q3 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 Net earnings — — — 689 — 689 Other comprehensive loss — — — — ( 3 ) ( 3 ) Dividends declared, $ 1.14 per share — — — ( 526 ) — ( 526 ) Repurchase of stock ( 1.7 ) — — ( 152 ) — ( 152 ) Share-based compensation 0.1 — 73 — — 73 November 1, 2025 452.8 $ 38 $ 7,157 $ 8,777 $ ( 471 ) $ 15,501 See accompanying Notes to Consolidated Financial Statements . TARGET CORPORATION Q3 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 Business Transformation Costs 10 Note 5 Fair Value Measurements 11 Note 6 Property and Equipment 11 Note 7 Supplier Finance Programs 11 Note 8 Commercial Paper and Long-Term Debt 12 Note 9 Derivative Financial Instruments 12 Note 10 Share Repurchase 13 Note 11 Pension Benefits 13 Note 12 Accumulated Other Comprehensive Loss 13 Note 13 Segment Reporting 14 TARGET CORPORATION Q3 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 Q3 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 Nine Months Ended (millions) November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Apparel & accessories (a) $ 3,838 $ 4,003 $ 11,635 $ 12,161 Beauty (b) 3,232 3,226 9,729 9,729 Food & beverage (c) 6,008 5,917 17,499 17,308 Hardlines (d) 3,190 3,152 9,786 9,634 Home furnishings & dcor (e) 3,908 4,185 10,789 11,612 Household essentials (f) 4,542 4,715 13,321 13,828 Other merchandise sales 34 30 117 120 Merchandise sales 24,752 25,228 72,876 74,392 Advertising revenue 241 167 621 459 Credit card profit sharing 119 148 395 433 Other 158 125 435 367 Net sales $ 25,270 $ 25,668 $ 74,327 $ 75,651 (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 rec

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. Business Transformation Costs In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. Costs incurred in connection with our business transformation initiative include the following: Severance and Related Costs — In October 2025, we reduced our headquarters workforce. As a result, we recognized $ 115 million of severance and related costs within SG&A during the three and nine months ended November 1, 2025. The majority of these costs are expected to be paid during the fourth quarter of 2025. Asset-Related Charges — For the three and nine months ended November 1, 2025, we recognized $ 46 million of impairments and other charges associated with the termination of a commercial partnership. N ote 6 provides additional informa

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to 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 November 1, 2025 February 1, 2025 November 2, 2024 Assets Short-term investments Cash and Cash Equivalents Level 1 $ 2,894 $ 3,893 $ 2,456 Prepaid forward contracts Other Current Assets Level 1 16 23 26 Interest rate swaps Other Noncurrent Assets Level 2 2 — — Liabilities Interest rate swaps Other Current Liabilities Level 2 1 — — Interest rate swaps Other Noncurrent Liabilities Level 2 47 125 105 Significant Financial Instruments Not Measured at Fair Value (a) (millions) November 1, 2025 February 1, 2025 November 2, 2024 Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current portion (b) $ 14,396 $ 13,790 $ 13,904 $ 12,953 $ 13,901 $ 13,029 (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 $ 35 mill

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 8. Commercial Paper and Long-Term Debt Our unsecured long-term debt issuances during the nine months ended November 1, 2025 were as follows: Debt Issuances (dollars in millions) Issuance Date Maturity Date Principal Amount Interest Rate (Fixed) March 2025 April 2035 $ 1,000 5.00 % June 2025 June 2028 500 4.35 June 2025 February 2036 500 5.25 Our unsecured long-term debt repayments during the nine months ended November 1, 2025 were as follows: Debt Repayments (dollars in millions) Repayment Date Maturity Date Principal Amount Interest Rate (Fixed) April 2025 April 2025 $ 1,500 2.25 % We obtain short-term financing from time to time under our commercial paper program. There was no commercial paper outstanding at any time during the three and nine months ended November 1, 2025, or November 2, 2024. In October 2025, we obtained a new committed $ 1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day facility. No balances were outstanding under our credit facilities at any time during 2025 or 2024. 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 $ 2.20 billion as of November 1, 2025, February 1, 2025, and November 2, 2024. We pay a floating rate and receive a fixed rate under each of these agreements. All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three and nine months ended November 1, 2025, and November 2, 2024. Effect of Hedges

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes Effect of Hedges on Net Interest Expense Three Months Ended Nine Months Ended (millions) November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Gain (loss) on fair value hedges recognized in Net Interest Expense Interest rate swaps designated as fair value hedges $ 16 $ ( 26 ) $ 78 $ 21 Hedged debt ( 16 ) 26 ( 78 ) ( 21 ) Gain on cash flow hedges recognized in Net Interest Expense 6 6 18 18 Total $ 6 $ 6 $ 18 $ 18 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 Nine Months Ended (millions, except per share data) November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Number of shares purchased 1.7 2.4 3.8 3.5 Average price paid per share (a) $ 91.59 $ 147.43 $ 104.70 $ 146.97 Total investment (a) $ 152 $ 354 $ 403 $ 509 (a) Amounts include applicable excise tax and commissions. 11. Pension Benefits We provide pension plan benefits to eligible team members. Net Pension Benefits (Income) / Expense Three Months Ended Nine Months Ended (millions) Classification November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Service cost benefits earned SG&A Expenses $ 18 $ 19 $ 55 $ 58 Interest cost on projected benefit obligation Net Other Income 42 41 126 124 Expected return on assets Net Other Income ( 68 ) ( 69 ) ( 203 ) ( 209 ) Amortization of losses Net Other Income 1 — 1 — Prior service cost Net Other Income — — 7 8 Total $ ( 7 ) $ ( 9 ) $ ( 14 ) $ ( 19 ) 12. 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

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents NOTES Index to Notes 13. 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 Nine Months Ended (millions) November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 Net sales $ 25,270 $ 25,668 $ 74,327 $ 75,651 Cost of sales Merchandising cost of sales 16,261 16,447 47,793 48,386 Supply chain and digital fulfillment costs 1,876 1,955 5,375 5,314 Total cost of sales 18,137 18,402 53,168 53,700 Selling, general and administrative expenses (a) 5,536 5,459 15,486 15,969 Depreciation and amortization (exclusive of depreciation included in cost of sales) 649 639 1,936 1,883 Operating income (a) 948 1,168 3,737 4,099 Net interest expense 115 105 346 321 Net other income ( 26 ) ( 28 ) ( 68 ) ( 77 ) Earnings before income taxes 859 1,091 3,459 3,855 Provision for income taxes 170 237 799 867 Net earnings $ 689 $ 854 $ 2,660 $ 2,988 (a) For the three and nine months ended November 1, 2025, includes $ 161 million related to business transformation costs described in Note 4 . For the nine months ended November 1, 2025, includes $ 593 million of pretax net gains related to settlements of credit card interchange fee litigation matters. Note 3 provides additional information. TARGET CORPORATION Q3 2025 Form 10-Q 14

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 Third quarter 2025 included the following notable items: GAAP diluted earnings per share were $1.51 and Adjusted EPS 1 were $1.78. Net Sales were $25.3 billion, a decrease of 1.5 percent from the comparable prior-year period. Comparable sales decreased 2.7 percent, reflecting a 2.2 percent decrease in traffic and a 0.5 percent decrease in average transaction amount. Comparable stores-originated sales declined 3.8 percent. Comparable digitally-originated sales increased 2.4 percent. Operating income of $0.9 billion was 18.9 percent lower than the comparable prior-year period. Earnings Per Share Three Months Ended Nine Months Ended November 1, 2025 November 2, 2024 Change November 1, 2025 November 2, 2024 Ch