Target 2023 Annual Report

2023ANNUALREPORT

TO OUR ST CKHOLDERS

Steady stewardship has always been a hallmark of our growth philosophy. Deliver what guests want and need today while anticipating where they’re headed tomorrow. Invest vigorously in the team, strategy and capabilities to stay in step with guests. Grow steadily. Grow profitably. And harvest the benefits of increasing scale to build on these efforts perpetually.

This discipline and alignment have produced continuous growth through a wide range of business environments, with ample opportunity still ahead of us. But not all of our recent growth has been steady. In the core pandemic years of 2020 and 2021, we spiked to never-beforeseen growth rates that stretched our model to new limits.

Our team was able to support that unexpected growth because the fundamentals were in place, and we carefully stewarded capital, capabilities and above all our connection to guests in an extraordinary moment for our company.Even in 2022, with constrained consumer demand and massive shifts in buying behaviors, we grew by more than $3 billion. Today, Target is more than $30 billion bigger than it was in 2019.

In broad strokes, after we recover from the unique and significant profit headwinds we faced in 2022, we believe that this remains the right trajectory for Target in the long term.

However, a couple of variables in the model have changed significantly for the better. First, the revenue gains we anticipate in the years ahead will be built on a base of nearly $110 billion, not the $78 billion that served as our starting mark in 2019. Second, with the new scale of our business and the continuing maturation of capabilities that barely existed three years ago, we see tremendous opportunities to streamline and simplify how we run Target.

A significant part of this growth has been driven by traffic. Last year’s traffic gain of 2.1% marked the sixth straight year of growth in this key metric. It demonstrates that even as guests’ day-to-day needs fluctuate—often rapidly and Dramatically—they’re turning to Target more and more for everything they want and need. For instance, last year, comp sales in frequency categories like food & beverage, essentials and beauty grew quickly as guests on tighter budgets prioritized basics.

“We’re also realistic about how 2023 will keep challenging us to be agile, resilient and responsive”

We believe we’ll be able to flex up the categories and the value proposition that are most relevant to our guests right now, while inspiring guests with newness and staying focused on gaining share across our portfolio to build on our multi year growth trajectory. We’re also realistic about how 2023 will keep challenging us to be agile, resilient and responsive as we sustain our steady record of taking care of our guests, our team, our communities and our shareholders. I appreciate your continued support and look forward to the value we’ll create this year.

BOARD OF LEADERSHIP

BRIAN CORNELL CHAIR AND CEO

KATIE BOYLAN EXECUTIVE VP

BRETT CRAIG CHIEF COMM. OFFICER

KIERA FERNANDEZ FOUNDATION PRESIDENT

CHRISTINA HENINGTON CHIEF GROWTH OFFICER

PRAT VEMANA CHIEF DIGITAL OFFICER

GRETCHEN MCCARTHY LOGISTICS OFFICER

JILL SANDO CHIEF MERCHANDISING OFFICER

CARA SYLVESTER CHIEF GUEST EXPERIENCE OFFICER

RICK GOMEZ CHIEF FOOD & BEAUTY OFFICER

MELISSA KREMER CHIEF HR OFFICER

MICHAEL FIDDELKE CHIEF FINANCIAL OFFICER

DON H. LIU CHIEF LEGAL OFFICER

WH WE ARE

Target Corporation was incorporated in Minnesota in 1902. We offer to our customers, referred to as “guests,” everyday essentials and fashionable, differentiated merchandise at discounted prices. Our ability to deliver a preferred shopping experience to our guests is supported by our supply chain and technology, our devotion to innovation, our loyalty offerings and suite of fulfillment options, and our disciplined approach to managing our business and investing in future growth.

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

MAXIMIZING VALUE

We provide premium quality, authentic ingredients and we tailor our owned-brand assortments to meet specific guest preferences

FRESH MIX

Constant

FREQUENCY

In our weekly circular, online store and throughout in-person stores, we remind guests that they can find quality, design and low prices throughout their Target shopping experience. And letting guests know that Target provides affordable solutions is an important feature

Our merchandise and marketing deliver on our “Expect More. Pay Less.” strategy through the right balance of products, prices and messaging. Throughout our stores and online, we offer a balance of good, better and best merchandise with varied price points, providing guests with options for every budget. Our fun marketing continues to set us apart, while also delivering a strong value message that conveys our commitment to affordable prices. And, we satisfy all of our guests’ wants and needs with the right mix of trends and basic commodities

Behind every great Target run, there’s a passionate team ready to help and nearly 2,000 stores that take shopping to a new level. They’re in neighborhoods and communities around the country (within about 10 miles from most doorsteps in America), and they’re truly the heart of Target. No matter how our guests choose to shop with us — whether in store, online or both — we aim to make their experience easy and inspiring, at an only-at-Target value.

We own our corporate headquarters buildings located in and around Minneapolis, Minnesota, and we lease and own additional office space elsewhere in Minneapolis and the U.S. We also lease office space in other countries. Our properties are in good condition, well maintained, and suitable to carry on our business.

USA TARGET STORE OUTLOOKS

Owned 1,530

Leased 261

Owned buildings on leased land 157

Total 1,948

EMPLOYEE UTLOOK

We employ more than 400,000 team members, 54% of whom are people of color and 56% are women. Target is headquartered in Minneapolis, Minnesota, its hometown since the first Target store opened in 1962 under The Dayton Company.

White

Target’s broader Más Que (“More Than”) marketing campaign reflects the diverse identities, experiences and culture of our Latino guests and their communities in a way that’s authentic and relevant. From advertising and in-store marketing to an always-on digital hub that spotlights Latino-owned and founded brands, Más Que is intended to engage and build meaningful connections with our Latino guests during Latino Heritage Month and year-round.

Target’s exclusive Black History Month collection features apparel, accessories and more, made by and for the Black community. In addition to the Black History Month collection, Target also created Black Beyond Measure, our platform focused on celebrating Black life every day of the year as part of our ongoing commitment to support and uplift the Black community.

The Asian Business Council (ABC) is one of eight Diversity and Inclusion Business Councils at Target. The ABC’s mission is to champion an inclusive work environment where Asian team members find belonging and growth.

Hispanic/Latino Asian Black

Our recent growth in sales demonstrates the strength and relevance of Target’s strategy. Our strategy places stores at the center of our flexible fulfillment approach, with stores fulfilling more than 96 percent of total sales, which provides convenience for our guests at a reduced fulfillment cost.

FINANCIAL HIGHLIGHTS

NOTE: REFLECTS AMOUNTS ATTRIBUTABLE TO CONTINUING OPERATIONS. 2017 WAS A 53-WEEK YEAR.

APPAREL & ACCESSORIES

HOME FURNISHING & DECOR

THE BREAKD WN

This report provides a comprehensive breakdown of the total sales targets set for 2023, delineating the contributions from various product lines, service offerings, market expansions, and customer engagement strategies. By dissecting the targets into specific components, stakeholders gain insights into the distribution of revenue goals and the strategic focus areas driving organizational growth.

Target Sales 88,222 MILLION

Retaining customer engagement is fundamental to sustained revenue growth. The target revenue from existing customer retention reflects the revenue preserved through effective customer retention strategies, including personalized services, loyalty programs, and superior customer support.

Target Sales 90, 373 MILLION

The sales target for or apparel and accessories reflects the revenue projection derived from sales of this specific product line. Marketing efforts, product enhancements, and customer outreach activities were aligned to achieve this target, contributing to overall revenue generation.

HARDLINES

Target Sales 89, 298 MILLION

Cross-selling and up-selling initiatives aimed to leverage existing customer relationships and maximize revenue potential. Tailored marketing campaigns, personalized offerings, and proactive sales engagements facilitated the realization of this target, driving incremental revenue growth.

TOTAL 2023 SALES $107,588 BILLION

FOOD & BEVERAGE

BEAUTY

Target Sales 84,994 MILLION

The sales target our Beauty section encapsulates revenue expectations associated with the delivery of specialized services. Strategic investments in service quality, talent development, and client relationship management were pivotal in attaining this target and expanding service-based revenue streams.

Target Sales 77, 463 MILLION

Penetrating new geographical markets was a strategic imperative aimed at diversifying revenue sources and capturing untapped opportunities. The revenue target from new markets underscores the successful expansion efforts and the effectiveness of market entry strategies deployed during the year.

In total sales growth in 2022

Same day services now make up <10% of Target’s total sales

In same-day services in 2022

In revenue growth during Q4 compared to 2021

Increase in traffic

In line with our strategic objectives, the revenue growth targets for 2023 were designed to drive sustainable financial performance and support our long-term vision. Through meticulous planning and execution, we aimed to capitalize on market opportunities, enhance customer value proposition, and optimize operational efficiency. This report outlines the key revenue targets set for 2023 and evaluates our performance against these benchmarks.

What is Target’s Red Card Program?

Target’s Red Card Program is the retailer’s branded payment method—a solution held closely by enterprise brands as a way to get their best customers to spend more.

Target offers a branded credit card and a branded debit card to customers. Using it unlocks a 5% discount on nearly all purchases, provides free two-day shipping (without a minimum purchase amount) and extends a customer’s return window by 30 more days.

In our quarterly filings, Target notes that roughly 20% of all purchases are made using Red Card products (including both Target’s branded credit card and debit card products). Target generates $25B in revenue each quarter, so that means $5B runs through the Red Card program each quarter. Mind blowing scale, yes; but that’s not the most interesting part.

Innovate to eliminate waste

OUR AMBITIONS

In 2019, we set science-based targets for emissions reductions across scopes 1, 2 and 3 and we joined the Business Ambition for 1.5°C, to help drive meaningful change across our sector and value chain, and commit to emissions reductions in line with no more than 1.5 degree warming. We are on track to achieve our 100% renewable electricity by 2030 goal and achieved its interim milestone, with 60% of our electricity procured from renewable sources1 as of FY2022.

Accelerate opportunity and equity

Design and elevate sustainable brands

This year we launched Target Zero, an initiative to help our guests more easily find hundreds of products across our assortment that create less packaging waste.

We are signatories to the New Plastics Economy Global Commitment and the U.S. Plastics Pact.

In 2022, we diverted 83% of operational waste and 59% of construction waste from landfill.

By 2030, Target aims to be the market leader for creating and curating inclusive, sustainable brands and experiences.

By 2025, Target intends to reduce annual total virgin plastic in our owned brand packaging by 20% from a 2020 baseline.

By 2030, Target plans to achieve zero waste to landfill in U.S. operations.

In April 2021, we launched our commitment to spend more than $2 billion with Blackowned businesses by the end of 2025.

Launched a curated collection with thousands of products and/or packaging designed to be refillable, reusable or compostable; concentrated; made from recycled content or made from materials that reduce the use of virgin plastic.

Target received our first official zero waste certified location designation from the TRUE Certification (Zero Waste) for our Hawaii Flow Center in 2022.

As a team we’ve vowed to face pain with purpose.

Target CEO Brian Cornell