Target (TGT) 10-K risk factor changes: FY2019 vs FY2018

We believe that one of the reasons our guests prefer to shop at Target, our team members choose Target as a place of [removed: employment] [added: employment,] and our vendors choose to do business with us is the reputation we have built over many years for serving our four primary constituencies: guests, team members, shareholders, and the communities in which we operate.

While reputations may take decades to build, [removed: any] negative incidents can quickly erode trust and [removed: confidence, particularly if they] [added: confidence and can] result in [removed: negative mainstream and social media publicity,] consumer boycotts, governmental investigations, or litigation.

In addition, vendors and others with whom we [removed: choose to] do business may affect our reputation.

Negative reputational incidents could adversely affect our business through lost sales, loss of new store and [removed: technology] development opportunities, or team member retention and recruiting difficulties.

[removed: Our] [added: In addition, our] ability to create a personalized guest experience through the collection and use of accurate and relevant guest data is important to our ability to differentiate from other retailers.

Guest perceptions regarding the cleanliness and safety of our stores, the functionality, reliability, and speed of our digital channels and fulfillment options, our in-stock levels, [removed: the effectiveness of our promotions,] [added: and] the [removed: attractiveness] [added: value] of our [removed: third party offerings, such as] [added: promotions are among] the [removed: clinics and pharmacies owned and operated by CVS, and other] factors [removed: also] [added: that] affect our ability to compete.

[removed: We sell many products under our] [added: Our] owned and exclusive [removed: brands, which] [added: brand products] help differentiate us from other retailers, generally carry higher margins than equivalent national brand products and represent a significant portion of our overall sales.

If we are unable to successfully develop, support, and evolve our owned and exclusive brands, if one or more of these brands experiences a loss of consumer acceptance or confidence, or if we are unable to successfully protect our intellectual property [removed: rights in these brands,] [added: rights,] our sales and gross margins could be adversely affected.

The [added: retail industry's] continuing migration [removed: of retailing] to digital channels has [removed: increased our challenges in differentiating] [added: affected the ways we differentiate] ourselves from other retailers.

In particular, consumers are able to quickly and conveniently comparison shop and determine real-time product availability using digital tools, which can lead to decisions based solely on [removed: price,] [added: price or] the functionality of the digital [removed: tools or a combination of factors.][added: tools.]

Any difficulties in executing our differentiation efforts, actions by our competitors in response to these efforts, or failures by vendors in managing their own channels, content and technology systems [removed: could hurt our ability] to [removed: differentiate ourselves from other retailers and] [added: support these efforts could] adversely affect our sales, gross margins, and expenses.

If we are unable to successfully provide a relevant and reliable experience for our [removed: guests, regardless of where our guest demand is ultimately fulfilled,] [added: guests across multiple channels,] our sales, results of operations and reputation could be adversely affected.

Our business has evolved from an in-store experience to interaction with guests across multiple channels (in-store, online, [removed: mobile and] [added: mobile,] social media, [added: voice assistants, and smart home devices,] among others).

[added: Our guests are using those channels to] shop [removed: in our stores and online] [added: with us] and provide feedback and public commentary about [removed: all aspects of] our business.

We must anticipate and meet changing guest expectations and counteract [removed: new] developments and [removed: technology] investments by our competitors.

Our evolving retailing efforts include implementing [removed: new] technology, software and processes to be able to [added: conveniently and] cost-effectively fulfill guest orders directly from [removed: our vendors and from] any point within our system of stores and distribution [removed: centers.][added: centers and from our vendors.]

Providing flexible fulfillment options [added: and implementing new technology] is complex and may not meet [removed: guest] expectations for accurate order fulfillment, faster and guaranteed delivery times, [removed: and] low-price or free [removed: shipping.][added: shipping, and desired payment methods.]

If we do not anticipate and respond quickly to changing consumer preferences, our [removed: sales, gross margins] [added: sales] and profitability could suffer.

If we do not obtain accurate and relevant data on guest preferences, predict changing consumer tastes, preferences, spending patterns and other lifestyle decisions, emphasize the correct categories, implement competitive and effective pricing and promotion strategies, or personalize our offerings to our guests, we may experience lost sales, spoilage, and increased inventory markdowns, which [removed: would] [added: could] adversely affect our results of operations by reducing our [removed: gross margins and hurting our] profitability.

If our capital investments in remodeling existing stores, building new stores, and improving technology and supply chain infrastructure do not achieve appropriate returns, our competitive position, financial condition and results of operations [removed: may] [added: could] be adversely affected.

Pursuing the wrong remodel or new store [removed: opportunities,] [added: opportunities and] any delays, cost increases, disruptions or other uncertainties related to those [removed: opportunities, and lower than expected sales from those opportunities,] [added: opportunities] could adversely [removed: impact] [added: affect] our results of operations.

We are currently making, and expect to continue to make, significant investments in technology and selective acquisitions to improve guest experiences across [removed: sales] [added: multiple] channels and improve our supply chain and inventory management systems.

[removed: These] [added: The effectiveness of these] investments [added: can be less predictable than remodeling stores, and] might not provide the anticipated benefits or desired [added: rates of] return.

[removed: Targeting] [added: Pursuing] the wrong investment opportunities, [removed: failing to successfully meet our strategic objectives when making the correct investments,] being unable to make new concepts scalable, making an investment commitment significantly above or below our needs, or failing to effectively incorporate acquired businesses into our business could result in the loss of our competitive position and adversely affect our financial condition or results of operations.

A significant disruption in our computer systems and our inability to adequately maintain and update those systems could adversely affect our operations and [added: negatively affect] our [removed: ability to maintain guest confidence.][added: guests.]

If our systems are damaged or fail to function properly or reliably, we may incur substantial repair or replacement costs, experience data loss or theft and impediments to our ability to manage inventories or process guest transactions, [removed: engage in additional promotional activities to retain our guests,] and encounter lost guest confidence, which could [added: require additional promotional activities to attract guests and otherwise] adversely affect our results of operations.

If our efforts to [removed: protect the security of] [added: provide] information [removed: about our guests, team members, vendors and other third parties] [added: security] are [removed: unsuccessful,] [added: unsuccessful or if] we [added: are unable to meet increasingly demanding regulatory requirements, we] may face additional costly government enforcement actions and private litigation, and our [removed: sales and] reputation [added: and results of operations] could suffer.

In addition, hardware, software, or applications we develop or procure from third parties [removed: or through open source solutions] may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.

[removed: Until the data breach we experienced in the fourth quarter of] [added: Prior to] 2013, all [added: data security] incidents we encountered were insignificant.

[removed: The] [added: Our 2013] data breach [removed: we experienced in 2013] was significant and went undetected for several weeks.

Both we and our vendors [added: have] had data security incidents [removed: subsequent to] [added: since] the 2013 data breach; however, to date these other incidents have not been material to our [removed: consolidated financial statements.][added: results of operations.]

If we, our vendors, or other third parties with whom we do business experience additional significant data security [removed: breaches] [added: incidents] or fail to detect and appropriately respond to significant [removed: data security breaches,] [added: incidents,] we could be exposed to additional government enforcement actions and private litigation.

In addition, our guests could lose confidence in our ability to protect their information, [removed: which could cause them to] discontinue using our REDcards or loyalty programs, or stop shopping with us [removed: altogether.][added: altogether, which could adversely affect our sales, reputation and results of operations.]

Changes in our relationships with our vendors, changes in tax [removed: policy] or trade [removed: relations,] [added: policy,] interruptions in our supply chain or increased commodity or supply chain costs could adversely affect our results of operations.

A large portion of our merchandise is sourced, directly or indirectly, from outside the [removed: United States,] [added: U.S.,] with China as our single largest source, so any major changes in tax [removed: policy] or trade [removed: relations,] [added: policy,] such as the imposition of additional tariffs [added: or duties on imported products, could require us to take certain actions, such as raising prices on products we sell, which could adversely affect our results of operations.]

[removed: or duties on imported products,] [added: Increases in our effective income tax rate] could adversely affect our business, results of operations, [removed: effective income tax rate, liquidity] [added: liquidity,] and net income.

Political or financial instability, currency fluctuations, [removed: changes in trade policy, trade restrictions, tariffs or duties,] the outbreak of pandemics, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could materially disrupt our supply of merchandise, increase our costs, and/or adversely affect our results of operations.

There have been periodic labor disputes impacting the [removed: United States] [added: U.S.] ports that have caused us to make alternative arrangements to continue the flow of inventory, and if these types of disputes recur, worsen, or occur in other countries through which we source products, it may have a material impact on our costs or inventory supply.

Changes in the costs of procuring commodities used in our merchandise or the costs related to our supply chain, [removed: including vendor costs, labor, fuel, tariffs, duties, currency exchange rates, and supply chain transparency initiatives,] could [removed: have an adverse effect on gross margins, expenses, and] [added: adversely affect our] results of operations.

We rely on third parties to support our business, including portions of our technology [added: infrastructure,] development and support, our digital platforms and fulfillment operations, credit and debit card transaction processing, extensions of credit for our 5% REDcard Rewards loyalty program, the clinics and pharmacies operated by CVS within our stores, the infrastructure supporting our guest contact centers, aspects of our food offerings, and delivery services.

Target’s position or perceived lack of position on social, environmental, public policy or other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation with certain groups or guests.

Consumers may also use third-party channels or devices, such as voice assistants and smart home devices, to initiate shopping searches and place orders, which could sometimes make us dependent on the capabilities and search algorithms of those third parties to reach those consumers.

We also need to collect accurate, relevant, and usable guest data to personalize our offerings.

Even when we are successful in meeting expectations for fulfillment, if we are unable to offset increased costs of fulfilling orders outside of our traditional in-store channel with efficiencies, cost-savings or expense reductions, our results of operations could be adversely affected.

The legal and regulatory environment regarding information security, cybersecurity, and privacy is increasingly demanding and has enhanced requirements for handling personal data.

Complying with new data protection requirements may cause us to incur substantial costs, require changes to our business practices, limit our ability to obtain data used to provide a differentiated guest experience, and expose us to further litigation and regulatory risks, each of which could adversely affect our results of operations.

We must compete by offering a consistent, convenient shopping experience and value for our guests regardless of sales channel and by providing our guests and team members with reliable, effective, and easy-to-use digital tools.

Our guests are using a variety of electronic devices and platforms to

If we are unable to attract and retain team members, contract with third parties, or make selective acquisitions to obtain the specialized skills needed to support these efforts, collect accurate, relevant, and usable guest data to support our personalization efforts, allow real-time and accurate visibility to product availability when guests are ready to purchase, quickly and efficiently fulfill orders using the fulfillment and payment methods guests demand, or provide a convenient and consistent experience for our guests across all sales channels, our ability to compete and our results of operations could be adversely affected.

In addition, if Target.com and our other technology systems do not appeal to our guests, integrate with our vendors or other third parties, reliably function as designed, integrate across all sales channels, or maintain the privacy of data, we may experience a loss of guest confidence and lost sales, which could adversely affect our reputation and results of operations.

Our business also relies on investments in technology and selective acquisitions, and the returns on these investments can be less predictable than remodeling and building stores.

Changes in our relationships with our vendors also have the potential to increase our expenses and adversely affect results of operations.

In addition, we could face increased costs or be limited in finding replacement providers or hiring and retaining team members to provide these services in-house.

Those factors, together with increasing wage and benefit costs, could adversely affect our results of operations.

We have offices in India and China where there has generally been greater political, financial, environmental and health instability than the United States.

Changes in our effective income tax rate could adversely affect our business, results of operations, liquidity, and net income.

Fiscal [removed: 2017 (a 53-week year)] [added: 2018] included the following notable items:

| • | GAAP earnings per share from continuing operations were [removed: $5.32, including discrete benefits related to the Tax Cuts and Jobs Act (the Tax Act).] [added: $5.50.] |

| • | Comparable sales increased [removed: 1.3] [added: 5.0] percent, driven by a [removed: 1.6] [added: 5.0] percent increase in traffic. |

| [removed: •] [added: ◦] | Comparable digital channel sales [removed: growth of 27 percent contributed 1.2] [added: increased 36 percent, contributing 1.8] percentage points [removed: of] [added: to] comparable sales growth. |

| • | We returned [removed: $2.4] [added: $3.4] billion to shareholders through dividends and share repurchases. |

Sales were [removed: $71,879] [added: $74,433] million for [removed: 2017,] [added: 2018,] an increase of [removed: $2,384] [added: $2,647] million or [removed: 3.4] [added: 3.7] percent from the prior year, due to a comparable sales increase of [removed: 1.3 percent, the extra week in 2017,] [added: 5.0 percent] and the contribution from new [removed: stores.][added: stores, partially offset by the impact of the extra week in 2017.]

Operating cash flow provided by continuing operations was [removed: $6,849] [added: $5,970] million for [removed: 2017, an increase] [added: 2018, a decrease] of [removed: $1,520] [added: $891] million, or [removed: 28.5 percent] [added: 13.0 percent,] from [removed: $5,329] [added: $6,861] million for [removed: 2016.][added: 2017.]

Refer to the Cash Flows discussion within the Liquidity and Capital Resources section of MD&A on page [removed: 25] [added: 24] for additional information.

| [removed: 2017 (a)] [added: 2018] | | | [removed: 2016] [added: 2017 As Adjusted (a)(b)] | | | [removed: 2015] [added: 2016 As Adjusted (b)] | | | [removed: 2017/2016] [added: 2018/2017] | | [removed: 2016/2015] [added: 2017/2016] | | |

| GAAP diluted earnings per share | $ | [removed: 5.32] [added: 5.50] | | $ | [removed: 4.58] [added: 5.29] | | $ | [removed: 5.25] [added: 4.58] | | [removed: 16.2] [added: 4.0] | % | [removed: (12.7] [added: 15.5] | [removed: )%] [added: %] |

| Adjusted diluted earnings per share | $ | [removed: 4.71] [added: 5.39] | | $ | [removed: 5.01] [added: 4.69] | | $ | [removed: 4.69] [added: 5.00] | | [removed: (5.9] [added: 15.1] | [removed: )%] [added: %] | [removed: 6.7] [added: (6.3] | [removed: %] [added: )%] |

Adjusted diluted earnings per share from continuing operations (Adjusted EPS), a non-GAAP metric, excludes the impact of certain [removed: items not related to our routine retail operations.][added: items.]

Management believes that Adjusted EPS is [removed: meaningful to provide] [added: useful in providing] period-to-period comparisons of [added: the results of] our [removed: operating results.][added: continuing operations.]

A reconciliation of non-GAAP financial measures to GAAP measures is provided on page [removed: 22.][added: 21.]

[added: |] (a) [added: |] Consisted of 53 weeks. [added: |]

For the trailing twelve months ended February [removed: 3, 2018,] [added: 2, 2019,] ROIC was [removed: 15.9] [added: 14.7] percent, compared with [removed: 15.0] [added: 15.4] percent for the trailing twelve months ended [removed: January 28, 2017.][added: February 3, 2018.]

Excluding the discrete impacts of the Tax [removed: Act,] [added: Cuts and Jobs Act (Tax Act),] ROIC was [removed: 14.0] [added: 14.6] percent [added: and 13.6 percent] for the trailing twelve months ended February [added: 2, 2019, and February] 3, [removed: 2018.][added: 2018, respectively.]

A reconciliation of ROIC is provided on page [removed: 24.][added: 23.]

| (dollars in millions) | [added: 2018 | | |] 2017 [added: As Adjusted] (a) | | | 2016 [removed: |] [added: As Adjusted] | | [removed: 2015 (b)] | [added: 2018/2017] | | 2017/2016 | | [removed: 2016/2015 | |]

| Cost of sales [removed: (c)] | [removed: 51,125] [added: 53,299] | | | [removed: 49,145] [added: 51,125] | | | [removed: 52,241] [added: 49,145] | | | [removed: 4.0] [added: 4.3] | | [removed: (5.9] [added: 4.0] | [removed: )] |

| Depreciation and amortization (exclusive of depreciation included in cost of sales) [removed: (c)] | [removed: 2,194] [added: 2,224] | | | [removed: 2,025] [added: 2,225] | | | [removed: 1,969] [added: 2,045] | | | [removed: 8.4] [added: (0.1] | [added: )] | [removed: 2.8] [added: 8.8] | |

| Rate Analysis | [added: 2018 | |] 2017 [added: As Adjusted] (a) | | 2016 [removed: | | 2015] [added: As Adjusted] | |

| Gross margin rate [removed: (b)] | [removed: 28.9] [added: 28.4] | % | [removed: 29.3] [added: 28.8] | % | 29.2 | % |

| Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate [removed: (b)] | [removed: 3.1] [added: 3.0] | | [removed: 2.9] [added: 3.1] | | [removed: 2.7] [added: 2.9] | |

Note [removed: 2] [added: 3] of the Financial Statements [removed: provides a] [added: defines] gift card [removed: "breakage" definition.][added: "breakage".]

[removed: Digital] [added: Our stores fulfill the majority of digital] channel [removed: sales may be fulfilled through our stores, our distribution centers, our vendors, or other delivery options,] [added: sales,] including [added: through] store [removed: drive-up] [added: pick up or drive up] and delivery via our wholly [removed: own] [added: owned] subsidiary, Shipt.

The extra week contributed [removed: $1,167 million of sales, or] 1.7 percentage points of increase over 2016.

| Sales by Channel | [removed: 2017] [added: 2018] | | [removed: 2016] [added: 2017] | | [removed: 2015 (a)] [added: 2016] | |

| Stores [added: originated] | [removed: 94.5] [added: 92.9] | % | [removed: 95.6] [added: 94.5] | % | [removed: 96.6] [added: 95.6] | % |

| Comparable Sales | [removed: 2017] [added: 2018] | | [removed: 2016] [added: 2017] | | [removed: 2015] [added: 2016] | |

| Comparable sales change | [added: 5.0 | % |] 1.3 | % | (0.5 | )% | [removed: 2.1 | % |]

| Number of transactions | [added: 5.0 | |] 1.6 | | (0.8 | ) | [removed: 1.3 | |]

| Average transaction amount | [added: 0.1 | |] (0.3 | ) | 0.3 | | [removed: 0.8 | |]

| Contribution to Comparable Sales Change | [removed: 2017] [added: 2018] | | [removed: 2016] [added: 2017] | | [removed: 2015] [added: 2016] | |

| Stores channel comparable sales change | [added: 3.2 | % |] 0.1 | % | (1.5 | )% | [removed: 1.3 | % |]

| Digital channel [added: percentage points] contribution to comparable sales change | [removed: 1.2] [added: 1.8] | | [removed: 1.0] [added: 1.2] | | [removed: 0.8] [added: 1.0] | |

| Total comparable sales change | [added: 5.0 | % |] 1.3 | % | (0.5 | )% | [removed: 2.1 | % |]

| | [added: | 2018 | | | | | | | | | | | |] 2017 [added: As Adjusted (a)(b)] | | [added: | | | | | | | | | |] 2016 [added: As Adjusted (b)] | | [removed: 2015] | | [added: | | | | | | |]

TD [added: Bank Group (TD)] offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the Target MasterCard Credit Card (Target Credit Cards).

Guests receive a 5 percent discount on [removed: virtually] [added: nearly] all purchases and free shipping when they use a [removed: REDcard.][added: REDcard at Target.]

| • | Adjusted earnings per share were $5.39. |

| • | Total revenue increased 3.6 percent, driven by a comparable sales increase and sales from new stores, partially offset by fiscal 2017 containing 53 weeks. |

| ◦ | Comparable store sales grew 3.2 percent. |

As described in Note 2 to the Financial Statements, certain prior-year amounts have been adjusted to reflect the impact of adopting Accounting Standards Update (ASU) No. 2014-09—Revenue from Contracts with Customers (Topic 606), ASU No. 2016-02—Leases (Topic 842), and ASU No. 2017-07—Compensation – Retirement Benefits (Topic 715) throughout this document to conform to the current year presentation.

Operating income in 2018 decreased by $114 million or 2.7 percent from 2017 to $4,110 million.

| Adjustments | (0.10 | | ) | (0.60 | | ) | 0.42 | | | | | | |

| (b) | Lease standard adoption resulted in a $0.03 and $0.02 reduction in GAAP and Adjusted EPS, respectively, for 2017, and a less than $0.01 and $0.01 reduction in GAAP and Adjusted EPS, respectively, for 2016. |

| Sales | $ | 74,433 | | $ | 71,786 | | $ | 69,414 | | 3.7 | % | 3.4 | % |

| Other revenue | 923 | | | 928 | | | 857 | | | (0.5 | ) | 8.3 | |

| Total revenue | 75,356 | | | 72,714 | | | 70,271 | | | 3.6 | | 3.5 | |

| SG&A expenses | 15,723 | | | 15,140 | | | 14,217 | | | 3.9 | | 6.5 | |

| Operating income | $ | 4,110 | | $ | 4,224 | | $ | 4,864 | | (2.7 | )% | (13.1 | )% |

| SG&A expense rate | 20.9 | | 20.8 | | 20.2 | |

| Operating income margin rate | 5.5 | | 5.8 | | 6.9 | |

Note: Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales.

All other rates are calculated by dividing the applicable amount by total revenue.

Digital channel sales may also be fulfilled through our distribution centers, our vendors, or other third parties.

The increase in 2018 sales compared with 2017 is due to a 5.0 percent comparable sales increase and the contribution from new stores, partially offset by the extra week in 2017, which contributed $1,167 million of sales, or 1.6 percent of 2017 sales.

| Digitally originated | 7.1 | | 5.5 | | 4.4 | |

| Total REDcard Penetration | 23.8 | % | 24.5 | % | 24.2 | % |

Note: Amounts may not foot due to rounding.

In 2018, we refined our calculation of REDcard Penetration.

The prior period amounts have been updated to conform with the current methodology, resulting in an increase of 0.2 percentage points to the Total REDcard Penetration for 2017 and 2016.

The 2018 decrease was primarily due to increased digital fulfillment and supply chain costs.

The benefit of merchandising strategies, including cost savings initiatives and efforts to improve pricing and promotions, was partially offset by the impact of our sales mix.

The increase in 2018 was primarily due to higher compensation, primarily driven by store wages, partially offset by cost savings across multiple expense categories.

The 2018 decrease was primarily due to the rate impact of higher sales.

| February 2, 2019 | | February 3, 2018 | | | February 2, 2019 | | February 3, 2018 | | |

Our 2018 effective income tax rate from continuing operations increased to 20.3 percent from 19.9 percent in 2017, primarily due to lower discrete favorable benefits of the Tax Act, which were $36 million in 2018 compared with $343 million in 2017, and less rate benefit from our global sourcing operations in 2018 compared with 2017.

The lower 2018 benefit of discrete Tax Act-related items was substantially offset by the full-year benefit of a 21 percent federal statutory rate in 2018 compared with a 33.7 percent blended federal statutory rate in 2017.

| Tax Act (c) | | $ | — | | | $ | (36 | ) | | $ | (0.07 | ) | | $ | — | | | $ | (343 | ) | | $ | (0.62 | ) | | $ | — | | | $ | — | | | $ | — | |

| Other (d) | | — | | | | — | | | | — | | | | (5 | | ) | | (3 | | ) | | (0.01 | | ) | | (4 | | ) | | (2 | | ) | | — | | |

Note: Amounts may not foot due to rounding.

| (b) | Lease standard adoption resulted in a $0.03 and $0.02 reduction in GAAP and Adjusted EPS, respectively, for 2017, and a less than $0.01 and $0.01 reduction in GAAP and Adjusted EPS, respectively, for 2016. Refer to Note 2 to the Consolidated Financial Statements. |

| (d) | For 2017, represents an insurance recovery related to the 2013 data breach. For 2016, represents items related to the 2015 sale of our pharmacy and clinic businesses. |

| (e) | Represents income from certain income tax matters not related to current period operations. |

| Net earnings from continuing operations | $ | 2,930 | | $ | 2,908 | | $ | 2,666 | | 0.7 | % | 9.1 | % |

| \+ Provision for income taxes | 746 | | | 722 | | | 1,295 | | | 3.5 | | (44.3 | ) |

| \+ Net interest expense | 461 | | | 653 | | | 991 | | | (29.3 | ) | (34.1 | ) |

| EBIT (b) | $ | 4,137 | | $ | 4,283 | | $ | 4,952 | | (3.4 | )% | (13.5 | )% |

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| • | Adjusted earnings per share were $4.71, which excludes discrete benefits related to the Tax Act and other items described on page 22. |

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| • | We made several investments to improve and expand our delivery capabilities; most notably, we purchased Shipt, an online same-day delivery company, for approximately $550 million. |

Earnings from continuing operations before interest expense and income taxes in 2017 decreased by $657 million or 13.2 percent from 2016 to $4,312 million.

| Adjustments | (0.61 | | ) | 0.42 | | | (0.56 | | ) | | | | |

Segment Results

| Sales | $ | 71,879 | | $ | 69,495 | | $ | 73,785 | | 3.4 | % | (5.8 | )% |

| Gross margin | 20,754 | | | 20,350 | | | 21,544 | | | 2.0 | | (5.5 | ) |

| SG&A expenses (d) | 14,248 | | | 13,360 | | | 14,448 | | | 6.6 | | (7.5 | ) |

| EBIT | $ | 4,312 | | $ | 4,965 | | $ | 5,127 | | (13.2 | )% | (3.2 | )% |

Note: See Note 30 of our Financial Statements for a reconciliation of our segment results to Earnings Before Income Taxes and more information about items recorded outside of segment SG&A.

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| (b) | Sales and Cost of Sales include $3,815 million and $3,076 million, respectively, related to our former pharmacy and clinic businesses for 2015. The sale of these businesses had no notable impact on EBIT. |

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| (c) | Refer to Note 3 of the Financial Statements for information about the reclassification of supply chain-related depreciation expense to Cost of Sales. |

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| (d) | For 2017, 2016, and 2015, SG&A Expenses includes $694 million, $663 million, and $641 million, respectively, of net profit-sharing income under our credit card program agreement. |

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| SG&A expense rate | 19.8 | | 19.2 | | 19.6 | |

| EBIT margin rate (c) | 6.0 | | 7.1 | | 6.9 | |

Note: Rate analysis metrics are computed by dividing the applicable amount by Sales.

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At February [removed: 3, 2018,] [added: 2, 2019,] our exposure to market risk was primarily from interest rate changes on our debt obligations, some of which are at a [removed: LIBOR-plus] [added: London Interbank Offered Rate (LIBOR)-plus] floating-rate.

Our interest rate exposure is primarily due to differences between our floating rate debt obligations compared to our floating rate [removed: short term] [added: short-term] investments.

At February [removed: 3, 2018,] [added: 2, 2019,] our floating rate [removed: short-term investments] [added: debt] exceeded our floating rate [removed: debt] [added: short-term investments] by approximately [removed: $900] [added: $700] million.

Based on our balance sheet position at February [removed: 3, 2018,] [added: 2, 2019,] the annualized effect of a 0.1 percentage point increase in floating interest rates on our floating rate debt obligations, net of our floating rate short-term investments, would not be significant.

See further description of our debt and derivative instruments in Notes [removed: 20] [added: 16] and [removed: 21] [added: 17] to the Financial Statements.

Based on our balance sheet position at February [removed: 3, 2018,] [added: 2, 2019,] the annualized effect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income taxes by $6 million.

A [removed: 0.5] [added: 1] percentage point decrease to the weighted average discount rate would increase annual expense by [removed: $31] [added: $68] million.

At year-end, we had hedged [removed: 55] [added: 60] percent of the interest rate exposure of our funded status.

As more fully described in Notes [removed: 15] [added: 12] and [removed: 27] [added: 23] to the Financial Statements, we are exposed to market returns on accumulated team member balances in our nonqualified, unfunded deferred compensation plans.

We control the risk of offering the nonqualified plans by making investments in life insurance contracts and prepaid forward contracts on our own common stock that [added: substantially] offset [removed: a substantial portion of] our economic exposure to the returns on these plans.

The annualized effect of a one percentage point change in market returns on our nonqualified defined contribution plans (inclusive of the effect of the investment vehicles used to manage our economic exposure) would not be significant.

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 [removed: offerings,] [added: offerings] and [added: suite of fulfillment options, and] our disciplined approach to managing our business and investing in future growth.

CVS Pharmacy, Inc. (CVS) operates pharmacies and clinics in our stores under a perpetual operating [removed: agreement, subject to termination in limited circumstances.][added: agreement from which we generate annual occupancy income.]

[removed: See] [added: For information on key financial highlights, see] Item [added: 6, Selected Financial Data, and Item] 7, Management's Discussion and Analysis of Financial Condition and Results of Operations [removed: (MD&A) and Note 6 of Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data (the Financial Statements) for more information.][added: (MD&A).]

Our digital channels include a wide merchandise assortment, including many items found in our stores, along with a complementary [removed: assortment such as additional sizes and colors sold only online.][added: assortment.]

Approximately one-third of [removed: 2017] [added: 2018] sales is related to our owned and exclusive brands, including but not limited to the following:

| [removed: Embark®] [added: Hyde & Eek! Boutique™] | Simply Balanced™ | Xhilaration® |

| DENIZEN® from Levi's® | [removed: Isabel Maternity™ by Ingrid] [added: Hearth] & [removed: Isabel®] [added: Hand™ with Magnolia] | Nate Berkus™ for Target |

| [removed: Fieldcrest®] [added: Genuine Kids® from OshKosh®] | Just One You® made by carter's® | [removed: Oh Joy!®] [added: Umbro™] for Target |

| [added: C9 by Champion® |] Hand Made Modern® | [removed: |] [added: Kid Made Modern®] |

The vast majority of merchandise is distributed to our stores through our network of [removed: 41] [added: 40] distribution centers.

Merchandise sold through our digital channels is distributed to our guests via common carriers (from stores, distribution centers, [removed: vendors] [added: vendors,] and third party [removed: distributors)] [added: distributors), delivery via our wholly-owned subsidiary, Shipt, Inc. (Shipt),] and through guest pick-up at our stores.

At February [removed: 3, 2018,] [added: 2, 2019,] we employed approximately [removed: 345,000] [added: 360,000] full-time, part-time and seasonal employees, referred to as "team members." Because of the seasonal nature of the retail business, employment levels peak in the holiday season.

Our principal trademarks, including Target, SuperTarget and our "Bullseye Design," have been registered with the United States [added: (U.S.)] Patent and Trademark Office.

[added: Nearly all of our revenues are generated within the U.S.] The vast majority of our property and equipment is located within the [removed: United States.][added: U.S.]

Our Corporate Governance Guidelines, [removed: Business Conduct Guide,] [added: Code of Ethics,] Corporate Responsibility Report, and the charters for the committees of our Board of Directors are also available free of charge in print upon request or at investors.target.com.

| A New Day™ | JoyLab™ | Smartly™ |

| Archer Farms® | Knox Rose™ | Smith & Hawken® |

| Art Class™ | Kona Sol™ | Sonia Kashuk® |

| Ava & Viv® | Made By Design™ | Spritz™ |

| Boots & Barkley® | Market Pantry® | Sutton & Dodge® |

| Bullseye's Playground™ | Opalhouse™ | Threshold™ |

| Cat & Jack™ | Original Use™ | Universal Thread™ |

| Cloud Island™ | Pillowfort™ | up & up® |

| Embark® | Prologue™ | Who What Wear™ |

| Gilligan & O'Malley® | Project 62™ | Wild Fable™ |

| Goodfellow & Co.™ | Room Essentials® | Wine Cube® |

| heyday™ | Shade & Shore™ | Wondershop™ |

| Fieldcrest® | Isabel Maternity™ by Ingrid & Isabel® | Oh Joy!® for Target |

In 2014, we announced our exit from the Canadian market.

Canadian financial results are included in our financial statements as our only discontinued operations.

We sold our pharmacy and clinic businesses (Pharmacy Transaction) to CVS in December of 2015.

For information on key financial highlights and segment financial information, see Item 6, Selected Financial Data, MD&A, and Note 30 of the Financial Statements.

| A New Day™ | Goodfellow & Co.™ | Sonia Kashuk® |

| Archer Farms® | JoyLab™ | Spritz™ |

| Art Class™ | Knox Rose™ | Sutton & Dodge® |

| Ava & Viv® | Market Pantry® | Threshold™ |

| Boots & Barkley® | Merona® | up & up® |

| Bullseye's Playground™ | Pillowfort™ | Who What Wear™ |

| Cat & Jack™ | Project 62™ | Wine Cube® |

| Cloud Island™ | Room Essentials® | Wondershop™ |

| Gilligan & O'Malley® | Smith & Hawken® | |

| C9 by Champion® | Hearth & Hand™ with Magnolia | Mossimo® |

| Genuine Kids® from OshKosh® | Kid Made Modern® | |

The majority of our stores also have a CVS pharmacy from which we will generate ongoing annual occupancy-related income (see MD&A and Note 6 of the Financial Statements for more information).

We continue to expand other delivery options, including store drive-up and delivery via our wholly-owned subsidiary, Shipt, Inc. (Shipt).

We expect less variability in working capital needs throughout the year than we have historically experienced due to efforts to better match payables to inventory levels.

Virtually all of our revenues are generated within the United States.

On May 17, 2016 and May 24, 2016, Target Corporation and certain present and former officers were named as defendants in two purported federal securities law class actions filed in the [removed: United States] [added: U.S.] District Court for the District of Minnesota (the Court).

The [removed: plaintiffs] [added: lead plaintiff] filed a Consolidated Amended Class Action Complaint [removed: (the First] [added: (First] Complaint) on November 14, 2016, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 relating to the Canada Disclosure and naming Target, its former chief executive officer, its present chief operating officer, and the former president of Target Canada as defendants.

On [removed: July 31, 2017] [added: March 19, 2018,] the Court [added: denied the plaintiff's motion to alter or amend the final judgment] issued [removed: a combined order] [added: on July 31, 2017,] dismissing the Federal Securities Law Class Actions.

That [removed: motion] [added: appeal] has not yet been heard or decided.

The plaintiffs sought [removed: to represent a class consisting of all persons who were participants in or beneficiaries of the Target Corporation 401(k) Plan or the Target Corporation Ventures 401(k) Plan (collectively, the Plans) at any time between February 27, 2013 and May 19, 2014 and whose Plan accounts included investments in Target stock and sought] damages, an injunction and other unspecified equitable relief, and attorneys’ fees, expenses, and costs, based on allegations that the defendants breached their fiduciary duties by failing to take action to prevent Plan participants from continuing to purchase Target stock during the class period at prices that allegedly were artificially inflated.

[removed: On August 30, 2017] [added: After] the [added: Court dismissed the First ERISA Class Action on July 31, 2017, the] plaintiffs filed a new ERISA Class Action (the Second ERISA Class Action) [removed: in] [added: with] the [removed: Court,] [added: Court on August 30, 2017,] which [removed: has] [added: had] substantially similar allegations, defendants, class representation, and damages sought as the First ERISA Class Action, except that the class period [removed: is] [added: was] extended to August 6, 2014.

On [removed: November 13, 2017,] [added: June 15, 2018, the Court granted the motion by] Target and the other defendants [removed: filed a motion] to dismiss the Second ERISA Class Action.

[removed: A hearing on that motion was held on February 22, 2018, but it] [added: That appeal] has not yet been [added: heard or] decided.

For a description of other legal proceedings, see Note [removed: 19] [added: 15] of the Financial Statements.

On April 18, 2018, the plaintiff appealed the Court's final judgment.

The plaintiffs sought to represent a class consisting of all persons who were participants in or beneficiaries of the Target Corporation 401(k) Plan or the Target Corporation Ventures 401(k) Plan (collectively, the Plans) at any time between February 27, 2013 and May 19, 2014 and whose Plan accounts included investments in Target stock.

On July 16, 2018, the plaintiffs appealed the Court's dismissal.

On December 5, 2018, the Alameda County Superior Court entered judgment approving a settlement regarding those allegations.

The settlement requires Target to pay $4.4 million for civil penalties, enforcement costs and supplemental environmental projects, and spend $3 million on certain past and future additional internal compliance measures.

The plaintiff sought to represent a class consisting of all purchasers of Target common stock between March 20, 2013 and August 4, 2014 and sought damages and other relief, including attorneys’ fees, based on allegations that the defendants misled investors about the performance and prospects of Target Canada and that such conduct affected the value of Target common stock.

On August 29, 2017 the plaintiff filed a motion to alter or amend the final judgment entered by the Court dismissing the Federal Securities Law Class Actions.

The plaintiffs also asked the Court for permission to file a Second Amended Class Action Complaint (the Second Complaint), which has substantially similar allegations, defendants, class representation, and damages sought as the First Complaint.

On October 16, 2017, Target and the other defendants filed their opposition to plaintiff's motion to alter or amend the final judgment dismissing the Federal Securities Law Class Actions.

On July 31, 2017 the Court issued a combined order dismissing the ERISA Class Actions.

Representatives of Target have had a series of meetings with representatives of the Attorney General’s Office and certain California District Attorneys’ Offices to discuss the allegations.

No formal legal action has been commenced, but the parties are discussing resolution of the matter.

| For the fiscal year ended February [removed: 3, 2018] [added: 2, 2019] | |

[removed: ][added: ]

Indicate by [removed: checkmark] [added: check mark] whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

The aggregate market value of the voting stock held by non-affiliates of the registrant as of [removed: July 29, 2017] [added: August 4, 2018,] was [removed: $30,595,914,184,] [added: $42,763,636,334] based on the closing price of [removed: $56.11] [added: $81.45] per share of Common Stock as reported on the New York Stock Exchange Composite Index.

Total shares of Common Stock, par value $0.0833, outstanding at March [removed: 8, 2018] [added: 7, 2019,] were [removed: 538,796,010.][added: 516,333,213.]

| Portions of Target's Proxy Statement for the Annual Meeting of Shareholders to be held on June [removed: 13, 2018] [added: 12, 2019,] are incorporated into Part III. |

| [Item [removed: 1](#s2BF2F77C0A8726E67087A2539034E41D)] [added: 1](#s072FB9F2AA8A546C8A4574D25AF4AB08)] | | [removed: [Business](#s2BF2F77C0A8726E67087A2539034E41D)] [added: [Business](#s072FB9F2AA8A546C8A4574D25AF4AB08)] | [removed: [2](#s2BF2F77C0A8726E67087A2539034E41D)] [added: [2](#s072FB9F2AA8A546C8A4574D25AF4AB08)] |

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| [Item [removed: 1B](#s599A5923B5B711C5931DA25390854138)] [added: 1B](#s6DD229FDA6A1592D962472D820B1DEC6)] | | [Unresolved Staff [removed: Comments](#s599A5923B5B711C5931DA25390854138)] [added: Comments](#s6DD229FDA6A1592D962472D820B1DEC6)] | [removed: [10](#s599A5923B5B711C5931DA25390854138)] [added: [10](#s6DD229FDA6A1592D962472D820B1DEC6)] |

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| [Item [removed: 5](#s76CFFEEE5C269D64CD6BA2538906D688)] [added: 5](#s63F67636C67653789026D5DE8181F5D4)] | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s76CFFEEE5C269D64CD6BA2538906D688)] [added: Securities](#s63F67636C67653789026D5DE8181F5D4)] | [removed: [14](#s76CFFEEE5C269D64CD6BA2538906D688)] [added: [14](#s63F67636C67653789026D5DE8181F5D4)] |

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| [Item [removed: 7](#sCF3F7DE3E21F284A1D42A25391EFC179)] [added: 7](#sF9DDA354ECF6512281F5977F0934C567)] | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sCF3F7DE3E21F284A1D42A25391EFC179)] [added: Operations](#sF9DDA354ECF6512281F5977F0934C567)] | [removed: [16](#sCF3F7DE3E21F284A1D42A25391EFC179)] [added: [17](#sF9DDA354ECF6512281F5977F0934C567)] |

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| [Item [removed: 8](#s92B5693B9936AFE0346DA253933086DD)] [added: 8](#s9799455DC7205B92988420E17419A583)] | | [Financial Statements and Supplementary [removed: Data](#s92B5693B9936AFE0346DA253933086DD)] [added: Data](#s9799455DC7205B92988420E17419A583)] | [removed: [33](#s92B5693B9936AFE0346DA253933086DD)] [added: [32](#s9799455DC7205B92988420E17419A583)] |

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| [PART [removed: III](#sF0446C51DDB2885652D1A2539BC868D2)] [added: III](#s1312B61F3AB751829908F02A999669E3)] | | | |

| [Item [removed: 10](#sA175D22EFC63468DCF92A2539BEACC42)] [added: 10](#s0D99D77D2CE55927B9B1A261E608B19D)] | | [Directors, Executive Officers and Corporate [removed: Governance](#sA175D22EFC63468DCF92A2539BEACC42)] [added: Governance](#s0D99D77D2CE55927B9B1A261E608B19D)] | [removed: [63](#sA175D22EFC63468DCF92A2539BEACC42)] [added: [65](#s0D99D77D2CE55927B9B1A261E608B19D)] |

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10-K 1 tgt-20190202x10k.htm 10-K

| [PART I](#s554B691B8F7F5C118A5065042AD0E819) | | | |

| [PART II](#s697CE7E6B0085E2C959EB501DAC8086A) | | | |

| [PART IV](#s03A80F4350B75F3DA9CF8BDD9D7FA771) | | | |

| [Signatures](#sF9D27C44A4E555A2BEBC2C043E7B7194) | | | [70](#sF9D27C44A4E555A2BEBC2C043E7B7194) |

10-K 1 tgt-20180203x10k.htm 10-K

| [PART I](#s16B3543D32391C8EF703A2539010EF36) | | | |

| [PART II](#sDBE7CDC16D042B782D0DA253915E8AB1) | | | |

| [PART IV](#sA58EFD48A1DF44EC39D4A2539CC3BDF1) | | | |

| [Signatures](#s1E65C5DD1D267844189AA2539D14AB5B) | | | [69](#s1E65C5DD1D267844189AA2539D14AB5B) |

| Stores at February [removed: 3, 2018] [added: 2, 2019] | Stores | | Retail Sq. Ft. (in thousands) | | | | Stores | | Retail Sq. Ft. (in thousands) | |

| Colorado | [removed: 41] [added: 42] | | [removed: 6,215] [added: 6,245] | | | New Mexico | 10 | | 1,185 | |

| Connecticut | 20 | | 2,672 | | | New York | [removed: 79] [added: 82] | | [removed: 10,117] [added: 10,134] | |

| Hawaii | 7 | | 1,111 | | | Oregon | [removed: 19] [added: 20] | | [removed: 2,280] [added: 2,312] | |

| Idaho | 6 | | 664 | | | Pennsylvania | [removed: 71] [added: 75] | | [removed: 8,827] [added: 9,094] | |

| Illinois | 94 | | [removed: 12,152] [added: 11,926] | | | Rhode Island | 4 | | 517 | |

| Kansas | 17 | | 2,385 | | | Tennessee | [removed: 31] [added: 30] | | [removed: 3,990] [added: 3,816] | |

| Kentucky | 13 | | 1,551 | | | Texas | [removed: 149] [added: 150] | | [removed: 20,863] [added: 20,919] | |

| Louisiana | 15 | | 2,120 | | | Utah | [removed: 13] [added: 14] | | [removed: 1,954] [added: 1,979] | |

| Maine | 5 | | 630 | | | Vermont | [removed: —] [added: 1] | | [removed: —] [added: 60] | |

| Maryland | 39 | | 4,860 | | | Virginia | [removed: 58] [added: 59] | | [removed: 7,689] [added: 7,714] | |

| Massachusetts | [removed: 42] [added: 46] | | [removed: 5,260] [added: 5,388] | | | Washington | 37 | | 4,329 | |

| Stores and Distribution Centers at February [removed: 3, 2018] [added: 2, 2019] | Stores | | Distribution Centers (a) | |

| Owned buildings on leased land | [removed: 160] [added: 158] | | — | |

(a) The [removed: 41] [added: 40] distribution centers have a total of [removed: 52,549] [added: 51,688] thousand square feet.

We own our corporate headquarters buildings located in and around Minneapolis, Minnesota, and we lease and own additional office space elsewhere in the [removed: United States.][added: U.S. We also lease office space in 11 countries for various support functions.]

For additional information on our properties, see the Capital Expenditures section in MD&A and Notes [removed: 14] [added: 11] and [removed: 22] [added: 18] of [removed: the] [added: Item 8,] Financial [removed: Statements.][added: Statements and Supplementary Data (the Financial Statements).]

| Alabama | 22 | | 3,132 | | | Montana | 7 | | 777 | |

| California | 287 | | 36,042 | | | New Jersey | 47 | | 5,992 | |

| Florida | 123 | | 17,015 | | | Ohio | 63 | | 7,703 | |

| Minnesota | 73 | | 10,315 | | | Wisconsin | 36 | | 4,430 | |

| | | | | | | Total | 1,844 | | 239,581 | |

| Owned | 1,525 | | 33 | |

| Leased | 161 | | 7 | |

| Total | 1,844 | | 40 | |

| Alabama | 22 | | 3,150 | | | Montana | 7 | | 780 | |

| California | 283 | | 35,948 | | | New Jersey | 45 | | 5,882 | |

| Florida | 122 | | 16,985 | | | Ohio | 62 | | 7,675 | |

| Minnesota | 74 | | 10,440 | | | Wisconsin | 37 | | 4,560 | |

| | | | | | | Total | 1,822 | | 239,355 | |

| Owned | 1,526 | | 33 | |

| Leased | 136 | | 8 | |

| Total | 1,822 | | 41 | |

We also lease office space in 12 countries for various support functions.

| Brian C. Cornell | Chairman of the Board and Chief Executive Officer since August 2014. Chief Executive Officer of PepsiCo Americas Foods, a division of PepsiCo, Inc., a multinational food and beverage corporation, from March 2012 to July 2014. | [removed: 59] [added: 60] | |

| Rick H. Gomez | Executive Vice President and Chief Marketing [added: & Digital] Officer since January [removed: 2017. Senior] [added: 2019. Executive] Vice [removed: President, Brand] [added: President] and [removed: Category] [added: Chief] Marketing [added: Officer] from [removed: April 2013] [added: January 2017] to January [removed: 2017.] [added: 2019. Senior] Vice President, Brand [added: and Category] Marketing [removed: at MillerCoors, a multinational brewing company,] from April [removed: 2011] [added: 2013] to [removed: April 2013.] [added: January 2017.] | [removed: 48] [added: 49] | |

| Don H. Liu | Executive Vice President, Chief Legal & Risk Officer and Corporate Secretary since October 2017. Executive Vice President, Chief Legal Officer and Corporate Secretary from August 2016 to September 2017. Executive Vice President, General Counsel and Corporate Secretary of Xerox Corporation from July 2014 to August 2016, and Senior Vice President, General Counsel and Corporate Secretary from March 2007 to July 2014. | [removed: 56] [added: 57] | |

| Stephanie A. Lundquist | Executive Vice President and [added: President, Food & Beverage since January 2019. Executive Vice President and] Chief Human Resources Officer [removed: since] [added: from] February [removed: 2016.] [added: 2016 to January 2019.] Senior Vice President, Human Resources from January 2015 to February 2016. Senior Vice President, Stores and Distribution Human Resources from February 2014 to January 2015. [removed: From March 2011 to January 2014, Ms. Lundquist held several leadership positions with Target Canada.] | [removed: 42] [added: 43] | |

| Michael E. McNamara | Executive Vice President and Chief Information [added: Officer since January 2019. Executive Vice President and Chief Information] & Digital Officer [removed: since] [added: from] September [removed: 2016.] [added: 2016 to January 2019.] Executive Vice President and Chief Information Officer from June 2015 to September 2016. [removed: Chief Information] Officer of Tesco PLC, a multinational grocery and general merchandise retailer, from March 2011 to May 2015. | [removed: 53] [added: 54] | |

| John J. Mulligan | Executive Vice President and Chief Operating Officer since September 2015. Executive Vice President and Chief Financial Officer from April 2012 to August 2015. | [removed: 52] [added: 53] | |

| Minsok Pak | Executive Vice President and Chief Strategy & Innovation Officer since August 2017. Senior Vice President of Shopper Marketing & Channel Development, LEGO Retail, LEGO Group, a developer and producer of toys, from April 2016 to July 2017. Partner, Digital Transformation, McKinsey & Company, a global management consulting firm, from April 2014 to April 2016. Managing Director, Actium Corporation, a private equity firm, from June 2010 to April 2014. | [removed: 49] [added: 50] | |

| Janna A. Potts | Executive Vice President and Chief Stores Officer since January 2016. Senior Vice President, Stores and Supply Chain Human Resources from February 2015 to January 2016. Senior Vice President, Target Canada Stores and Distribution from March 2014 to January 2015. [removed: Senior Vice President, Store Operations from August 2009 to March 2014.] | [removed: 50] [added: 51] | |

| Cathy R. Smith | Executive Vice President and Chief Financial Officer since September 2015. Executive Vice President and Chief Financial Officer of Express Scripts Holding Company, a pharmacy benefit manager, from February 2014 to December 2014. [removed: Executive Vice President of Strategy and Chief Financial Officer for Walmart International, a division of Wal-Mart Stores, Inc., a discount retailer, from March 2010 to January 2014.] | [removed: 54] [added: 55] | |

| Mark J. Tritton | Executive Vice President and Chief Merchandising Officer since June 2016. President of Nordstrom Product Group, of Nordstrom Inc., a fashion specialty retailer, from June 2009 to June 2016. | [removed: 54] [added: 55] | |

| Laysha L. Ward | Executive Vice President and Chief External Engagement Officer since January 2017. Chief Corporate Social Responsibility Officer from December 2014 to January 2017. President, Community Relations and Target Foundation from July 2008 to December 2014. | [removed: 50] [added: 51] | |

| Melissa K. Kremer | Executive Vice President and Chief Human Resources Officer since January 2019. Senior Vice President, Talent and Organizational Effectiveness from October 2017 to January 2019. Vice President, Human Resources, Merchandising, Strategy & Innovation, from September 2015 to October 2017. From February 2012 until September 2015, Ms. Kremer held several leadership positions in Human Resources, supporting Merchandising, Target.com & Mobile, Enterprise Strategy & Multichannel. | 41 | |

At March [removed: 8, 2018,] [added: 7, 2019,] there were [removed: 14,710] [added: 14,331] shareholders of record.

Dividends declared per share [removed: and the high and low closing common stock price] for each fiscal quarter during [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] are disclosed in Note [removed: 31] [added: 26] of the Financial Statements.

Under this program, we repurchased [removed: 21.3] [added: 48.6] million shares of common stock through February [removed: 3, 2018,] [added: 2, 2019,] at an average price of [removed: $60.52,] [added: $69.13,] for a total investment of [removed: $1.3] [added: $3.4] billion.

The table below presents information with respect to Target common stock purchases made during the three months ended February [removed: 3, 2018,] [added: 2, 2019,] by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.

| Open market and privately negotiated purchases | [removed: 583,027] [added: —] | | | $ | [removed: 55.36] [added: —] | | | [removed: 583,027] [added: —] | | | $ | [removed: 3,841,829,136] [added: 1,808,949,841] | |

| November [removed: 26, 2017] [added: 4, 2018] through December [removed: 30, 2017] [added: 1, 2018] | | | | | | | | | | | | | |

| December [removed: 31, 2017 through February 3,] [added: 2,] 2018 [added: through January 5, 2019] | | | | | | | | | | | | | |

| (a) | Represents the incremental shares received upon final settlement of the accelerated share repurchase [removed: agreement] (ASR) [added: agreement] initiated in third quarter [removed: 2017.] [added: 2018.] |

[removed: ][added: ]

| | February [removed: 2, 2013 | | | February] 1, 2014 | | | January 31, 2015 | | | January 30, 2016 | | | January 28, 2017 | | | February 3, 2018 | | | [added: February 2, 2019 | | |]

The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal years with (i) the cumulative total return on the S&P 500 [removed: Index,] [added: Index and] (ii) the peer group [removed: used in previous filings] consisting of [removed: 18] [added: 17] online, general merchandise, department store, food, and specialty [removed: retailers, which are large and meaningful competitors] [added: retailers] (Amazon.com, Inc., Best Buy Co., Inc., Costco Wholesale Corporation, CVS Health Corporation, Dollar General Corporation, [added: Dollar Tree, Inc.,] The Gap, Inc., The Home Depot, Inc., Kohl's Corporation, The Kroger Co., Lowe's Companies, Inc., Macy's, Inc., [removed: Publix Super Markets, Inc.,] Rite Aid Corporation, Sears Holdings Corporation, [removed: Staples, Inc.,] The TJX Companies, Inc., Walgreens Boots Alliance, Inc., and Walmart Inc.) [removed: (Previous Peer Group), and (iii) a new peer group consisting of the companies in the Previous Peer Group excluding Publix Super Markets, Inc., which is no longer quoted on a public stock exchange and Staples, Inc., which is no longer publicly traded, plus Dollar Tree, Inc. (Current Peer] [added: (Peer] Group).

The [removed: Current] Peer Group is consistent with the retail peer group used for our definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June [removed: 13, 2018.][added: 12, 2019, excluding Publix Super Markets, Inc., which is not quoted on a public stock exchange.]

The graph assumes the investment of $100 in Target common stock, the S&P 500 [removed: Index] [added: Index,] and the Peer Group on February [removed: 2, 2013,] [added: 1, 2014,] and reinvestment of all dividends.

| Open market and privately negotiated purchases | 1,242,920 | | | 64.83 | | | | 1,242,920 | | | 1,728,366,804 | | |

| October 2018 ASR (a) | 2,224,074 | | | 77.98 | | | | 2,224,074 | | | 1,731,980,648 | | |

| January 6, 2019 through February 2, 2019 | | | | | | | | | | | | | |

| Open market and privately negotiated purchases | 1,285,280 | | | 69.74 | | | | 1,285,280 | | | 1,642,349,966 | | |

| Total | 4,752,274 | | | $ | 72.31 | | | 4,752,274 | | | $ | 1,642,349,966 | |

| Target | $ | 100.00 | | $ | 134.13 | | $ | 135.76 | | $ | 123.33 | | $ | 147.22 | | $ | 148.42 | |

| S&P 500 Index | 100.00 | | | 114.22 | | | 113.46 | | | 137.14 | | | 168.46 | | | 168.36 | | |

| Peer Group | 100.00 | | | 124.37 | | | 135.70 | | | 150.68 | | | 217.62 | | | 226.48 | | |

| October 29, 2017 through November 25, 2017 | | | | | | | | | | | | | |

| August 2017 ASR (a) | 279,645 | | | 57.78 | | | | 279,645 | | | 3,931,213,840 | | |

| November 2017 ASR | 2,350,000 | | | 65.97 | | | | 2,350,000 | | | 3,681,213,840 | | |

| Open market and privately negotiated purchases | 548,183 | | | 57.37 | | | | 548,183 | | | 3,649,761,870 | | |

| Open market and privately negotiated purchases | 527,361 | | | 66.45 | | | | 527,361 | | | 3,614,721,098 | | |

| November 2017 ASR (b) | — | | | — | | | | — | | | 3,709,702,895 | | |

| Total | 4,288,216 | | | $ | 62.95 | | | 4,288,216 | | | $ | 3,709,702,895 | |

| | |

| --- | --- |

| (b) | No additional shares were received upon final settlement of the ASR initiated in November 2017. |

| Target | $ | 100.00 | | $ | 94.85 | | $ | 127.22 | | $ | 128.74 | | $ | 116.88 | | $ | 139.50 | |

| S&P 500 Index | 100.00 | | | 120.30 | | | 137.42 | | | 136.50 | | | 164.99 | | | 202.66 | | |

| Current Peer Group | 100.00 | | | 121.51 | | | 151.16 | | | 164.97 | | | 183.17 | | | 263.52 | | |

| Previous Peer Group | 100.00 | | | 120.95 | | | 149.92 | | | 163.25 | | | 181.67 | | | 261.95 | | |

| | [removed: As of or for] [added: For] the Fiscal Year [removed: Ended] | | | | | | | | | | | | | | |

| (millions, except per share data) | [added: 2018 | | |] 2017 [removed: (a)] [added: As Adjusted (a)(b)] | | | 2016 [added: As Adjusted (b)] | | | 2015 [added: As Adjusted (b)] | | | 2014 [removed: | | | 2013] [added: (b)] | | |

| Continuing operations | [removed: 2,928] [added: 2,930] | | | [removed: 2,669] [added: 2,908] | | | [removed: 3,321] [added: 2,666] | | | [removed: 2,449] [added: 3,321] | | | [removed: 2,694] [added: 2,449] | | |

| Discontinued operations | [added: 7 | | |] 6 | | | 68 | | | 42 | | | (4,085 | | ) | [removed: (723 | | ) |]

| Net earnings / (loss) | [removed: 2,934] [added: 2,937] | | | [removed: 2,737] [added: 2,914] | | | [removed: 3,363] [added: 2,734] | | | [removed: (1,636] [added: 3,363] | | [removed: )] | [removed: 1,971] [added: (1,636] | | [added: )] |

| Continuing operations | [removed: 5.35] [added: 5.54] | | | [removed: 4.62] [added: 5.32] | | | [removed: 5.29] [added: 4.61] | | | [removed: 3.86] [added: 5.29] | | | [removed: 4.24] [added: 3.86] | | |

| Discontinued operations | 0.01 | | | [removed: 0.12] [added: 0.01] | | | [removed: 0.07] [added: 0.12] | | | [removed: (6.44] [added: 0.07] | | [removed: )] | [removed: (1.14] [added: (6.44] | | ) |

| Basic earnings / (loss) per share | [removed: 5.36] [added: 5.55] | | | [removed: 4.74] [added: 5.32] | | | [removed: 5.35] [added: 4.73] | | | [removed: (2.58] [added: 5.35] | | [removed: )] | [removed: 3.10] [added: (2.58] | | [added: )] |

| Continuing operations | [removed: 5.32] [added: 5.50] | | | [removed: 4.58] [added: 5.29] | | | [removed: 5.25] [added: 4.58] | | | [removed: 3.83] [added: 5.25] | | | [removed: 4.20] [added: 3.83] | | |

| Discontinued operations | 0.01 | | | [removed: 0.12] [added: 0.01] | | | [removed: 0.07] [added: 0.12] | | | [removed: (6.38] [added: 0.07] | | [removed: )] | [removed: (1.13] [added: (6.38] | | ) |

| Diluted earnings / (loss) per share | [removed: 5.33] [added: 5.51] | | | [removed: 4.70] [added: 5.29] | | | [removed: 5.31] [added: 4.69] | | | [removed: (2.56] [added: 5.31] | | [removed: )] | [removed: 3.07] [added: (2.56] | | [added: )] |

| Cash dividends declared per share | [added: 2.54 | | |] 2.46 | | | 2.36 | | | 2.20 | | | 1.99 | | | [removed: 1.65 | | |]

| Total assets | [removed: 38,999] [added: 41,290] | | | [removed: 37,431] [added: 40,303] | | | [removed: 40,262] [added: 38,724] | | | [removed: 41,172] [added: 40,262] | | | [removed: 44,325] [added: 41,172] | | |

| Long-term debt, including current portion | [removed: 11,587] [added: 11,275] | | | [removed: 12,749] [added: 11,398] | | | [removed: 12,760] [added: 12,591] | | | [removed: 12,725] [added: 12,760] | | | [removed: 12,494] [added: 12,725] | | |

| Sales | $ | 74,433 | | $ | 71,786 | | $ | 69,414 | | $ | 73,717 | | $ | 72,618 | |

| Total revenue | 75,356 | | | 72,714 | | | 70,271 | | | 74,494 | | | 72,618 | | |

| | As of | | | | | | | | | | | | | | |

| | February 2, 2019 | | | February 3, 2018 As Adjusted (b) | | | January 28, 2017 As Adjusted (b) | | | January 30, 2016 (b) | | | January 31, 2015 (b) | | |

| | |

| --- | --- |

| (b) | The selected financial data for fiscal years 2017, 2016, and 2015 and as of February 3, 2018 and January 28, 2017, reflect the adoption of Accounting Standards Update (ASU) No. 2014-09—Revenue from Contracts with Customers (Topic 606). The selected financial data for fiscal years 2017 and 2016 and as of February 3, 2018 and January 28, 2017, reflect the adoption of ASU No. 2016-02—Leases (Topic 842). Note 2 of the Financial Statements provides additional information. The selected financial data for fiscal year 2014 and as of January 30, 2016, and January 31, 2015, do not reflect adoption of Topic 606 and Topic 842. |

| Sales | $ | 71,879 | | $ | 69,495 | | $ | 73,785 | | $ | 72,618 | | $ | 71,279 | |

| Brian C. Cornell Chairman and Chief Executive Officer March [removed: 14, 2018] [added: 13, 2019] | | Cathy R. Smith Executive Vice President and Chief Financial Officer |

We have audited the accompanying consolidated statements of financial position of Target Corporation (the Corporation) as of February [removed: 3, 2018] [added: 2, 2019] and [removed: January 28, 2017,] [added: February 3, 2018,] the related consolidated statements of operations, comprehensive income, cash flows and shareholders' investment for each of the three years in the period ended February [removed: 3, 2018,] [added: 2, 2019,] and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation at February [removed: 3, 2018] [added: 2, 2019] and [removed: January 28, 2017,] [added: February 3, 2018,] and the results of its operations and its cash flows for each of the three years in the period ended February [removed: 3, 2018,] [added: 2, 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation's internal control over financial reporting as of February [removed: 3, 2018,] [added: 2, 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March [removed: 14, 2018,] [added: 13, 2019,] expressed an unqualified opinion thereon.

/s/ Ernst & [removed: Young,] [added: Young] LLP

| Minneapolis, Minnesota March [removed: 14, 2018] [added: 13, 2019] | |

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we assessed the effectiveness of our internal control over financial reporting as of February [removed: 3, 2018,] [added: 2, 2019,] based on the framework in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Our internal control over financial reporting as of February [removed: 3, 2018,] [added: 2, 2019,] has been audited by Ernst & Young LLP, the independent registered public accounting firm who has also audited our consolidated financial statements, as stated in their report which appears on this page.

| Brian C. Cornell Chairman and Chief Executive Officer March [removed: 14, 2018] [added: 13, 2019] | | Cathy R. Smith Executive Vice President and Chief Financial Officer |

We have audited Target Corporation’s internal control over financial reporting as of February [removed: 3, 2018,] [added: 2, 2019,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Target Corporation (the Corporation) maintained, in all material respects, effective internal control over financial reporting as of February [removed: 3, 2018,] [added: 2, 2019,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Corporation as of February [removed: 3, 2018] [added: 2, 2019] and [removed: January 28, 2017,] [added: February 3, 2018,] the related consolidated statements of operations, comprehensive income, cash flows and shareholders' investment for each of the three years in the period ended February [removed: 3, 2018,] [added: 2, 2019,] and the related notes and our report dated March [removed: 14, 2018] [added: 13, 2019] expressed an unqualified opinion thereon.

/s/ Ernst & [removed: Young,] [added: Young] LLP

| Minneapolis, Minnesota March [removed: 14, 2018] [added: 13, 2019] | |

| (millions, except per share data) | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017 As Adjusted (a)] | | | [removed: 2015] [added: 2016 As Adjusted (a)] | | |

| Sales | $ | 71,879 | | $ | [removed: 69,495] [added: (93] | [added: )] | [added: (a) |] $ | [removed: 73,785] [added: —] | | [added: | $ | — | | | $ | 71,786 | |]

| Cost of sales [removed: (a)] | [removed: 51,125] [added: 53,299] | | | [removed: 49,145] [added: 51,125] | | | [removed: 52,241] [added: 49,145] | | |

| Selling, general and administrative expenses | 14,248 | | | [removed: 13,356] [added: 835] | | | [removed: 14,665] [added: (a)] | [added: (2] | | [added: ) | (b) | 59 | | | (c) | 15,140 | | |]

| Depreciation and amortization (exclusive of depreciation included in cost of sales) [removed: (a)] | 2,194 | | | [removed: 2,025] [added: —] | | | [removed: 1,969] | [added: 31] | | [added: | (b) | — | | | | 2,225 | | |]

| Earnings from continuing operations before [removed: interest expense and] income taxes | [removed: 4,312] [added: 3,646] | | | [removed: 4,969] [added: —] | | | [removed: 5,530] | [added: (16] | | [added: ) | | — | | | | 3,630 | | |]

| Net interest expense | 666 | | | [removed: 1,004] [added: —] | | | [removed: 607] | [added: (13] | | [added: ) | (b) | — | | | | 653 | | |]

| Earnings from continuing operations before income taxes | [removed: 3,646] [added: 3,965] | | | [removed: 3,965] [added: —] | | | [removed: 4,923] | [added: (3] | | [added: ) | | — | | | | 3,961 | | |]

| Provision for income taxes | 718 | | | [removed: 1,296] [added: (2] | | [added: )] | [removed: 1,602] | [added: 6] | | [added: | | — | | | | 722 | | |]

| Net earnings from continuing operations | 2,928 | | | [removed: 2,669] [added: 2] | | | [removed: 3,321] | [added: (22] | | [added: ) | | — | | | | 2,908 | | |]

| Discontinued operations, net of tax | [removed: 6] [added: 7] | | | [removed: 68] [added: 6] | | | [removed: 42] [added: 68] | | |

| Net earnings | $ | 2,934 | | $ | [removed: 2,737] [added: 2] | | [added: |] $ | [removed: 3,363] [added: (22] | [added: )] | [added: | $ | — | | | $ | 2,914 | |]

| Continuing operations | $ | 5.35 | | [removed: $] | [removed: 4.62] | | [added: | | | | | | | | |] $ | [removed: 5.29] [added: 5.32] | |

| Discontinued operations | 0.01 | | | [removed: 0.12] [added: 0.01] | | | [removed: 0.07] [added: 0.12] | | |

| Net earnings per share | $ | 5.36 | | [removed: $] | [removed: 4.74] | | [added: | | | | | | | | |] $ | [removed: 5.35] [added: 5.32] | |

| Continuing operations | $ | [removed: 5.32] [added: 4.58] | | [removed: $] | [removed: 4.58] | | [added: | | | | | | | | |] $ | [removed: 5.25] [added: 4.58] | |

| Discontinued operations | 0.01 | | | [removed: 0.12] [added: 0.01] | | | [removed: 0.07] [added: 0.12] | | |

| Net earnings per share | $ | 5.33 | | [removed: $] | [removed: 4.70] | | [added: | | | | | | | | |] $ | [removed: 5.31] [added: 5.29] | |

| Basic | [removed: 546.8] [added: 528.6] | | | [removed: 577.6] [added: 546.8] | | | [removed: 627.7] [added: 577.6] | | |

| Diluted | [removed: 550.3] [added: 533.2] | | | [removed: 582.5] [added: 550.3] | | | [removed: 632.9] [added: 582.5] | | |

| Antidilutive shares | [removed: 4.1] [added: —] | | | [removed: 0.1] [added: 4.1] | | | [removed: —] [added: 0.1] | | |

| Dividends declared per share | $ | [removed: 2.46] [added: 0.62] | | $ | [removed: 2.36] [added: 0.60] | | [added: |] $ | [removed: 2.20] [added: 0.64] | | [added: $ | 0.62 | | | $ | 0.64 | | $ | 0.62 | | | $ | 0.64 | | $ | 0.62 | | | $ | 2.54 | | $ | 2.46 | |]

| (millions) | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | |

| Net earnings | $ | [removed: 2,934] [added: 2,737] | | $ | [removed: 2,737] [added: —] | | [added: |] $ | [removed: 3,363] [added: (2] | [added: )] | [added: | $ | — | | | $ | 2,734 | |]

| Other comprehensive [removed: income] [added: (loss)] / [removed: (loss),] [added: income,] net of tax | | | | | | | | | |

| Pension and other benefit liabilities, net of tax [removed: provision / (benefit) of $12, $(9), and $(18)] | [removed: 2] [added: (52] | | [added: )] | [removed: (13] [added: 2] | | [removed: )] | [removed: (27] [added: (13] | | ) |

Adoption of New Accounting Standards

ASU No. 2014-09

As discussed in Note 2 to the consolidated financial statements, the Corporation changed its method for recognizing revenue in 2018 due to the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, effective February 4, 2018, using the full retrospective approach.

ASU No. 2016-02

As discussed in Note 2 to the consolidated financial statements, the Corporation changed its method of accounting for leases in 2018 due to the adoption of ASU No. 2016-02, Leases (Topic 842), as amended, effective February 4, 2018, using the modified retrospective approach.

| Sales | $ | 74,433 | | $ | 71,786 | | $ | 69,414 | |

| Other revenue | 923 | | | 928 | | | 857 | | |

| Total revenue | 75,356 | | | 72,714 | | | 70,271 | | |

| Depreciation and amortization (exclusive of depreciation included in cost of sales) | 2,224 | | | 2,225 | | | 2,045 | | |

| Operating income | 4,110 | | | 4,224 | | | 4,864 | | |

| Net interest expense | 461 | | | 653 | | | 991 | | |

| Net other (income) / expense | (27 | | ) | (59 | | ) | (88 | | ) |

| Provision for income taxes | 746 | | | 722 | | | 1,295 | | |

| Net earnings from continuing operations | 2,930 | | | 2,908 | | | 2,666 | | |

| Net earnings | $ | 2,937 | | $ | 2,914 | | $ | 2,734 | |

| Continuing operations | $ | 5.54 | | $ | 5.32 | | $ | 4.61 | |

| Net earnings per share | $ | 5.55 | | $ | 5.32 | | $ | 4.73 | |

| Continuing operations | $ | 5.50 | | $ | 5.29 | | $ | 4.58 | |

| Net earnings per share | $ | 5.51 | | $ | 5.29 | | $ | 4.69 | |

| (a) | Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, leases, and pensions. |

| Net earnings | $ | 2,937 | | $ | 2,914 | | $ | 2,734 | |

| Comprehensive income | $ | 2,879 | | $ | 2,922 | | $ | 2,725 | |

| (a) | Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, leases, and pensions. |

| Inventory | 9,497 | | | 8,597 | | |

| Total current assets | 12,519 | | | 12,540 | | |

| Land | 6,064 | | | 6,095 | | |

| Buildings and improvements | 29,240 | | | 28,131 | | |

| Fixtures and equipment | 5,912 | | | 5,623 | | |

| Computer hardware and software | 2,544 | | | 2,645 | | |

| Construction-in-progress | 460 | | | 440 | | |

| Accumulated depreciation | (18,687 | | ) | (18,398 | | ) |

| Property and equipment, net | 25,533 | | | 24,536 | | |

| Operating lease assets | 1,965 | | | 1,884 | | |

| Total assets | $ | 41,290 | | $ | 40,303 | |

| Accrued and other current liabilities | 4,201 | | | 4,094 | | |

| Current portion of long-term debt and other borrowings | 1,052 | | | 281 | | |

| Total current liabilities | 15,014 | | | 13,052 | | |

| Long-term debt and other borrowings | 10,223 | | | 11,117 | | |

| Noncurrent operating lease liabilities | 2,004 | | | 1,924 | | |

| Deferred income taxes | 972 | | | 693 | | |

| Gross margin | 20,754 | | | 20,350 | | | 21,544 | | |

| Gain on sale | — | | | — | | | (620 | | ) |

| Dilutive effect of share-based awards | 3.5 | | | 4.9 | | | 5.2 | | |

(a) Refer to Note 3 for additional information about a reclassification of supply chain-related depreciation expense to Cost of Sales.

| Comprehensive income | $ | 2,942 | | $ | 2,728 | | $ | 3,333 | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| Net earnings | $ | 2,934 | | $ | 2,737 | | $ | 3,363 | |

| Depreciation and amortization | 2,445 | | | 2,298 | | | 2,213 | | |

| Gain on sale | — | | | — | | | (620 | | ) |

| Other assets | (168 | | ) | 30 | | | 221 | | |

| Cash provided by operations | 6,923 | | | 5,436 | | | 5,958 | | |

| Proceeds from sale of businesses | — | | | — | | | 1,875 | | |

| Cash provided by investing activities—discontinued operations | — | | | — | | | 19 | | |

| Cash (required for) / provided by investing activities | (3,075 | | ) | (1,473 | | ) | 508 | | |

| Property and equipment acquired through capital lease obligations | 173 | | | 238 | | | 126 | | |

| January 31, 2015 | 640.2 | | $ | 53 | | $ | 4,899 | | $ | 9,644 | | $ | (599 | ) | $ | 13,997 | |

| Repurchase of stock | (44.7 | ) | (4 | | ) | — | | | (3,441 | | ) | — | | | (3,445 | | ) |

As described in Note 7, in January 2015, we announced our exit from the Canadian market.

Income and expenses directly attributable to the Canada exit are included in our financial statements and classified within discontinued operations.

Discontinued operations refers only to our discontinued Canadian operations.

Note 3 provides more information about a reclassification of supply chain-related depreciation expense to Cost of Sales.

Our retail stores generally record revenue at the point of sale.

Commissions earned on sales generated by leased departments are included within sales and were $44 million, $42 million, and $37 million in 2017, 2016, and 2015, respectively.

We will adopt the standard in the first quarter of 2018 using the full retrospective approach.

We expect minor changes to the timing of revenue recognition, primarily related to promotional gift cards, which we estimate will increase 2015 beginning retained earnings by less than $20 million upon adoption.

We completed our evaluation of the impact the standard has on our determination of whether we act as principal or agent in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous.

Beginning in the second quarter of 2017, we reclassified supply chain-related depreciation expense to Cost of Sales whereas it was previously included in Depreciation and Amortization on our Consolidated Statements of Operations.

We reclassified prior year amounts to reflect this change.

This reclassification increased Cost of Sales by $251 million, $273 million, and $244 million for 2017, 2016, and 2015, respectively, with equal and offsetting decreases to Depreciation and Amortization.

This reclassification had no impact on Sales, Earnings Before Interest Expense and Income Taxes, Net Earnings or Earnings Per Share.

(a) Reimbursement of specific, incremental and identifiable costs.

Pharmacy Transaction

In December 2015, we sold our pharmacy and clinic businesses to CVS (the Pharmacy Transaction) for cash consideration of $1.9 billion, recognizing a gain of $620 million, and deferred income of $694 million.

CVS now operates the pharmacy and clinic businesses in our stores and paid us $27 million and $24 million for occupancy during 2017 and 2016, respectively.

| | | | |

| --- | --- | --- | --- |

| | | | |

| Gain on Pharmacy Transaction (millions) | 2015 | | |

[removed: There have been] [added: During the most recently completed fiscal quarter,] no [removed: changes] [added: other change] in our internal control over financial reporting [removed: during the most recently completed fiscal quarter that have] materially affected, or [removed: are] [added: is] reasonably likely to materially affect, our internal control over financial reporting.

During the most recently completed fiscal quarter, the following change to our information technology systems materially affected, or is reasonably likely to materially affect, our internal control over financial reporting:

| | |

| --- | --- |

| • | We are in the process of a broad migration of many mainframe-based systems and middleware products to a modern platform, including systems supporting inventory and supply chain-related transactions. |

Certain information required by Part III is incorporated by reference from Target's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June [removed: 13, 2018] [added: 12, 2019] (our Proxy Statement).

| • | Consolidated Statements of Operations for the Years Ended February [added: 2, 2019, February] 3, 2018, [removed: January 28, 2017,] and January [removed: 30, 2016] [added: 28, 2017] |

| • | Consolidated Statements of Comprehensive Income for the Years Ended February [added: 2, 2019, February] 3, 2018, [removed: January 28, 2017,] and January [removed: 30, 2016] [added: 28, 2017] |

| • | Consolidated Statements of Financial Position at February [added: 2, 2019 and February] 3, 2018 [removed: and January 28, 2017] |

| • | Consolidated Statements of Cash Flows for the Years Ended February [added: 2, 2019, February] 3, 2018, [removed: January 28, 2017,] and January [removed: 30, 2016] [added: 28, 2017] |

| • | Consolidated Statements of Shareholders' Investment for the Years Ended February [added: 2, 2019, February] 3, 2018, [removed: January 28, 2017,] and January [removed: 30, 2016] [added: 28, 2017] |

| [removed: (2)A] [added: HH] | [removed: †] [added: ‡] | [removed: [Asset Purchase] [added: [Pharmacy Operating] Agreement dated [removed: June 12,] [added: December 16,] 2015 between Target Corporation and CVS Pharmacy, [removed: Inc.](http://www.sec.gov/Archives/edgar/data/27419/000002741915000029/tgt-20150801xexhibit2h.htm) (1)] [added: Inc.](http://www.sec.gov/Archives/edgar/data/27419/000002741916000043/tgt_exhibitx10kk.htm) (34)] |

| (3)A | | [Amended and Restated Articles of Incorporation (as amended through June 9, 2010)](http://www.sec.gov/Archives/edgar/data/27419/000110465910033363/a10-11723_1ex3da.htm) [removed: (2)] [added: (1)] |

| B | | [Bylaws (as amended through November 11, 2015)](http://www.sec.gov/Archives/edgar/data/27419/000110465915078120/a15-22805_1ex3da.htm) [removed: (3)] [added: (2)] |

| (4)A | | [Indenture, dated as of August 4, 2000 between Target Corporation and Bank One Trust Company, N.A.](http://www.sec.gov/Archives/edgar/data/27419/000091205700036147/ex-4_1.htm) [removed: (4)] [added: (3)] |

| B | | [First Supplemental Indenture dated as of May 1, 2007 to Indenture dated as of August 4, 2000 between Target Corporation and The Bank of New York Trust Company, N.A. (as successor in interest to Bank One Trust Company N.A.)](http://www.sec.gov/Archives/edgar/data/27419/000110465907034430/a07-12852_1ex4d1.htm) [removed: (5)] [added: (4)] |

| (10)A | * | [Target Corporation Executive Officer Cash Incentive Plan](http://www.sec.gov/Archives/edgar/data/27419/000002741917000020/0000027419-17-000020-index.html) [removed: (6)] [added: (5)] |

| B | * | [Target Corporation Long-Term Incentive Plan (as amended and restated effective June 8, 2011)](http://www.sec.gov/Archives/edgar/data/27419/000110465911048645/a11-14163_1ex10db.htm) [removed: (7)] [added: (6)] |

| C | * | [Amended and Restated Target Corporation 2011 Long-Term Incentive Plan (as amended and restated effective September 1, 2017)](http://www.sec.gov/Archives/edgar/data/27419/000002741917000027/tgt-2017729_exhibit10c.htm) [removed: (8)] [added: (7)] |

| D | * | [Target Corporation SPP I (2016 Plan Statement) (as amended and restated effective April 3, 2016)](http://www.sec.gov/Archives/edgar/data/27419/000002741916000051/tgt-20160430xexhibit10c.htm) [removed: (9)] [added: (8)] |

| E | * | [Target Corporation SPP II (2016 Plan Statement) (as amended and restated effective April 3, 2016)](http://www.sec.gov/Archives/edgar/data/27419/000002741916000051/tgt-20160430xexhibit10d.htm) [removed: (10)] [added: (9)] |

| F | * | [Target Corporation SPP III (2014 Plan Statement) (as amended and restated effective January 1, 2014)](http://www.sec.gov/Archives/edgar/data/27419/000002741914000014/tgt-20140201xexhibit_10e.htm) [removed: (11)] [added: (10)] |

| G | * | [Amendment to Target Corporation SPP III (2014 Plan Statement) (effective April 3, 2016)](http://www.sec.gov/Archives/edgar/data/27419/000002741916000051/tgt-20160430xexhibit10nn.htm) [removed: (12)] [added: (11)] |

| H | * | [Target Corporation Officer Deferred Compensation Plan (as amended and restated effective June 8, 2011)](http://www.sec.gov/Archives/edgar/data/27419/000110465911048645/a11-14163_1ex10df.htm) [removed: (13)] [added: (12)] |

| I | * | [Target Corporation Officer EDCP (2017 Plan Statement) (as amended and restated effective May 1, 2017)](http://www.sec.gov/Archives/edgar/data/27419/000002741917000008/tgt-20170128xexhibit10i.htm) [removed: (14)] [added: (13)] |

| J | * | [Target Corporation Deferred Compensation Plan Directors](http://www.sec.gov/Archives/edgar/data/27419/000104746907001800/a2176656zex-10_i.htm) [removed: (15)] [added: (14)] |

| K | * | [Target Corporation DDCP (2013 Plan Statement) (as amended and restated effective December 1, 2013)](http://www.sec.gov/Archives/edgar/data/27419/000002741914000014/tgt-20140201xexhibit_10i.htm) [removed: (16)] [added: (15)] |

| L | * | [Target Corporation Officer Income Continuation Plan (as amended and restated effective September 1, 2017)](http://www.sec.gov/Archives/edgar/data/27419/000002741917000027/tgt-2017729_exhibitx10l.htm) [removed: (17)] [added: (16)] |

| M | * | [Target Corporation Executive Excess Long Term Disability Plan (as restated effective January 1, 2010)](http://www.sec.gov/Archives/edgar/data/27419/000110465910061015/a10-17636_1ex10da.htm) [removed: (18)] [added: (17)] |

| N | * | [Director Retirement Program](http://www.sec.gov/Archives/edgar/data/27419/000110465905015954/a05-4599_1ex10do.htm) [removed: (19)] [added: (18)] |

| O | * | [Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective January 1, 2009)](http://www.sec.gov/Archives/edgar/data/27419/000104746909002623/a2190597zex-10_o.htm) [removed: (20)] [added: (19)] |

| P | * | [Amendment dated June 8, 2011 to Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective January 1, 2009)](http://www.sec.gov/Archives/edgar/data/27419/000110465911048645/a11-14163_1ex10daa.htm) [removed: (21)] [added: (20)] |

| Q | * | [Amendment dated October 25, 2017 to Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective January 1, 2009)](http://www.sec.gov/Archives/edgar/data/27419/000002741917000034/tgt-20171028xexhibit10mm.htm) [removed: (22)] [added: (21)] |

| R | * | [Form of Amended and Restated Executive Non-Qualified Stock Option Agreement](http://www.sec.gov/Archives/edgar/data/27419/000002741915000012/tgt_exhibitx10vx10-kxfy2014.htm) [removed: (23)] [added: (22)] |

| S | * | [Form of Restricted Stock Unit [removed: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit10s.htm)] [added: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741919000006/tgt-20190202xexhibit10s.htm)] |

| T | * | [Form of Performance-Based Restricted Stock Unit [removed: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit10t.htm)] [added: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741919000006/tgt-20190202xexhibit10t.htm)] |

| U | * | [Form of Performance Share Unit [removed: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit10u.htm)] [added: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741919000006/tgt-20190202xexhibit10u.htm)] |

| V | * | [Form of Price-Vested Stock Option Agreement](http://www.sec.gov/Archives/edgar/data/27419/000002741917000014/tgt-2017429xexhibit10jj.htm) [removed: (24)] [added: (23)] |

| W | * | [Form of Non-Employee Director Non-Qualified Stock Option Agreement](http://www.sec.gov/Archives/edgar/data/27419/000110465912001595/a12-2427_1ex10dee.htm) [removed: (25)] [added: (24)] |

| X | * | [Form of Non-Employee Director Restricted Stock Unit [removed: Agreement](https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit10x.htm)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit10x.htm) (25)] |

| AA | * | [Aircraft Time Sharing Agreement as of March 13, 2015 among Target Corporation and Brian C. Cornell](http://www.sec.gov/Archives/edgar/data/27419/000002741915000012/tgt_exhibitx10hhx10-kxfy20.htm) [removed: (28)] [added: (27)] |

| [removed: BB] [added: CC] | | [Five-Year Credit Agreement dated as of October 5, 2016 among Target Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein](http://www.sec.gov/Archives/edgar/data/27419/000002741916000066/tgt-20161029xexhibit10o.htm) (29) |

| [removed: CC] [added: DD] | | [Extension Amendment dated August 7, 2017 to Five-Year Credit Agreement among Target Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein](http://www.sec.gov/Archives/edgar/data/27419/000002741917000034/tgt-20171028xexhibit10ll.htm) (30) |

| [removed: DD] [added: FF] | ‡ | [Credit Card Program Agreement dated October 22, 2012 among Target Corporation, Target Enterprise, Inc. and TD Bank USA, N.A.](http://www.sec.gov/Archives/edgar/data/27419/000110465913057305/a13-17284_1ex10dx.htm) [removed: (31)] [added: (32)] |

| [removed: EE] [added: GG] | ‡ | [First Amendment dated February 24, 2015 to Credit Card Program Agreement among Target Corporation, Target Enterprise, Inc. and TD Bank USA, N.A.](http://www.sec.gov/Archives/edgar/data/27419/000002741915000018/tgt-20150502xexhibit10ii.htm) [removed: (32)] [added: (33)] |

| [removed: FF] [added: II] | ‡ | [removed: [Pharmacy] [added: [First Amendment dated November 30, 2016 to Pharmacy] Operating Agreement [removed: dated December 16, 2015] between Target Corporation and CVS Pharmacy, [removed: Inc.](http://www.sec.gov/Archives/edgar/data/27419/000002741916000043/tgt_exhibitx10kk.htm) (33)] [added: Inc.](http://www.sec.gov/Archives/edgar/data/27419/000002741917000008/tgt-20170128xexhibit10ccxc.htm) (35)] |

| BB | * | [Transition Agreement dated January 7, 2019](http://www.sec.gov/Archives/edgar/data/27419/000110465919001426/a19-2173_1ex10da.htm) (28) |

| EE | | [Second Extension Amendment dated August 6, 2018 to Five-Year Credit Agreement among Target Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein](http://www.sec.gov/Archives/edgar/data/27419/000002741918000036/tgt-20181103xexhibit10ii.htm) (31) |

| (28) | Incorporated by reference to Exhibit (10)A to Target's Form 8-K Report filed January 10, 2019. |

| (36) | Incorporated by reference to Exhibit (10)HH to Target's Form 10-K Report for the year ended February 3, 2018. |

| --- | --- |

| | |

| Z | * | [Make-Whole Performance-Based Restricted Stock Unit Agreement with Brian C. Cornell, effective as of August 21, 2014](http://www.sec.gov/Archives/edgar/data/27419/000002741914000028/tgt-20140802xexhibit10ee.htm) (27) |

| HH | | [Second Amendment dated January 9, 2018 to Pharmacy Operating Agreement between Target Corporation and CVS Pharmacy, Inc.](https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit10hh.htm) |

| (12) | | [Statements of Computations of Ratios of Earnings to Fixed Charges](https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203xexhibit_12.htm) |

| † | Excludes the Seller Disclosure Schedule, Exhibits B through G and Schedules I and II referred to in the agreement which Target Corporation agrees to furnish supplementally to the Securities and Exchange Commission upon request. Exhibit A is separately filed as Exhibit (10)FF. |