# Target Corp: Form 10-Q for the period ended Nov 1, 2025

- Company: [Target Corp](/companies/tgt.md) (CIK 27419)
- Form: 10-Q
- Filed: 2025-11-26
- Accepted by EDGAR: Nov 26, 2025, 17:34 ET
- Period: 2025-11-01
- Accession: 0000027419-25-000126
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/27419/000002741925000126/tgt-20251101.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/27419/000002741925000126/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-11-01.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-08-03 to 2025-11-01 | $25.27bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2025-02-02 to 2025-11-01 | $74.33bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-08-03 to 2025-11-01 | $18.14bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2025-02-02 to 2025-11-01 | $53.17bn | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2025-08-03 to 2025-11-01 | $5.54bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2025-02-02 to 2025-11-01 | $15.49bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-08-03 to 2025-11-01 | $948.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2025-02-02 to 2025-11-01 | $3.74bn | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-08-03 to 2025-11-01 | $115.0m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2025-02-02 to 2025-11-01 | $346.0m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-08-03 to 2025-11-01 | $170.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2025-02-02 to 2025-11-01 | $799.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-08-03 to 2025-11-01 | $689.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2025-02-02 to 2025-11-01 | $2.66bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-08-03 to 2025-11-01 | $1.51 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2025-02-02 to 2025-11-01 | $5.84 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-08-03 to 2025-11-01 | $1.52 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2025-02-02 to 2025-11-01 | $5.85 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-08-03 to 2025-11-01 | 455,100,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2025-02-02 to 2025-11-01 | 455,700,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2025-02-02 to 2025-11-01 | $3.48bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2025-02-02 to 2025-11-01 | $2.84bn | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2025-02-02 to 2025-11-01 | $1.54bn | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2025-02-02 to 2025-11-01 | $408.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2025-11-01 | $20.70bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-11-01 | $59.99bn | us-gaap:Assets |
| Current liabilities | at 2025-11-01 | $21.24bn | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-11-01 | $15.50bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,140 characters.

### Financial Summary

Third quarter 2025 included the following notable items:

- GAAP diluted earnings per share were $1.51 and Adjusted EPS1 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 November 1, 2025 | November 2, 2024 | Change | Nine Months Ended November 1, 2025 | November 2, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| GAAP diluted earnings per share | $1.51 | $1.85 | (18.2)% | $5.84 | $6.45 | (9.6)% |
| Adjustments | 0.26 | — |  | (0.71) | — |  |
| Adjusted diluted earnings per share | $1.78 | $1.85 | (3.9)% | $5.13 | $6.45 | (20.5)% |

Note: Amounts may not foot due to rounding.

1Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 22.

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 November 1, 2025, after-tax ROIC was 13.4 percent, compared with 15.9 percent for the trailing twelve months ended November 2, 2024. The calculation of ROIC is provided on page 23.

### 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 tariffs. The U.S. has indicated that it is actively negotiating or expects to negotiate country-specific agreements that it expects will result in changes to imposed tariff rates. Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or through our vendors, with China as the single largest source of merchandise we import.

We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed. The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods.

### Business Transformation Initiatives

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. The three months ended November 1, 2025, included costs and charges related to our business transformation initiatives, including a reduction in our headquarters workforce. Note 4 to the Financial Statements provides additional information.

We may incur additional business transformation costs and charges in future periods, which may adversely affect our results of operations and financial condition; however, we cannot reasonably estimate the amount of such costs and charges at this time.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF RESULTS OF OPERATIONS** | Index to Notes |

### Analysis of Results of Operations

*(dollars in millions)*

| Summary of Operating Income | Three Months Ended November 1, 2025 | November 2, 2024 | Change | Nine Months Ended November 1, 2025 | November 2, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $25,270 | $25,668 | (1.5)% | $74,327 | $75,651 | (1.7)% |
| Cost of sales (a) | 18,137 | 18,402 | (1.4) | 53,168 | 53,700 | (1.0) |
| SG&A expenses (a)(b) | 5,536 | 5,459 | 1.4 | 15,486 | 15,969 | (3.0) |
| Depreciation and amortization (exclusive of depreciation included in cost of sales) | 649 | 639 | 1.7 | 1,936 | 1,883 | 2.8 |
| Operating income (b) | $948 | $1,168 | (18.9)% | $3,737 | $4,099 | (8.8)% |

| Rate Analysis | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Gross margin rate (a) | 28.2% | 28.3% | 28.5% | 29.0% |
| SG&A expense rate (a)(b) | 21.9 | 21.3 | 20.8 | 21.1 |
| Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) | 2.6 | 2.5 | 2.6 | 2.5 |
| Operating income margin rate (b) | 3.8 | 4.6 | 5.0 | 5.4 |

*(a)* Reflects the impact of a reclassification of prior year amounts, which were not material, to conform with current year presentation.

*(b)* SG&A Expenses and Operating Income for the three and nine months ended November 1, 2025, include certain business transformation costs described in Note 4 to the Financial Statements. For the nine months ended November 1, 2025, SG&A Expenses and Operating Income also include gains related to interchange fee settlements described in Note 3. These discretely managed items resulted in a net impact to the SG&A Expense Rate of 0.6 and (0.6) percentage points for the three and nine months ended November 1, 2025, respectively, with an inverse impact on the Operating Income Margin Rate in the respective periods. The Reconciliation of Non-GAAP Adjusted EPS tables provide additional information.

Note: Gross margin (GM) is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales. We updated the prior period gross margin rate to conform to the current year calculation, which resulted in an approximate 1 percentage point increase in our gross margin rate for the 2024 periods presented.

### Net Sales

Net sales includes all Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card profit-sharing income.

Merchandise Sales are net of expected returns, and our estimate of gift card breakage. Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed. We use comparable sales to evaluate the performance of our stores and digital channels by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies. Digitally originated sales include all Merchandise Sales initiated through mobile applications and our websites. Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pickup or Drive Up, and Same Day Delivery. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF RESULTS OF OPERATIONS** | Index to Notes |

Merchandise Sales growth—from both comparable sales and new stores—represents an important driver of our long-term profitability. We expect that comparable sales growth will drive a significant portion of our total sales growth. We believe that our ability to successfully differentiate our guests’ shopping experience through a careful combination of merchandise assortment, price, convenience, guest experience, and other factors will over the long-term drive both increasing shopping frequency (number of transactions, or "traffic") and the amount spent each visit (average transaction amount).

| Comparable Sales | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Comparable sales change | (2.7)% | 0.3% | (2.8)% | (0.5)% |
| Drivers of change in comparable sales |  |  |  |  |
| Number of transactions (traffic) | (2.2) | 2.4 | (1.9) | 1.1 |
| Average transaction amount | (0.5) | (2.0) | (0.9) | (1.6) |

| Comparable Sales by Channel | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Stores originated comparable sales change | (3.8)% | (1.9)% | (4.2)% | (2.0)% |
| Digitally originated comparable sales change | 2.4 | 10.8 | 3.8 | 6.9 |

| Merchandise Sales by Channel | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Stores originated | 80.7% | 81.5% | 80.7% | 81.8% |
| Digitally originated | 19.3 | 18.5 | 19.3 | 18.2 |
| Total | 100% | 100% | 100% | 100% |

| Merchandise Sales by Fulfillment Channel | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Stores | 97.7% | 97.7% | 97.7% | 97.8% |
| Other | 2.3 | 2.3 | 2.3 | 2.2 |
| Total | 100% | 100% | 100% | 100% |

Note: Merchandise Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Same Day Delivery.

| Merchandise Sales by Product Category | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Apparel & accessories | 16% | 16% | 16% | 16% |
| Beauty | 13 | 13 | 13 | 13 |
| Food & beverage | 24 | 23 | 24 | 23 |
| Hardlines | 13 | 12 | 14 | 13 |
| Home furnishings & décor | 16 | 17 | 15 | 16 |
| Household essentials | 18 | 19 | 18 | 19 |
| Total | 100% | 100% | 100% | 100% |

### TARGET CORPORATION Q3 2025 Form 10-Q 17

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF RESULTS OF OPERATIONS** | Index to Notes |

Note 2 to the Financial Statements provides additional product category sales information. The collective interaction of a broad array of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix and the transfer of sales to new stores, makes further analysis of sales metrics infeasible.

We monitor the percentage of purchases that are paid for using Target Circle™ Cards (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on our Target Circle Cards are also incremental sales for Target. Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target. For the three months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively. For the nine months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 17.0 percent and 17.8 percent, respectively.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF RESULTS OF OPERATIONS** | Index to Notes |

### Gross Margin Rate

#### Quarter-to-Date

For the three months ended November 1, 2025, our gross margin rate was 28.2 percent compared with 28.3 percent in the comparable prior-year period. The decrease reflected the net impact of

- merchandising, primarily due to higher markdown rates partially offset by growth in advertising and other revenues;
- lower inventory shrink; and
- lower supply chain and digital fulfillment costs, reflecting the comparison over costs in 2024 related to timing of receipts and elevated inventory, combined with the benefit of productivity improvements at supply chain facilities and in digital fulfillment, partially offset by the deleveraging impact of lower sales.

#### Year-to-Date

For the nine months ended November 1, 2025, our gross margin rate was 28.5 percent compared with 29.0 percent in the comparable prior-year period. The decrease reflected the net impact of

- merchandising activities, including higher markdown rates and purchase order cancellation costs, partially offset by growth in advertising and other revenues;
- higher supply chain and digital fulfillment costs, partially due to the combined impact of investments in new supply chain facilities and the deleveraging impact of lower sales; and
- lower inventory shrink.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF RESULTS OF OPERATIONS** | Index to Notes |

### Selling, General, and Administrative Expense Rate

For the three months ended November 1, 2025, our SG&A expense rate was 21.9 percent compared with 21.3 percent for the comparable prior-year period. The increase reflected business transformation costs of approximately 0.6 percentage points. The deleveraging impact of lower Net Sales was offset by a reduction in other costs, including lower incentive compensation expense.

For the nine months ended November 1, 2025, our SG&A expense rate was 20.8 percent compared with 21.1 percent for the comparable prior-year period. The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 0.8 percentage points. This rate benefit was partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs, including 0.2 percentage points related to business transformation costs.

Interchange fee settlements and business transformation costs are further described in Notes 3 and 4, respectively, to the Financial Statements.

### Store Data

| Change in Number of Stores | Three Months Ended November 1, 2025 | November 2, 2024 | Nine Months Ended November 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Beginning store count | 1,982 | 1,966 | 1,978 | 1,956 |
| Opened | 14 | 13 | 18 | 23 |
| Closed | (1) | (1) | (1) | (1) |
| Ending store count | 1,995 | 1,978 | 1,995 | 1,978 |

| Number of Stores and Retail Square Feet | Number of Stores November 1, 2025 | February 1, 2025 | November 2, 2024 | Retail Square Feet (a) November 1, 2025 | February 1, 2025 | November 2, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| 170,000 or more sq. ft. | 273 | 273 | 273 | 48,824 | 48,824 | 48,824 |
| 50,000 to 169,999 sq. ft. | 1,576 | 1,559 | 1,559 | 197,274 | 195,050 | 195,050 |
| 49,999 or less sq. ft. | 146 | 146 | 146 | 4,420 | 4,404 | 4,404 |
| Total | 1,995 | 1,978 | 1,978 | 250,518 | 248,278 | 248,278 |

*(a)* In thousands; reflects total square feet less office, supply chain facility, and vacant space.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **OTHER PERFORMANCE FACTORS** | Index to Notes |

### Other Performance Factors

### Net Interest Expense

Net interest expense was $115 million and $346 million for the three and nine months ended November 1, 2025, respectively, compared with $105 million and $321 million in the comparable prior-year periods. The increase was primarily due to higher average debt levels.

### Provision for Income Taxes

Our effective income tax rates for the three and nine months ended November 1, 2025, were 19.8 percent and 23.1 percent, respectively, compared with 21.7 percent and 22.5 percent in the comparable prior-year periods. For the three month period, the decrease primarily reflects benefits from tax credits in the current year. For the nine month period, the increase reflects discrete tax expense in the current year related to share-based compensation and global minimum taxes, partially offset by benefits from tax credits.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **RECONCILIATION OF NON-GAAP FINANCIAL MEASURES** | Index to Notes |

### Reconciliation of Non-GAAP Financial Measures to GAAP Measures

To provide additional transparency, we disclose non-GAAP adjusted diluted earnings per share (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 operations. This measure is not in accordance with, or an alternative to, generally accepted accounting principles in the U.S. (GAAP). The most comparable GAAP measure is diluted earnings per share. Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate Adjusted EPS differently, limiting the usefulness of the measure for comparisons with other companies.

*(millions, except per share data)*

| Reconciliation of Non-GAAP Adjusted EPS | Three Months Ended November 1, 2025 Pretax | Net of Tax | Per Share | November 2, 2024 Pretax | Net of Tax | Per Share |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| GAAP diluted earnings per share |  |  | $1.51 |  |  | $1.85 |
| Adjustments |  |  |  |  |  |  |
| Business transformation costs (a) | $161 | $120 | $0.26 | $— | $— | $— |
| Adjusted EPS |  |  | $1.78 |  |  | $1.85 |

*(millions, except per share data)*

| Reconciliation of Non-GAAP Adjusted EPS | Nine Months Ended November 1, 2025 Pretax | Net of Tax | Per Share | November 2, 2024 Pretax | Net of Tax | Per Share |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| GAAP diluted earnings per share |  |  | $5.84 |  |  | $6.45 |
| Adjustments |  |  |  |  |  |  |
| Business transformation costs (a) | $161 | $120 | $0.26 | $— | $— | $— |
| Interchange fee settlements (b) | (593) | (441) | (0.97) | — | — | — |
| Adjusted EPS |  |  | $5.13 |  |  | $6.45 |

Note: Amounts may not foot due to rounding.

*(a)* Note 4 to the Financial Statements provides additional information.

*(b)* Note 3 to the Financial Statements provides additional information.

Earnings before interest expense and income taxes (EBIT) and earnings before interest expense, income taxes, depreciation, and amortization (EBITDA) are non-GAAP financial measures. We believe these measures provide meaningful information about our operational efficiency compared with our competitors by excluding the impact of differences in tax jurisdictions and structures, debt levels, and, for EBITDA, capital investment. These measures are not in accordance with, or an alternative to, GAAP. The most comparable GAAP measure is net earnings. EBIT and EBITDA should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate EBIT and EBITDA differently, limiting the usefulness of the measures for comparisons with other companies.

*(dollars in millions)*

| EBIT and EBITDA | Three Months Ended November 1, 2025 | November 2, 2024 | Change | Nine Months Ended November 1, 2025 | November 2, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net earnings | $689 | $854 | (19.3)% | $2,660 | $2,988 | (11.0)% |
| + Provision for income taxes | 170 | 237 | (28.4) | 799 | 867 | (7.9) |
| + Net interest expense | 115 | 105 | 8.5 | 346 | 321 | 7.8 |
| EBIT | $974 | $1,196 | (18.7)% | $3,805 | $4,176 | (8.9)% |
| + Total depreciation and amortization (a) | 773 | 754 | 2.6 | 2,331 | 2,215 | 5.2 |
| EBITDA | $1,747 | $1,950 | (10.5)% | $6,136 | $6,391 | (4.0)% |

*(a)* Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.

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| --- | --- |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **RECONCILIATION OF NON-GAAP FINANCIAL MEASURES** | Index to Notes |

We have also disclosed after-tax ROIC, which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies.

*After-Tax Return on Invested Capital*

*(dollars in millions)*

| Numerator | Trailing Twelve Months November 1, 2025 | November 2, 2024 (a) |
| --- | ---: | ---: |
| Operating income | $5,204 | $5,964 |
| + Net other income | 97 | 105 |
| EBIT | 5,301 | 6,069 |
| + Operating lease interest (b) | 167 | 157 |
| - Income taxes (c) | 1,238 | 1,403 |
| **Net operating profit after taxes** | **$4,230** | **$4,823** |

| Denominator | November 1, 2025 | November 2, 2024 | October 28, 2023 |
| --- | ---: | ---: | ---: |
| Current portion of long-term debt and other borrowings | $1,133 | $1,635 | $1,112 |
| + Noncurrent portion of long-term debt | 15,366 | 14,346 | 14,883 |
| + Shareholders' investment | 15,501 | 14,489 | 12,514 |
| + Operating lease liabilities (d) | 3,924 | 3,765 | 3,351 |
| - Cash and cash equivalents | 3,822 | 3,433 | 1,910 |
| Invested capital | $32,102 | $30,802 | $29,950 |
| Average invested capital (e) | **$31,451** | **$30,376** |  |
| **After-tax return on invested capital (f)** | **13.4%** | **15.9%** |  |

*(a)* The trailing twelve months ended November 2, 2024, consisted of 53 weeks compared with 52 weeks in the current-year period.

*(b)* Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases was owned or accounted for under finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.

*(c)* Calculated using the effective tax rates, which were 22.6 percent and 22.5 percent for the trailing twelve months ended November 1, 2025, and November 2, 2024, respectively. For the trailing twelve months ended November 1, 2025, and November 2, 2024, includes tax effect of $1.2 billion and $1.4 billion, respectively, related to EBIT and $38 million and $35 million, respectively, related to operating lease interest.

*(d)* Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.

*(e)* Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period.

*(f)* For the trailing twelve months ended November 1, 2025, includes the impact of after-tax net gains on interchange fee settlements and business transformation costs, which had a net impact on after-tax ROIC of 1.0 percentage point. Notes 3 and 4 to the Financial Statements provide additional information.

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| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF FINANCIAL CONDITION** | Index to Notes |

### Analysis of Financial Condition

### Liquidity and Capital Resources

#### Capital Allocation

We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals.

Our cash and cash equivalents balance was $3.8 billion, $4.8 billion, and $3.4 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. Our cash and cash equivalents balance includes short-term investments of $2.9 billion, $3.9 billion, and $2.5 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly-rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.

#### Operating Cash Flows

Cash flows provided by operating activities were $3.5 billion and $4.1 billion for the nine months ended November 1, 2025, and November 2, 2024, respectively. The decrease reflects lower net earnings, as well as the net impact of lower accounts payable leverage and inventory purchases in the current year.

#### Inventory

Inventory was $14.9 billion as of November 1, 2025, compared with $12.7 billion and $15.2 billion as of February 1, 2025, and November 2, 2024, respectively. The increase from February 1, 2025, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period. The decrease compared to November 2, 2024, reflects alignment of inventory with sales trends, partially offset by higher merchandise costs.

#### Investing Cash Flows

Cash required for investing activities increased to $2.8 billion for the nine months ended November 1, 2025, compared to $1.9 billion for the nine months ended November 2, 2024, due to higher capital expenditures.

#### Dividends

We paid dividends totaling $518 million ($1.14 per share) and $1.5 billion ($3.38 per share) for the three and nine months ended November 1, 2025, respectively, and $516 million ($1.12 per share) and $1.5 billion ($3.32 per share) for the three and nine months ended November 2, 2024, respectively, a per share increase of 1.8 percent. We declared dividends totaling $526 million ($1.14 per share) during the third quarter of 2025 and $521 million ($1.12 per share) during the third quarter of 2024, a per share increase of 1.8 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.

#### Share Repurchase

We deployed $403 million to repurchase shares during the nine months ended November 1, 2025. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 10 to the Financial Statements for more information.

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| **MANAGEMENT'S DISCUSSION AND ANALYSIS** | Table of Contents |
| **ANALYSIS OF FINANCIAL CONDITION** | Index to Notes |

#### Financing

Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of November 1, 2025, our credit ratings were as follows:

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| --- | --- | --- | --- |
| **Credit Ratings** | Moody’s | S&P | Fitch |
| Long-term debt | A2 | A | A |
| Commercial paper | P-1 | A-1 | F1 |

If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit ratings will remain the same as described above.

We issued $1.0 billion of unsecured debt in both March and June 2025, and repaid $1.5 billion of unsecured debt in April 2025. Note 8 to the Financial Statements provides additional information.

We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In 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 credit facility. This credit facility and our $3.0 billion unsecured revolving credit facility that will expire in October 2028 provide a liquidity backstop to our commercial paper program. No balances were outstanding under either credit facility at any time during 2025 or 2024. There was no commercial paper outstanding as of either November 1, 2025, or November 2, 2024. Note 8 to the Financial Statements provides additional information.

Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of November 1, 2025, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

We believe our sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital, and planned capital expenditures, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.

### New Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.

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| **MANAGEMENT'S DISCUSSION AND ANALYSIS & SUPPLEMENTAL INFORMATION** | Table of Contents |
| **FORWARD-LOOKING STATEMENTS & CONTROLS AND PROCEDURES** | Index to Notes |

### Forward-Looking Statements

This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "anticipate," "believe," "could," “expect,” “may,” “might,” “seek,” "will," “would,” or similar words. The principal forward-looking statements in this report include statements regarding: our future financial and operational performance, changes in the consumer landscape, evolution in tariffs and global trade policy, the impacts of business transformation efforts, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended February 1, 2025, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

## Market risk

As filed, 257 characters.

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk of our Form 10-K for the fiscal year ended February 1, 2025.

## Controls and procedures

As filed, 1,785 characters.

### Changes in Internal Control Over Financial Reporting

There were no changes during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

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| **SUPPLEMENTAL INFORMATION** | Table of Contents |
|  | Index to Notes |

## Risk factors

As filed, 159 characters.

There have been no material changes to the risk factors described in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended February 1, 2025.

Filed Nov 26, 2025.
Source: SEC EDGAR, the filing index for accession 0000027419-25-000126. Last ingested by Listed: Oct 24, 2026, 14:52 ET. No prices; not investment advice.