- Fourth quarter comparable sales
decreased 1.5 percent, compared to the guidance range of (1.5%) to
(1.0%)1.
- Fourth quarter comparable digital
channel sales increased 34 percent, contributing 1.8 percentage
points of comparable sales growth.
- Fourth quarter comparable sales growth
in Signature Categories outpaced total comparable sales by nearly 3
percentage points.
- Fourth quarter comparable traffic
increased 0.2 percent.
- Fourth quarter GAAP earnings per share
(EPS) from continuing operations of $1.46 and Adjusted EPS2 of
$1.45, compared with the Company’s guidance range of $1.45 to
$1.55.
- For full-year 2016, GAAP EPS from
continuing operations declined 12.7 percent to $4.58, reflecting a
loss of $0.44 on the early retirement of debt.
- Full-year Adjusted EPS2 increased 6.7
percent to $5.01.
- Target returned $5.0 billion to
shareholders in 2016 through dividends and share repurchases.
Target Corporation (NYSE: TGT) today announced its fourth
quarter and full-year 2016 results. The Company reported GAAP
earnings per share (EPS) from continuing operations of $1.46 in
fourth quarter and $4.58 for full-year 2016, compared with $2.31
and $5.25 in 2015, respectively. Fourth quarter Adjusted EPS were
$1.45, down 4.6 percent from $1.52 in 2015. Full-year Adjusted EPS
of $5.01 was 6.7 percent higher than $4.69 in 2015. The attached
tables provide a reconciliation of non-GAAP to GAAP measures. All
earnings per share figures refer to diluted EPS.
“Our fourth quarter results reflect the impact of
rapidly-changing consumer behavior, which drove very strong digital
growth but unexpected softness in our stores,” said Brian Cornell,
chairman and CEO of Target. “At our meeting with the financial
community this morning, we will provide detail on the meaningful
investments we’re making in our business and financial model which
will position Target for long-term, sustainable growth in this new
era in retail. We will accelerate our investments in a smart
network of physical and digital assets as well as our exclusive and
differentiated assortment, including the launch of more than 12 new
brands, representing more than $10 billion of our sales, over the
next two years. In addition, we will invest in lower gross margins
to ensure we are clearly and competitively priced every day. While
the transition to this new model will present headwinds to our
sales and profit performance in the short term, we are confident
that these changes will best-position Target for continued success
over the long term.”
1On Jan. 18, 2017, Target updated fourth
quarter guidance for comparable sales, GAAP EPS from continuing
operations, and Adjusted EPS.
2Adjusted EPS, a non-GAAP financial
measure, excludes the impact of certain discretely managed items.
See the “Miscellaneous” section of this release, as well as the
tables of this release, for additional information about the items
that have been excluded from Adjusted EPS.
Fiscal 2017 Guidance
Target’s 2017 guidance reflects the impact of the Company’s
transition to a new financial model, which will be covered in the
Company’s meeting with the financial community later today.
In first quarter 2017, Target expects a low-to-mid single digit
decline in comparable sales, and both GAAP EPS from continuing
operations and Adjusted EPS of $0.80 to $1.00.
For full-year 2017, Target expects a low-single digit decline in
comparable sales, and both GAAP EPS from continuing operations and
Adjusted EPS of $3.80 to $4.20.
First quarter and full-year 2017 GAAP EPS from continuing
operations may include the impact of certain discrete items, which
will be excluded in calculating Adjusted EPS. In the past, these
items have included losses on the early retirement of debt, data
breach expenses, restructuring costs, and certain other items that
are discretely managed. The Company is not currently aware of any
such discrete items.
Segment Results
Fourth quarter 2016 sales decreased 4.3 percent to $20.7 billion
from $21.6 billion last year, reflecting a 1.5 percent decline in
comparable sales combined with the removal of pharmacy and clinic
sales from this year’s results. Comparable digital channel sales
grew 34 percent and contributed 1.8 percentage points of comparable
sales growth. Segment earnings before interest expense and income
taxes (EBIT), which is Target’s measure of segment profit, were
$1,344 million in fourth quarter 2016, a decrease of 13.5 percent
from $1,554 million in 2015.
Fourth quarter EBITDA and EBIT margin rates were 9.5 percent and
6.5 percent, respectively, compared with 9.8 percent and 7.2
percent, respectively, in 2015. Fourth quarter gross margin rate
was 26.9 percent, compared with 27.9 percent in 2015, reflecting
markdown pressure from promotional and clearance activity and costs
associated with the mix shift between the Company’s store and
digital channels, partially offset by the benefit of the sale of
the Company’s pharmacy and clinic businesses, a favorable
merchandise mix, and cost of goods savings. Fourth quarter SG&A
expense rate was 17.5 percent in 2016, compared with 18.1 percent
in 2015, reflecting the benefit of the sale of the Company’s
pharmacy and clinic businesses and continued expense discipline
across the organization.
Interest Expense and Taxes from Continuing Operations
The Company’s fourth quarter 2016 net interest expense was $140
million, compared with $152 million last year. Fourth quarter 2016
effective income tax rate from continuing operations was 32.0
percent, compared with 29.6 percent last year. Last year’s tax rate
reflected the impact of the gain on the December 2015 sale of the
pharmacy and clinic businesses.
Shareholder Returns
The Company returned $902 million to shareholders in fourth
quarter 2016, including:
- Dividends of $337 million, compared
with $345 million in fourth quarter 2015.
- Share repurchases totaling $565
million, including:
- Open market transactions that retired
3.2 million shares of common stock at an average price of $66.52,
for a total investment of $211 million.
- An accelerated share repurchase (ASR)
agreement that retired 4.6 million shares of common stock at an
average price of $76.77, for a total investment of $355
million.
As expected, during the fourth quarter the Company completed its
previous share repurchase program, which was approved in 2012 and
extended to $10 billion in 2015. Upon completion of the prior
program, the Company began repurchasing shares under its current $5
billion share repurchase program, which was approved in September
2016. Under the current program, the Company invested $264 million
in the fourth quarter, leaving approximately $4.7 billion remaining
under the current program at the end of the quarter.
For the trailing twelve months through fourth quarter 2016,
after-tax return on invested capital (ROIC) was 15.0 percent,
compared with 16.0 percent for the twelve months through fourth
quarter 2015. Last year’s ROIC rate reflected the benefit of the
gain on the December 2015 sale of the pharmacy and clinic
businesses. Excluding that benefit, ROIC for the twelve months
through fourth quarter 2015 was 13.9 percent. See the
“Reconciliation of Non-GAAP Financial Measures” section of this
release for additional information about the Company’s ROIC
calculation.
Webcast Details
Target will webcast its financial community meeting, including
Q&A, at 8 a.m. CST today. Investors and the media are invited
to listen to the meeting at Investors.Target.com (hover over “company” then
click on “events & presentations” in the “investors” column). A
replay of the webcast will be available beginning at approximately
1 p.m. CST today.
Miscellaneous
Statements in this release regarding first quarter and full-year
2017 earnings per share and comparable sales guidance are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are
subject to risks and uncertainties which could cause the Company’s
actual results to differ materially. The most important risks and
uncertainties are described in Item 1A of the Company’s Form 10-K
for the fiscal year ended Jan. 30, 2016. Forward-looking statements
speak only as of the date they are made, and the Company does not
undertake any obligation to update any forward-looking
statement.
In addition to the GAAP results provided in this release, the
Company provides Adjusted EPS for the three and twelve-month
periods ended Jan. 28, 2017, and Jan. 30, 2016. The Company also
provides ROIC for the twelve-month periods ended Jan. 28, 2017, and
Jan. 30, 2016, which is a ratio based on GAAP information, with the
exception of adjustments made to capitalize operating leases.
Operating leases are capitalized as part of the ROIC calculation to
control for differences in capital structure between the Company
and its competitors. Adjusted EPS, capitalized operating lease
obligations and operating lease interest are not in accordance
with, or an alternative for, generally accepted accounting
principles in the United States. Management believes Adjusted EPS
is useful in providing period-to-period comparisons of the results
of the Company’s ongoing retail operations. Management believes
ROIC is useful in assessing the effectiveness of the Company’s
capital allocation over time. The most comparable GAAP measure for
Adjusted EPS is diluted EPS from continuing operations. The most
comparable GAAP measure for capitalized operating lease obligations
and operating lease interest is total rent expense. Adjusted EPS,
capitalized operating lease obligations and operating lease
interest should not be considered in isolation or as a substitution
for analysis of the Company’s results as reported under GAAP. Other
companies may calculate Adjusted EPS and ROIC differently than the
Company does, limiting the usefulness of the measure for
comparisons with other companies.
About Target
Minneapolis-based Target Corporation (NYSE: TGT) serves guests
at 1,802 stores and at Target.com. Since 1946, Target has given 5
percent of its profit to communities, which today equals millions
of dollars a week. For more information, visit Target.com/Pressroom. For a behind-the-scenes look
at Target, visit Target.com/abullseyeview or follow @TargetNews on Twitter.
TARGET CORPORATION Consolidated Statements
of Operations
Three
Months Ended Twelve Months Ended
(millions, except per share data) (unaudited)
January 28,2017
January 30,2016 Change
January 28,2017 January 30,2016 Change
Sales $ 20,690 $ 21,626 (4.3 )% $ 69,495
$ 73,785 (5.8 )% Cost of sales 15,116
15,594 (3.1 )
48,872 51,997
(6.0 ) Gross margin 5,574 6,032 (7.6 ) 20,623 21,788
(5.4 ) Selling, general and administrative expenses 3,614 3,921
(7.8 ) 13,356 14,665 (8.9 ) Depreciation and amortization 612 562
8.8 2,298 2,213 3.8 Gain on sale —
(620 ) (100.0 )
— (620 ) (100.0 )
Earnings from continuing operations before interest expense and
income taxes 1,348 2,169 (37.9 ) 4,969 5,530 (10.1 ) Net interest
expense 140 152
(8.1 ) 1,004
607 65.3 Earnings from
continuing operations before income taxes 1,208 2,017 (40.1 ) 3,965
4,923 (19.5 ) Provision for income taxes 387
596 (35.2 )
1,296 1,602
(19.1 ) Net earnings from continuing operations 821 1,421 (42.2 )%
2,669 3,321 (19.6 )% Discontinued operations, net of tax
(4 ) 5
68 42
Net earnings $ 817
$ 1,426 (42.7 )% $ 2,737
$ 3,363 (18.6 )%
Basic earnings/(loss) per share
Continuing operations $ 1.47 $ 2.33 (36.9 )% $ 4.62 $ 5.29 (12.7 )%
Discontinued operations (0.01 )
0.01 0.12
0.07 Net earnings
per share $ 1.46 $ 2.33
(37.5 )% $ 4.74 $ 5.35
(11.5 )%
Diluted earnings/(loss) per share
Continuing operations $ 1.46 $ 2.31 (37.0 )% $ 4.58 $ 5.25 (12.7 )%
Discontinued operations (0.01 )
0.01 0.12
0.07 Net earnings
per share $ 1.45 $ 2.32
(37.6 )% $ 4.70 $ 5.31
(11.6 )% Weighted average common shares
outstanding Basic 559.7 610.5 (8.3 )% 577.6 627.7 (8.0 )% Dilutive
impact of share-based awards 4.8
4.8
4.9 5.2 Diluted
564.5 615.3
(8.2 )% 582.5
632.9 (8.0 )% Antidilutive shares
0.1 —
0.1
— Dividends declared per share
$ 0.60 $ 0.56 7.1
% $ 2.36 $ 2.20
7.3 %
Note: Per share amounts may not foot due
to rounding.
Subject to reclassification
TARGET CORPORATION Consolidated
Statements of Financial Position
(millions) (unaudited)
January 28,2017 January 30,2016
Assets
Cash and cash equivalents, including
short-term investments of $1,110 and $3,008 $ 2,512 $ 4,046
Inventory 8,309 8,601 Assets of discontinued operations 69 322
Other current assets 1,100
1,161 Total current assets 11,990 14,130
Property and equipment Land 6,106 6,125 Buildings and improvements
27,611 27,059 Fixtures and equipment 5,503 5,347 Computer hardware
and software 2,651 2,617 Construction-in-progress 200 315
Accumulated depreciation (17,413 )
(16,246 ) Property and equipment, net 24,658 25,217
Noncurrent assets of discontinued operations 12 75 Other noncurrent
assets 771 840
Total assets $ 37,431
$ 40,262
Liabilities and shareholders’
investment Accounts payable $ 7,252 $ 7,418 Accrued and other
current liabilities 3,737 4,236 Current portion of long-term debt
and other borrowings 1,718 815 Liabilities of discontinued
operations 1 153
Total current liabilities 12,708 12,622 Long-term debt and
other borrowings 11,031 11,945 Deferred income taxes 861 823
Noncurrent liabilities of discontinued operations 18 18 Other
noncurrent liabilities 1,860
1,897 Total noncurrent liabilities 13,770
14,683 Shareholders’ investment
Common stock 46 50 Additional paid-in capital 5,661 5,348 Retained
earnings 5,884 8,188 Accumulated other comprehensive loss Pension
and other benefit liabilities (601 ) (588 ) Currency translation
adjustment and cash flow hedges (37 )
(41 ) Total shareholders’ investment
10,953 12,957
Total
liabilities and shareholders’ investment $ 37,431
$ 40,262
Common Stock Authorized
6,000,000,000 shares, $.0833 par value; 556,156,228 and 602,226,517
shares issued and outstanding at January 28, 2017 and
January 30, 2016, respectively.
Preferred Stock Authorized
5,000,000 shares, $.01 par value; no shares were issued or
outstanding at January 28, 2017 or January 30, 2016.
Subject to reclassification
TARGET CORPORATION Consolidated
Statements of Cash Flows
Twelve Months Ended
(millions) (unaudited)
January 28,2017
January 30,2016
Operating activities
Net earnings $ 2,737 $ 3,363 Earnings from discontinued
operations, net of tax 68
42 Net earnings from continuing operations 2,669
3,321 Adjustments to reconcile net earnings to cash provided by
operations: Depreciation and amortization 2,298 2,213 Share-based
compensation expense 113 115 Deferred income taxes 41 (322 ) Gain
on sale — (620 ) Loss on debt extinguishment 422 — Noncash (gains)
/ losses and other, net — 57 Changes in operating accounts:
Inventory 293 (316 ) Other assets 36 227 Accounts payable and
accrued liabilities (543 )
579 Cash provided by operating activities—continuing
operations 5,329 5,254 Cash provided by operating
activities—discontinued operations 107
704 Cash provided by operations
5,436 5,958
Investing activities Expenditures for property and equipment
(1,547 ) (1,438 ) Proceeds from disposal of property and equipment
46 28 Proceeds from sale of business — 1,875 Other investments
28 24 Cash
(required for) / provided by investing activities—continuing
operations (1,473 ) 489 Cash provided by investing
activities—discontinued operations —
19 Cash (required for) / provided by
investing activities (1,473 )
508
Financing activities Additions to
long-term debt 1,977 — Reductions of long-term debt (2,641 ) (85 )
Dividends paid (1,348 ) (1,362 ) Repurchase of stock (3,706 )
(3,483 ) Stock option exercises 221
300 Cash required for financing
activities (5,497 )
(4,630 ) Net (decrease) / increase in cash and cash equivalents
(1,534 ) 1,836 Cash and cash equivalents at beginning of period
4,046 2,210
Cash and cash equivalents at end of period $
2,512 $ 4,046
Subject to reclassification
TARGET CORPORATION Segment
Results
Three Months Ended
Twelve Months Ended
(millions) (unaudited) January 28,2017
January 30,2016 (a)
Change January 28,2017
January 30,2016 (a)
Change Sales $ 20,690 $ 21,626 (4.3 )%
$ 69,495 $ 73,785 (5.8 )% Cost of sales
15,116 15,594 (3.1 )
48,872 51,997
(6.0 ) Gross margin 5,574 6,032 (7.6 ) 20,623 21,788 (5.4 )
SG&A expenses (b) 3,618
3,916 (7.6 ) 13,360
14,448 (7.5 ) EBITDA 1,956 2,116
(7.6 ) 7,263 7,340 (1.1 ) Depreciation and amortization
612 562 8.8
2,298 2,213
3.8 EBIT $ 1,344 $ 1,554
(13.5 )% $ 4,965 $ 5,127
(3.2 )%
(a) Sales include $574 million and $3,815
million related to our former pharmacy and clinic businesses for
the three and twelve months ended January 30, 2016, respectively,
and cost of sales include $503 million and $3,076 million,
respectively. The December 2015 sale of these businesses to CVS
(Pharmacy Transaction) had no notable impact on EBITDA or EBIT.
(b) SG&A includes net profit sharing
income from the arrangement with TD Bank of $174 million and $663
million for the three and twelve months ended January 28,
2017, respectively, and $163 million and $641 million for the three
and twelve months ended January 30, 2016.
Three Months Ended
Twelve Months Ended
Rate Analysis(unaudited)
January 28,2017 January 30,2016 January
28,2017 January 30,2016 Gross margin rate 26.9 % 27.9
% 29.7 % 29.5 % SG&A expense rate 17.5 18.1 19.2 19.6
EBITDA margin rate (a) 9.5 9.8 10.5 9.9 Depreciation and
amortization expense rate 3.0 2.6 3.3 3.0 EBIT margin rate (a)
6.5 7.2 7.1 6.9
Rate analysis metrics are computed by
dividing the applicable amount by sales.
(a) Excluding sales of our former pharmacy
and clinic businesses, EBITDA margin rates were 10.1 percent and
10.5 percent for the three and twelve months ended January 30,
2016, respectively, and EBIT margin rates were 7.4 percent and 7.3
percent, respectively.
Three Months Ended Twelve Months Ended
Sales by
Channel(unaudited)
January 28,2017
January 30,2016 (a)
January 28,2017
January 30,2016 (a)
Stores 93.2 % 95.0 % 95.6 % 96.6 %
Digital 6.8 5.0
4.4 3.4 Total 100
% 100 % 100 % 100 %
(a) Excluding sales of our former pharmacy
and clinic businesses, stores channels sales were 94.9 percent and
96.4 percent of total sales, respectively, for the three and twelve
months ended January 30, 2016, and digital channels sales were 5.1
percent and 3.6 percent of total sales, respectively.
Three Months Ended
Twelve Months Ended
Comparable
Sales(unaudited)
January 28,2017 January 30,2016 January
28,2017 January 30,2016 Comparable sales change (1.5 )%
1.9 % (0.5 )% 2.1 % Drivers of change in comparable
sales: Number of transactions 0.2 1.3 (0.8 ) 1.3 Average
transaction amount (1.6 ) 0.6 0.3
0.8
Three Months Ended Twelve
Months Ended
Contribution to Comparable Sales
Change(unaudited)
January 28,2017 January 30,2016
January 28,2017 January 30,2016 Stores channel
comparable sales change (3.3 )% 0.6 % (1.5 )%
1.3 % Digital channel contribution to comparable sales
change 1.8 1.3
1.0 0.8 Total comparable sales
change (1.5 )% 1.9 % (0.5
)% 2.1 %
Note: Amounts may not foot due to
rounding.
Three Months Ended Twelve Months Ended
REDcard
Penetration(unaudited)
January 28,2017 January 30,2016
January 28,2017 January 30,2016 Target Debit
Card 12.7 % 12.3 % 12.8 % 12.1 % Target
Credit Cards 11.6 10.7
11.2 10.1 Total REDcard
Penetration 24.3 % 23.0 %
24.0 % 22.3 %
Note: Amounts may not foot due to
rounding.
Represents the percentage of Target sales
that are paid with REDcards. Excluding pharmacy and clinic sales,
total REDcard penetration would have been 23.5 percent and 23.2
percent for the three and twelve months ended January 30, 2016,
respectively.
Number of Stores andRetail
Square Feet(unaudited)
Number of Stores Retail Square Feet (a)
January 28,2017 January 30,2016
January 28,2017 January 30,2016 170,000 or
more sq. ft. 276 278 49,328 49,688
50,000 to 169,999 sq. ft. 1,504 1,505 189,620 189,677 49,999 or
less sq. ft. 22 9 554
174 Total 1,802 1,792
239,502 239,539
(a) In thousands: reflects total
square feet, less office, distribution center and vacant space.
Subject to reclassification
TARGET CORPORATION
Reconciliation of Non-GAAP Financial Measures
To provide additional transparency, we have disclosed non-GAAP
adjusted diluted earnings per share from continuing operations
(Adjusted EPS). This metric excludes certain items presented below.
We believe this information is useful in providing period-to-period
comparisons of the results of our continuing operations. This
measure is not in accordance with, or an alternative to, generally
accepted accounting principles in the United States (GAAP). The
most comparable GAAP measure is diluted earnings per share from
continuing operations. Adjusted EPS should not be considered in
isolation or as a substitution for analysis of our results as
reported under GAAP. Other companies may calculate Adjusted EPS
differently than we do, limiting the usefulness of the measure for
comparisons with other companies.
Three Months Ended January 28, 2017
January 30, 2016
(millions, except per share data)
(unaudited) Pretax Net of Tax
Per Share Pretax Net of
Tax Per Share Change GAAP diluted
earnings per share from continuing operations
$ 1.46 $ 2.31 (37.0 )%
Adjustments:
Gain on sale transaction (a) $ — $ — $ — $ (620 ) $ (487 ) $ (0.79
)
Restructuring costs (b) — — — 3 2 — Other (c) (4 ) (2 ) — 1 1 —
Resolution of income tax matters —
— —
— —
— Adjusted diluted earnings per
share from continuing operations
$ 1.45
$ 1.52 (4.6 )%
Twelve
Months Ended January 28, 2017 January 30, 2016
(millions, except
per share data) (unaudited) Pretax
Net of Tax Per Share Pretax
Net of Tax Per Share Change GAAP
diluted earnings per share from continuing operations $ 4.58 $ 5.25
(12.7 )%
Adjustments:
Loss on early retirement of debt $ 422 $ 257 $ 0.44 $ — $ — $ —
Gain on sale (a) — — — (620 ) (487 ) (0.77 ) Restructuring costs
(b) — — — 138 87 0.14 Impairments (d) — — — 39 29 0.05 Other (c) (4
) (2 ) — 39 28 0.04 Resolution of income tax matters
— (7 )
(0.01 ) — (8 )
(0.01 ) Adjusted diluted
earnings per share from continuing operations
$ 5.01
$ 4.69
6.7 % Note: Amounts may not foot due to rounding.
(a) Represents the gain on the Pharmacy
Transaction.
(b) Costs related to our corporate
restructuring announced during the first quarter of 2015.
(c) For the three and twelve months ended
January 28, 2017, represents items related to the Pharmacy
Transaction. For the three and twelve months ended January 30,
2016, represents costs related to the 2013 data breach.
(d) For the twelve months ended January
30, 2016, represents impairments related to our decision to wind
down certain noncore operations.
Subject to reclassification
We have also disclosed after-tax return on invested capital for
continuing operations (ROIC), which is a ratio based on GAAP
information, with the exception of adjustments made to capitalize
operating leases. Operating leases are capitalized as part of the
ROIC calculation to control for differences in capital structure
between us and our competitors. We believe this metric provides a
meaningful measure of the effectiveness of our capital allocation
over time. Other companies may calculate ROIC differently than we
do, limiting the usefulness of the measure for comparisons with
other companies.
After-Tax Return on Invested Capital
Numerator
Trailing Twelve Months
(dollars in millions) (unaudited)
January 28,2017 January 30,2016
Earnings from continuing operations before interest expense and
income taxes $ 4,969 $ 5,530 + Operating lease interest
(a)(b) 71 87
Adjusted earnings from continuing operations before interest
expense and income taxes 5,040 5,617 - Income taxes (c)
1,648 1,827
Net
operating profit after taxes $
3,392 $ 3,790
Denominator
(dollars in millions)
(unaudited)
January 28,2017 January 30,2016
January 31,2015 Current portion of long-term debt and other
borrowings $ 1,718 $ 815 $ 91 + Noncurrent portion of long-term
debt 11,031 11,945 12,634 + Shareholders' equity 10,953 12,957
13,997 + Capitalized operating lease obligations (b)(d) 1,187 1,457
1,490 - Cash and cash equivalents 2,512 4,046 2,210 - Net assets of
discontinued operations 62
226 1,479 Invested
capital $ 22,315 $ 22,902
$ 24,523
Average invested capital (e)
$ 22,608 $
23,713
After-tax return on invested capital
15.0 % 16.0 % (f)
(a) Represents the add-back to operating
income to reflect the hypothetical interest expense we would incur
if the property under our operating leases were owned or accounted
for as capital leases, using eight times our trailing twelve months
rent expense and an estimated interest rate of six percent.
(b) See the following Reconciliation of
Capitalized Operating Leases table for the adjustments to our GAAP
total rent expense to obtain the hypothetical capitalization of
operating leases and related operating lease interest.
(c) Calculated using the effective tax
rate for continuing operations, which was 32.7% and 32.5% for the
trailing twelve months ended January 28, 2017 and January 30, 2016.
For the twelve months ended January 28, 2017 and January 30, 2016,
includes tax effect of $1,624 million and $1,799 million,
respectively, related to EBIT and $23 million and $28 million,
respectively, related to operating lease interest.
(d) Calculated as eight times our trailing
twelve months rent expense.
(e) Average based on the invested capital
at the end of the current period and the invested capital at the
end of the prior period.
(f) Excluding the net gain on the sale of
our pharmacy and clinic businesses, ROIC was 13.9 percent for the
trailing twelve months ended January 30, 2016.
Capitalized operating lease obligations and operating lease
interest are not in accordance with, or an alternative for, GAAP.
The most comparable GAAP measure is total rent expense. Capitalized
operating lease obligations and operating lease interest should not
be considered in isolation or as a substitution for analysis of our
results as reported under GAAP.
Reconciliation of Capitalized
Operating Leases Trailing Twelve Months
(dollars in millions) (unaudited) January
28,2017 January 30,2016 January 31,2015
Total rent expense $ 148 $ 182 $ 186
Capitalized operating lease obligations (total rent expense x 8)
1,187 1,457 1,490 Operating lease interest (capitalized operating
lease obligations x 6%) 71
87 n/a
Subject to reclassification
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170228005902/en/
Target CorporationInvestors:John
Hulbert, 612-761-6627orMedia:Erin Conroy, 612-761-5928orTarget
Media Hotline, 612-696-3400
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