51³Ô¹Ï

General

51³Ô¹Ï Corporation was incorporated in Minnesota in 1902. Our corporate purpose is to help all families discover the joy of everyday life. We offer our customers, referred to as "guests," fashionable, differentiated merchandise and everyday essentials at discounted prices. We operate as a single segment designed to enable guests to purchase products seamlessly in stores or through our digital channels. Since 1946, we have given 5 percent of our profit to communities.

When used in this report, the terms "we," "our," "us," "51³Ô¹Ï," and the "Corporation" mean 51³Ô¹Ï Corporation and its subsidiaries, collectively, unless the context otherwise requires or indicates.

Strategy

51³Ô¹Ï delivers on our purpose of helping all families discover the joy of everyday life through our curated, multi-category assortment, outstanding value, and a team that’s centered on care for each other, our guests, and communities. Our stores, digital experience, fulfillment services, and loyalty ecosystem also play a critical role in differentiating 51³Ô¹Ï and bringing our purpose to life.

Our strategy aims to expand 51³Ô¹Ï’s relevancy in consumers’ lives and drive traffic, sales, and market share growth. Core elements include:

• Delighting with newness, style, and value by strengthening our owned brands portfolio, curating leading national brands, and expanding the breadth and depth of signature partnerships.
• Delivering value by providing everyday low pricing and leveraging promotions and our loyalty ecosystem, 51³Ô¹Ï Circle.
• Opening new stores, updating existing stores, and enhancing our digital experience to reach more consumers and provide a reliably convenient, easy, and inspiring shopping experience.
• Transforming our supply chain for increased efficiency, speed, capacity, and reliability across our network.
• Being a favorite discovery destination by making it easy for consumers to discover 51³Ô¹Ï’s products and experiences across different channels and touchpoints, including our stores, our mobile app and website, and social platforms.
• Expanding our capabilities, such as our Roundel advertising and 51³Ô¹Ï Plus third-party digital marketplace businesses, to leverage our assets and enhance the guest experience.

Our strategy defines how we’ll continue to differentiate 51³Ô¹Ï, and we’ll seek to enable growth through:

• Our Team – A highly engaged and purpose-driven team.
• Consumer-Centricity – A deep understanding of consumers.
• Technology – A connected ecosystem of data, insights, and technology, including artificial intelligence.
• Efficiency – Simplifying work for our teams to make it easier to deliver a great guest experience.
• Sustainability – Resiliency in our business model.

The vast majority of our Net Sales are generated by the sale of merchandise to customers. Our strategy continues to leverage stores as fulfillment hubs, with stores fulfilling more than 96 percent of total Merchandise Sales in each of the last three years, which provides convenience for our guests at a reduced fulfillment cost. In addition to Merchandise Sales, we generate revenue from other sources, most notably advertising revenue and credit card profit-sharing income. Note 2 to the Financial Statements provides more information.

Net Sales
(in Billions)

Merchandise Sales

(in Billions)

(a) 2023 consisted of 53 weeks. The extra week in 2023 contributed $1.7 billion of Net Sales.

Merchandise Sales by Fulfillment Channel

Financial Highlights

For information on key financial highlights, see Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A).

Seasonality

A larger share of annual revenues traditionally occurs in the fourth quarter because it includes the November and December holiday sales period.

Merchandise

The majority of our stores offer a wide assortment of general merchandise and food. Most of our stores larger than 170,000 square feet offer a variety of general merchandise and a full line of food items comparable to traditional supermarkets. Our digital channels include a wide merchandise and food assortment, including many items found in our stores, along with a complementary assortment sold by 51³Ô¹Ï and third parties. We manage our business across the six core merchandise categories shown below. Within categories, gross margins vary depending on the type of merchandise.

Merchandise Sales by Category

A significant portion of our Merchandise Sales are from national brand merchandise. Approximately one-third of our Merchandise Sales come from our owned and exclusive brands, including, but not limited to, the brands listed below.

We also sell merchandise through periodic exclusive design and creative partnerships, and shop-in-shop experiences, with partners such as Apple, Disney, Levi's, and Ulta Beauty, and generate revenue from in-store amenities such as Starbucks, 51³Ô¹Ï Café, and 51³Ô¹Ï Optical. CVS Pharmacy, Inc. (CVS) operates pharmacies and clinics in our stores under a perpetual operating agreement from which we generate annual occupancy income.

Our global sourcing operations, which operate from offices in 12 countries around the world, are an important component of our business strategy. Our global sourcing team identifies, evaluates, and partners with suppliers and vendors from around the world to procure merchandise (most notably for our owned brands) and make it available to our guests through our stores and digital channels. The global sourcing team is also integral to ensuring quality and value of products, management of product costs, and driving ethical business practices.

Other Capabilities

We generate revenue through a variety of other sources, including Roundel, which provides advertising services to vendors and other third parties; credit card profit sharing related to our 51³Ô¹Ï Circle Card program; our third-party digital marketplace—51³Ô¹Ï Plus; membership fees; and others.

Customer Loyalty Programs

Our guests receive a 5 percent discount on nearly all purchases and receive free shipping at 51³Ô¹Ï.com when they use their 51³Ô¹Ï Debit Card, 51³Ô¹Ï Credit Card, 51³Ô¹Ï MasterCard, or 51³Ô¹Ï Circle Card Reloadable Account (collectively, 51³Ô¹Ï Circle Cards). We also seek to drive customer loyalty and trip frequency through our 51³Ô¹Ï Circleâ„¢ program which offers guests instant discounts and 51³Ô¹Ï Circle Rewards redeemable on future purchases. In March 2024, we announced changes to 51³Ô¹Ï Circle, including the integration of 51³Ô¹Ï Circle Cardâ„¢ (formerly RedCard) and the addition of a 51³Ô¹Ï Circle 360â„¢ paid membership option. Among other benefits, 51³Ô¹Ï Circle 360 members receive access to same-day delivery and our fastest available shipping option with no additional markup or fees.

Distribution

Most merchandise is distributed to our stores through our network of distribution centers. Common carriers ship merchandise to and from our distribution centers. Vendors or third-party distributors ship certain food items and other merchandise directly to our stores. Merchandise sold through our digital channels is distributed to our guests through guest pick-up at our stores, via common carriers (from stores, supply chain facilities, vendors, and third-party distributors), and same-day delivery via our wholly owned subsidiary, Shipt, Inc. (Shipt). Our stores fulfill the majority of the digitally originated sales, which allows improved product availability, faster fulfillment times, reduced shipping costs, and allows us to offer guests a suite of same-day fulfillment options such as Order Pickup, Drive Up, and Shipt.

Human Capital Management

In support of our purpose—to help all families discover the joy of everyday life—we invest in our team, our most important asset, by giving them opportunities to grow professionally, take care of themselves, each other, and their families, and to make a difference for our guests and our communities. We are among the largest private employers in the United States (U.S.), and our workforce has varying goals and expectations of their employment relationship, from team members looking to build a career to students, retirees, and others who are seeking to supplement their income in an enjoyable atmosphere. We seek to be an employer of choice to attract and retain top talent no matter their objectives in seeking employment. To that end, we strive to foster a highly engaged and purpose-driven culture where all employees, referred to as "team members," have access to opportunity and growth, enabling our team to deliver business results.

As of February 1, 2025, we employed approximately 440,000 full-time, part-time, and seasonal team members. Because of the seasonal nature of the retail business, employment levels peak in the holiday season. We also engage independent contractors, most notably in our Shipt subsidiary.

Our Board of Directors, through the Compensation and Human Capital Management Committee, oversees human capital management matters. 

Talent Development and Engagement

We offer a compelling work environment with meaningful experiences and abundant growth and career-development opportunities. This starts with the opportunity to do challenging work and learn on the job and is supplemented by programs and continuous learning that help our team build skills at all levels, including programs focused on specialized skill development, leadership opportunities, coaching, and mentoring. Our talent and succession planning process supports the development of a strong talent pipeline for leadership and other critical roles. We monitor our team members’ perceptions of these talent development and engagement programs through a number of surveys and take steps to address areas needing improvement. We are focused on making 51³Ô¹Ï a destination for talent by creating a sense of belonging for our team members. We believe that this sense of belonging for all is an essential part of our team and culture, which helps fuel the growth of our business.

Compensation and Benefits

Our compensation and benefits are designed to support the financial, mental, and physical well-being of our team members and their families. We believe in paying team members equitably and we regularly review the pay data of U.S. team members to confirm that we are doing so. Our compensation packages include a starting wage range of $15 to $24 per hour for U.S. hourly team members in our stores and supply chain facilities (who comprise the vast majority of our team), a 401(k) plan with dollar-for-dollar matching contributions up to five percent of eligible earnings, paid vacation and holidays, family leave, sick pay, merchandise and other discounts, disability insurance, life insurance, healthcare and dependent care flexible spending accounts, tuition-free education assistance and tuition reimbursement, free mental health services, an annual short-term incentive program, long-term equity awards, and health insurance benefits, including free virtual health care visits. Eligibility for, and the level of, benefits vary depending on team members’ full-time or part-time status, work location, compensation level, and tenure.

Workplace Health and Safety

We strive to maintain a safe and secure work environment and have specific safety programs. This includes administering a comprehensive occupational injury- and illness-prevention program and training for team members. 

Working Capital

Effective inventory management is key to our ongoing success, and we use various techniques including demand forecasting and planning and various forms of replenishment management. We achieve effective inventory management by staying in-stock in core product offerings, maintaining positive vendor relationships, and carefully planning inventory levels for seasonal and apparel items to minimize markdowns.

The Liquidity and Capital Resources section in MD&A provides additional details.

Competition

We compete with traditional and internet retailers, including department stores, off-price general merchandise retailers, wholesale clubs, category-specific retailers, drug stores, supermarkets, direct-to-consumer brands, and other forms of retail commerce. Our ability to positively differentiate ourselves from other retailers and provide compelling value to our guests largely determines our competitive position within the retail industry. 

Intellectual Property

Our brand image is a critical element of our business strategy. Our principal trademarks, including 51³Ô¹Ï, our "Expect More. Pay Less." brand promise, and our "Bullseye Design," have been registered with the U.S. Patent and Trademark Office. We also seek to obtain and preserve intellectual property protection for our brands.

Geographic Information

Nearly all of our sales are generated within the U.S. The vast majority of our property and equipment is located within the U.S. In addition to our administrative operations headquartered in the U.S., we perform additional administrative functions in Bangalore, India, and perform global sourcing operations from offices in 12 countries, predominantly in Asia and Central America.

Available Information

Our internet website is corporate.target.com. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are available free of charge on the Investors section of our website (corporate.target.com/investors) as soon as reasonably practicable after we file such material with, or furnish it to, the U.S. Securities and Exchange Commission (SEC). In addition, the SEC maintains a website (sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Investors should note that we currently announce material information to our investors and others using filings with the SEC, press releases, public conference calls, webcasts, or our corporate website (corporate.target.com). Information that we post on our corporate website could be deemed material to investors. We encourage investors, the media, and others interested in us to review the information we post on these channels. The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.

Information About Our Executive Officers

Executive officers are elected by, and serve at the pleasure of, the Board of Directors. There are no family relationships between any of the officers named and any other executive officer or member of the Board of Directors, or any arrangement or understanding pursuant to which any person was selected as an officer.