TARGET CORP (TGT)

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Risk Factors

to this Form 10-K, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As of ~~February 1, 2025,~~ January 31, 2026, our exposure to market risk was primarily from interest rate changes on our debt obligations and short-term investments. Our interest rate exposure is primarily due to differences between our floating rate debt obligations, including fixed rate debt hedged using floating rate interest rate swaps, compared to our floating rate short-term investments. As of ~~February 1, 2025,~~ January 31, 2026, our floating rate short-term investments exceeded our floating rate debt obligations by approximately ~~$1.7~~ $2.4 billion. Based on our financial position as of ~~February 1, 2025,~~ January 31, 2026, the annualized effect of a 1 percentage point increase in floating interest rates on our floating rate short-term investments, net of our floating rate debt obligations, would increase our earnings before income taxes by ~~$17~~ $24 million. In general, we expect our floating rate debt obligations to be in line with our floating rate short-term investments over time, but that may vary in different interest rate and economic environments. See further description of our debt and derivative instruments in Notes

and

to the Financial Statements.

We record our general liability and workers' compensation liabilities at net present value; therefore, these liabilities fluctuate with changes in interest rates. Based on our balance sheet position as of ~~February 1, 2025,~~ January 31, 2026, the annualized effect of a 1 percentage point increase/(decrease) in interest rates would increase/(decrease) earnings before income taxes by ~~$17~~ $20 million.

In addition, we are exposed to market return fluctuations on our qualified defined benefit pension plan. The value of our pension liabilities is inversely related to changes in interest rates. A 1 percentage point decrease in the weighted average discount rate would increase annual expense by ~~$33~~ $38 million. To protect against declines in interest rates, we hold high-quality, long-duration bonds and derivative instruments in our pension plan trust. As of ~~February 1, 2025,~~ January 31, 2026, we had hedged 70 75 percent of the interest rate exposure of our plan liabilities.

As more fully described in

Note 22 24

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 substantially offset our economic exposure to the returns on these plans.

There have been no other material changes in our primary risk exposures or management of market risks since the prior year.

Item 8. Financial Statements and Supplementary Data

Report of Management on the Consolidated Financial Statements

Management is responsible for the consistency, integrity, and presentation of the information in the Annual Report. The consolidated financial statements and other information presented in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States and include necessary judgments and estimates by management.

To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance that assets are safeguarded and transactions are executed in accordance with established procedures. The concept of reasonable assurance is based upon recognition that the cost of the controls should not exceed the benefit derived. We believe our systems of internal control provide this reasonable assurance.

The Board of Directors exercised its oversight role with respect to the Corporation's systems of internal control primarily through its Audit & Risk Committee, which is comprised of independent directors. The Committee oversees the Corporation's systems of internal control, accounting practices, financial reporting and audits to assess whether their quality, integrity, and objectivity are sufficient to protect shareholders' investments.

In addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public accounting firm, whose report also appears on this page.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Target Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Target Corporation (the Corporation) as of January 31, 2026 and February 1, ~~2025 and February 3, 2024,~~ 2025, the related consolidated statements of operations, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended ~~February 1, 2025,~~ January 31, 2026, 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 January 31, 2026 and February 1, ~~2025 and February 3, 2024,~~ 2025, and the results of its operations and its cash flows for each of the three years in the period ended ~~February 1, 2025,~~ January 31, 2026, 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 1, 2025,~~ January 31, 2026, 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 ~~12, 2025~~ 11, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

/s/ Ernst & Young LLP

We have served as the Corporation's auditor since 1931.

Minneapolis, Minnesota

March ~~12, 2025~~ 11, 2026

Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). 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 1, 2025,~~ January 31, 2026, based on the framework in

Internal Control—Integrated Framework (2013)

, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our assessment, we conclude that the Corporation's internal control over financial reporting is effective based on those criteria.

Our internal control over financial reporting as of ~~February 1, 2025,~~ January 31, 2026, 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.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Target Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Target Corporation’s internal control over financial reporting as of ~~February 1, 2025,~~ January 31, 2026, 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 1, 2025,~~ January 31, 2026, 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 January 31, 2026 and February 1, ~~2025 and February 3, 2024,~~ 2025, the related consolidated statements of operations, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended ~~February 1, 2025,~~ January 31, 2026, and the related notes and our report dated March ~~12, 2025~~ 11, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Minneapolis, Minnesota

March ~~12, 2025~~ 11, 2026

Consolidated Statements of Operations

Note: 2023 consisted of 53 weeks compared with 52 weeks in ~~2024~~ 2025 and ~~2022.~~ 2024.

See accompanying

Notes to Consolidated Financial Statements

Consolidated Statements of Comprehensive Income

Note: 2023 consisted of 53 weeks compared with 52 weeks in ~~2024~~ 2025 and ~~2022.~~ 2024.

See accompanying

Notes to Consolidated Financial Statements

Consolidated Statements of Financial Position

Common Stock

Authorized 6,000,000,000 shares, $0.0833 par value; 452,840,187 shares issued and outstanding as of January 31, 2026; 455,566,995 shares issued and outstanding as of February 1, ~~2025; 461,675,441 shares issued and outstanding as of February 3, 2024.~~ 2025.

Preferred Stock

Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.

See accompanying

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Note: 2023 consisted of 53 weeks compared with 52 weeks in ~~2024~~ 2025 and ~~2022.~~ 2024.

See accompanying

Notes to Consolidated Financial Statements

Consolidated Statements of Shareholders' Investment

We declared $4.46, $4.38, and $4.14 dividends per share for the twelve months ended February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

See accompanying

Notes to Consolidated Financial Statements

1. Summary of Accounting Policies

Organization -

We are a general merchandise retailer selling products to our guests through our stores and digital channels.

We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Nearly all of our revenues are generated in the United States (U.S.). The vast majority of our long-lived assets are located within the U.S.

Consolidation -

The consolidated financial statements include the balances of Target Corporation and its subsidiaries after elimination of intercompany balances and transactions. All subsidiaries are wholly owned.

Use of estimates -

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions affecting reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ significantly from those estimates.

Fiscal year -

Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in this report relate to fiscal years, rather than to calendar years. Fiscal 2025 ended January 31, 2026, and consisted of 52 weeks. Fiscal 2024 ended February 1, 2025, and consisted of 52 weeks. Fiscal 2023 ended February 3, 2024, and consisted of 53 weeks. Fiscal ~~2022 ended January 28, 2023, and consisted of 52 weeks. Fiscal 2025~~ 2026 will end January ~~31, 2026,~~ 30, 2027, and will consist of 52 weeks.

Accounting policies -

Our accounting policies are disclosed in the applicable Notes to the Consolidated Financial Statements.

2. Net Sales

Merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources, most notably advertising revenue and credit card profit-sharing income.

(a)

Includes apparel for women, men, young adults, kids, toddlers, and babies, as well as jewelry, accessories, and shoes.

(b)

Includes skin and bath care, cosmetics, hair care, oral care, deodorant, and shaving products.

(c)

Includes dry and perishable grocery, including snacks, candy, beverages, deli, bakery, meat, produce, and food service (primarily Starbucks) in our stores.

(d)

Includes electronics, including video games and consoles, toys, sporting goods, entertainment, and luggage.

(e)

Includes bed and bath, home décor, school/office supplies, storage, small appliances, kitchenware, greeting cards, party supplies, furniture, lighting, home improvement, and seasonal merchandise.

(f)

Includes household cleaning, paper products, over-the-counter healthcare, vitamins and supplements, baby gear, and pet supplies.

Merchandise sales

– We record almost all retail store revenues at the point of sale. Digitally originated sales may include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. Merchandise sales do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes. Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive brand merchandise within one year of purchase. Sales are recognized net of expected returns, which we estimate using historical return patterns and our expectation of future returns. As of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ the liability for estimated returns was ~~$172~~ $155 million and ~~$170~~ $172 million, respectively.

We routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until the merchandise is ultimately sold to a guest. Under the vast majority of these arrangements, which represent less than 5 percent of consolidated sales, we record revenue and related costs gross. We concluded that we are the principal in these transactions for a number of reasons, most notably because we 1) control the overall economics of the transactions, including setting the sales price and realizing the majority of cash flows from the sale, 2) control the relationship with the customer, and 3) are responsible for fulfilling the promise to provide goods to the customer. Merchandise received under these arrangements is not included in Inventory because the purchase and sale of this inventory are virtually simultaneous.

Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance. Our gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions.

(a)

Included in Accrued and Other Current Liabilities.

(b)

Net of estimated breakage.

Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, Target Credit Card, Target MasterCard or Target Circle Card Reloadable Account (collectively, Target Circle Cards).

Target Circle program members earn Target Circle Rewards on various transactions. As of February 1, 2025, and February 3, 2024, deferred revenue of $19 million and $117 million, respectively, related to our Target Circle program was included in Accrued and Other Current Liabilities.

Advertising revenue

– Primarily represents revenue related to advertising services provided via our Roundel digital advertising business offering. Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement. Notes

and

provide additional information about items included in Cost of Sales and SG&A Expenses.

Credit card profit sharing

– We receive payments under a credit card program agreement with TD Bank Group (TD). Under the agreement, we receive a percentage of the profits generated by the Target Circle credit card receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Circle credit card receivables, controls risk management policies, and oversees regulatory compliance.

Other

– Includes commissions earned on third-party sales through our Target Plus third-party digital marketplace, Target Circle 360 membership revenue, Shipt membership and service revenues, rental income, ~~Target Circle 360 membership revenue,~~ and other miscellaneous revenues.

3. Cost of Sales and Selling, General, and Administrative Expenses

The following table illustrates the primary items classified in each major expense category:

Note: The classification of these expenses varies across the retail industry.

In 2024, we reclassified certain expenses related to our advertising and third-party digital marketplace business offerings to conform to the current year presentation. The reclassifications increased Cost of Sales by $92 million and $77 million for 2023 and 2022, respectively, with equal and offsetting decreases to SG&A Expenses. These reclassifications had no impact on Net Sales, Operating Income, Net Earnings, or Earnings Per Share.

4. Consideration Received from Vendors

We receive consideration for a variety of vendor-sponsored programs—such as volume rebates, promotions, certain advertising activities, markdown allowances, and for our compliance programs—referred to as "vendor income." Additionally, under our compliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations), such as late or incomplete shipments. Vendor income is recorded as a reduction of Cost of Sales except in arrangements where the payment is a reimbursement of specific, incremental, and identifiable costs and recorded as an offset to those costs within SG&A Expenses.

Note 9 11

provides additional information.

. Advertising Costs

Advertising costs consist primarily of digital advertisements and media broadcast. Digital advertising costs are generally expensed as incurred when the consumer engages with the advertisement through clicks or views, while media broadcast costs are generally expensed at first showing or distribution of the advertisement. Advertising costs, net of vendor reimbursements, are recorded in SG&A Expenses and were $1.5 billion in ~~2024,~~ both 2025 and 2024 and $1.4 billion in ~~2023, and $1.5 billion in 2022.~~ 2023.

~~6. Fair Value Measurements~~ . Interchange Fee Settlements

In March 2025, we entered into settlement agreements to resolve credit card interchange fee litigation matters in which we were a plaintiff. As a result of these lump-sum settlements, we recorded gains within SG&A Expenses of $593 million, net of legal fees.

Business Transformation Costs

In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. Costs incurred in connection with our business transformation initiative include the following:

•

Severance and Related Costs

— During 2025, we recognized $129 million of severance and related costs within SG&A, primarily related to our headquarters workforce reduction. The majority has been paid as of January 31, 2026.

•

Asset-Related Charges and Other Costs

— During 2025, we recognized $57 million of lease termination costs associated with vacant office space, and $64 million of impairment charges and other costs associated with the termination of a commercial partnership and certain other contract terminations within SG&A.

Note 12

provides additional information regarding impairment charges.

8. Fair Value Measurements

Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

(a)

Carrying value approximates fair value because maturities are less than three months.

(b)

Initially valued at transaction price. Subsequently valued by reference to the market price of Target common stock.

(c)

Valuations are based on observable inputs to the valuation model (e.g., interest rates and credit spreads). See

Note 16 18

for additional information on interest rate swaps.

(a)

The carrying amounts of certain other current assets, commercial paper, accounts payable, and certain accrued and other current liabilities approximate fair value due to their short-term nature.

(b)

The fair value of long-term debt is ~~generally measured~~ estimated using a Level 2 inputs based on quoted prices for the instruments. Where quoted prices are not available, fair value is estimated using discounted cash ~~flow analysis based on current market~~ flows and market-based expectations for interest ~~rates for the same or similar types of financial instruments and would be classified as Level 2.~~ rates. These amounts exclude commercial paper, ~~unamortized swap valuation~~ fair value hedge adjustments, and lease liabilities.

7. 9. Cash and Cash Equivalents

Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of purchase. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card transactions. These receivables typically settle in five days or less.

(a)

We have access to these funds without any significant restrictions, taxes, or penalties.

As of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ we included book overdrafts of ~~$157~~ $221 million and ~~$173~~ $157 million, respectively, in Accounts Payable and $8 $7 million and ~~$10~~ $8 million, respectively, in Accrued and Other Current Liabilities.

8. 10. Inventory

The vast majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Inventory cost includes the amount we pay to our suppliers to acquire inventory, freight costs incurred to deliver product to our distribution centers and stores, and import costs, reduced by vendor income and cash discounts. Supply chain operating costs, including compensation and benefits, are expensed in the period incurred. Inventory is also reduced for estimated losses related to shrink and markdowns. The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices, and was ~~$183~~ $201 million and ~~$153~~ $183 million as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively.

Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the inventory retail value. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being valued at the lower of cost or market because permanent markdowns are taken as a reduction of the retail value of inventory.

9. 11. Other Current Assets

~~10.~~ 12. Property and Equipment

Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the remaining initial lease term, plus any renewals that are reasonably certain at the date the leasehold improvements are acquired. Total depreciation expense, including depreciation expense included in Cost of Sales, was $3.1 billion, $3.0 billion, and $2.8 ~~billion, and $2.7~~ billion for 2025, 2024, and 2023, ~~and 2022,~~ respectively. For income tax purposes, accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility pre-opening costs, including supplies and payroll, are expensed as incurred.

We review long-lived assets for impairment when performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or ~~distribution center,~~ supply chain facility, discontinue a project, or make significant software changes—indicate that the asset's carrying value may not be recoverable. We recognized impairment losses of $69 million, $68 million, and $102 ~~million, and $66~~ million during 2025, 2024, and 2023, ~~and 2022,~~ respectively. For asset groups classified as held for sale, measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. We estimate fair value by obtaining market appraisals, obtaining valuations from third-party brokers, or using other valuation techniques. Impairments are recorded in SG&A Expenses.

~~11.~~ 13. Other Noncurrent Assets

(a)

No impairments were recorded in 2025, 2024, ~~2023,~~ or ~~2022~~ 2023 as a result of the annual goodwill impairment tests performed.

(b)

Note 22 24

provides more information on company-owned life insurance investments.

~~12.~~ 14. Supplier Finance Programs

We have arrangements with several financial institutions to act as our paying agents to certain vendors. The arrangements also permit the financial institutions to provide vendors with an option, at our vendors' sole discretion, to ~~sell their receivables~~ elect to receive early payment of our payment obligations from ~~Target to~~ the financial ~~institutions.~~ institutions at a discounted amount. A vendor’s election to receive early payment ~~at a discounted amount from the financial institutions~~ does not change the amount that we must remit to the financial institutions or our payment date, which is up to 120 days from the invoice date.

We do not pay any fees or pledge any security to these financial institutions under these arrangements. The arrangements can be terminated by either party with notice ranging up to 120 days.

Our outstanding vendor obligations eligible for early payment, which are included within Accounts Payable on our Consolidated Statements of Financial Position, do not represent actual ~~receivables sold by our vendors to the financial institutions,~~ early payments made under supplier finance programs, which have historically been lower.

~~13.~~ 15. Accrued and Other Current Liabilities

(a)

We retain a substantial portion of the risk related to general liability and workers' compensation claims. We estimate our ultimate cost based on analysis of historical data and actuarial estimates. General liability and workers' compensation liabilities are recorded at our estimate of their net present value.

Note 19 21

provides the noncurrent balance of these liabilities.

~~14.~~ 16. Commitments and Contingencies

Contingencies

We are exposed to claims and litigation arising in the ordinary course of business and use various methods to resolve these matters in a manner that we believe serves the best interest of our shareholders and other constituents. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and, if material, disclose the estimated range of loss. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. Historically, adjustments to our estimates have not been material. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable liabilities. We do not believe that any of these identified claims or litigation will be material to our results of operations, cash flows, or financial condition.

Commitments

Purchase obligations, which include all legally binding contracts such as merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments, firm minimum commitments for inventory purchases, and service contracts, were $1.2 billion as of ~~February 1, 2025.~~ January 31, 2026. These purchase obligations are primarily due within three years and recorded as liabilities when goods are received or services are rendered. Real estate obligations, which include legally binding minimum lease payments for leases signed but not yet commenced, and commitments for the purchase, construction, or remodeling of real estate and facilities, were ~~$1.5~~ $1.7 billion as of ~~February 1, 2025.~~ January 31, 2026. These real estate obligations are primarily due within one year, a portion of which are recorded as liabilities.

We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancellable by their terms. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.

We also issue letters of credit and surety bonds in the ordinary course of business. Trade letters of credit totaled ~~$1.5~~ $1.2 billion as of ~~February 1, 2025,~~ January 31, 2026, a portion of which are reflected in Accounts Payable. Standby letters of credit and surety bonds, primarily related to insurance and regulatory requirements, totaled ~~$509~~ $667 million as of ~~February 1, 2025.~~ January 31, 2026.

~~15.~~ 17. Commercial Paper and Long-Term Debt

~~In September 2024, we issued $750 million of~~ Our unsecured long-term debt ~~with a fixed rate of 4.5 percent that matures in September 2034.~~ issuances during the year ended

~~We obtain short-term financing from time to time under our commercial paper program. There was no commercial paper outstanding at any time during the year ended February 1, 2025, or~~ January 31, 2026 were as of February 3, 2024. During the year ended February 3, 2024, the maximum amount outstanding was $90 million, and the average daily amount outstanding was $1 million, at a weighted average annual interest rate of 4.8 percent. follows:

~~In October 2024, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2025 and terminated our prior 364-day facility.~~ We ~~also have a committed $3.0 billion unsecured revolving credit facility that will expire in October 2028. No balances were outstanding~~ obtain short-term financing from time to time under our ~~credit facilities~~ commercial paper program. There was no commercial paper outstanding at any time during ~~2024~~ the years ended January 31, 2026, or ~~2023.~~ February 1, 2025.

In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day facility. We also have a committed $3.0 billion unsecured revolving credit facility that will expire in October 2028. No balances were outstanding under our credit facilities at any time during 2025 or 2024.

Substantially all of our outstanding borrowings are senior, unsecured obligations. Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants, which have no practical effect on our ability to pay dividends.

~~16.~~ 18. Derivative Financial Instruments

Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk. As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis.

Note 6 8

provides the fair value and classification of these instruments.

Under our swap agreements, we pay a floating rate equal to the daily Secured Overnight Financing Rate (SOFR) compounded over six months and receive a weighted average fixed rate of 2.8 percent. The agreements have a weighted average remaining maturity of ~~4.5~~ 3.5 years. As of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ interest rate swaps with notional amounts totaling $2.20 ~~billion and $2.45~~ billion were designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during ~~2024~~ 2025 and ~~2023.~~ 2024.

~~17.~~ 19. Leases

We lease certain retail stores, supply chain facilities, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the Consolidated Statements of Financial Position; we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease and nonlease components for new and reassessed leases.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from

one

to 50 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Certain of our lease agreements require reimbursement of real estate taxes, common area maintenance, and insurance, as well as rental payments based on a percentage of retail sales over contractual levels, and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate to third parties. Our lease and sublease portfolio consists mainly of operating leases with CVS Pharmacy Inc. (CVS) for space within our stores.

(a)

Finance lease assets are recorded net of accumulated amortization of ~~$857~~ $963 million and ~~$743~~ $857 million as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively.

(a)

2025, 2024, ~~2023,~~ and ~~2022~~ 2023 include $143 million, $132 million, and $115 ~~million, and $101~~ million, respectively, of short-term and variable lease costs.

(b)

Supply chain-related amounts are included in Cost of Sales.

(c)

Sublease income excludes rental income from owned properties of $54 million, $48 ~~million in 2024,~~ million, and $49 million for ~~each of 2023~~ 2025, 2024, and ~~2022,~~ 2023, respectively, which is also included in Net Sales.

(a)

Operating lease payments include ~~$777~~ $719 million related to options to extend lease terms that are reasonably certain of being exercised and exclude ~~$186~~ $39 million of legally binding minimum lease payments for leases signed but not yet commenced.

(b)

Finance lease payments include ~~$245~~ $286 million related to options to extend lease terms that are reasonably certain of being exercised and exclude ~~$128~~ $100 million of legally binding minimum lease payments for leases signed but not yet commenced.

~~18.~~ 20. Income Taxes

Earnings before income taxes were ~~$5.3~~ $4.8 billion, $5.3 billion, and ~~$3.4~~ $5.3 billion during 2025, 2024, and 2023, ~~and 2022,~~ respectively, including $0.8 billion, $1.1 billion, and $1.2 ~~billion, and $1.3~~ billion earned by our foreign entities subject to tax outside of the U.S.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which expands income tax disclosure requirements, primarily related to the effective tax rate reconciliation and income taxes paid. We adopted the standard prospectively in fiscal 2025.

(a)

~~$10 million~~ State taxes in California, New York, Illinois, and ~~$8 million~~ Minnesota contributed to the majority of the ~~balances as of February 1, 2025, and February 3, 2024, respectively, is included~~ tax effect in ~~Other Noncurrent Assets.~~ this category.

We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S. Internal Revenue Service (IRS) is currently auditing certain aspects of the U.S. federal income tax returns for years 2021 through 2023 and has completed exams for years 2020 and prior. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2019. (b)

~~If we were to prevail on all unrecognized~~ The tax ~~benefits recorded, the amount that would benefit~~ effects of share based compensation are classified within nontaxable or nondeductible items in the effective tax rate was $206 million, $161 million, and $107 million as of February 1, 2025, February 3, 2024, and January 28, 2023, respectively. In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During 2024, 2023, and 2022, we recorded an expense reconciliation for 2025.

/ (a)

~~(benefit) from accrued interest and penalties~~ Includes amounts paid for the purchase of $13 million, $6 million, and $(4) million, respectively. As of February 1, 2025, February 3, 2024, and January 28, 2023, total accrued interest and penalties were $21 million, $14 million, and $7 million, respectively. federal transferable tax credits.

~~It is reasonably possible that the amount~~ We made cash payments of ~~the unrecognized~~ $1,055 million and $374 million for income taxes, net of refunds, during 2024 and 2023, respectively. Due to deferred tax ~~benefits with respect to~~ effects and other payment and refund timing differences, income tax payments are not necessarily indicative of our ~~other unrecognized~~ current tax ~~positions will increase~~ expense or ~~decrease during the next twelve months; however, an estimate of the amount or range of the change cannot be made at this time.~~ future cash obligations.

~~19. Other Noncurrent Liabilities~~ (a)

$13 million and $10 million of the balances as of January 31, 2026, and February 1, 2025, respectively, is included in Other Noncurrent Assets.

As of January 31, 2026, we had gross tax loss carryforwards of $1.2 billion in Canada and $0.2 billion in Luxembourg. The losses are deemed to have a remote possibility of realization; therefore, a deferred tax asset and valuation allowance are not established.

We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S. Internal Revenue Service (IRS) is currently auditing certain aspects of our U.S. federal income tax returns for 2021-2024, including transfer pricing matters. The IRS has completed examinations of years 2020 and prior. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2019.

If we were to prevail on all unrecognized tax benefits recorded, the amount that would benefit the effective tax rate was $226 million, $206 million, and $161 million as of January 31, 2026, February 1, 2025, and February 3, 2024, respectively. In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During 2025, 2024, and 2023, we recorded expense from accrued interest and penalties of $12 million, $13 million, and $6 million, respectively. As of January 31, 2026, February 1, 2025, and February 3, 2024, total accrued interest and penalties were $32 million, $21 million, and $14 million, respectively.

21. Other Noncurrent Liabilities

(a)

To be amortized evenly through 2038.

~~20.~~ 22. Share Repurchase

We periodically repurchase shares of our common stock under a board-authorized repurchase program through a combination of open market transactions, accelerated share repurchase arrangements, and other privately negotiated transactions with financial institutions.

(a)

Amounts include applicable excise tax and commissions.

~~21.~~ 23. Share-Based Compensation

We maintain a long-term incentive plan for key team members and non-employee members of our Board of Directors. This plan allows us to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards, or a combination of awards (collectively, share-based awards). The number of unissued common shares reserved for future grants under this plan was 15.3 million as of January 31, 2026.

~~24.1 million~~ Compensation expense associated with share-based awards is recognized on a straight-line basis over the required service period and reflects estimated forfeitures. Share-based compensation expense recognized in SG&A Expenses was $282 million, $307 million, and $255 million, and the related income tax benefit was $62 million, $66 million, and $56 million, in 2025, 2024, and 2023, respectively.

as of February 1, 2025.

Compensation expense associated with share-based awards is recognized on a straight-line basis over the required service period and reflects estimated forfeitures. Share-based compensation expense recognized in SG&A Expenses was $307 million, $255 million, and $224 million, and the related income tax benefit was $66 million, $56 million, and $52 million, in 2024, 2023, and 2022, respectively.

Restricted Stock Units

We issue restricted stock units and performance-based restricted stock units generally with 3-year cliff or 4-year graduated vesting from the grant date (collectively restricted stock units) to certain team members. The final number of shares issued under performance-based restricted stock units is based on our total shareholder return relative to a retail peer group over a 3-year performance period. We also regularly issue restricted stock units to our Board of Directors, which vest quarterly in the year they are granted and are settled in shares of Target common stock upon departure from the Board. The fair value for restricted stock units is calculated based on our stock price on the date of grant, incorporating an analysis of the total shareholder return performance measure where applicable. The weighted average grant date fair value of restricted stock units was $107.95, $165.21, ~~$160.91,~~ and ~~$208.80~~ $160.91 in 2025, 2024, and 2023, ~~and 2022,~~ respectively.

(a)

Represents the number of shares of restricted stock units, in thousands. For performance-based restricted stock units, assumes attainment of maximum payout rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of outstanding restricted stock units and performance-based restricted stock units as of ~~February 1, 2025,~~ January 31, 2026, was ~~4.47~~ 5.98 million.

(b)

Weighted average per unit

The expense recognized each period is partially dependent upon our estimate of the number of shares that will ultimately be issued. As of ~~February 1, 2025,~~ January 31, 2026, there was ~~$429~~ $443 million of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted average period of ~~2.5~~ 2.4 years. The fair value of restricted stock units vested and converted to shares of Target common stock was $175 million, $225 million, and $213 ~~million, and $321~~ million in 2025, 2024, and 2023, ~~and 2022,~~ respectively.

Performance Share Units

We issue performance share units to certain team members that represent shares potentially issuable in the future. Issuance is based upon our performance, generally relative to a retail peer group, over a 3-year ~~or 4-year~~ performance period on certain measures primarily including sales growth, after-tax return on invested capital, and earnings per share growth. The fair value of performance share units is calculated based on our stock price on the date of grant. The weighted average grant date fair value of performance share units was $108.32, $164.92, ~~$162.54,~~ and ~~$216.63~~ $162.54 in 2025, 2024, and 2023, ~~and 2022,~~ respectively.

(a)

Represents the number of performance share units, in thousands. Assumes attainment of maximum payout rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of outstanding performance share units as of ~~February 1, 2025,~~ January 31, 2026, was ~~0.87~~ 1.11 million.

(b)

Weighted average per unit.

The expense recognized each period is partially dependent upon our estimate of the number of shares that will ultimately be issued. Future compensation expense for unvested awards could reach a maximum of ~~$190~~ $265 million assuming payout of all unvested awards. The unrecognized expense is expected to be recognized over a weighted average period of ~~1.3~~ 1.6 years. The fair value of performance share units vested and converted to shares of Target common stock was $13 million, $46 million, and $127 ~~million, and $178~~ million in 2025, 2024, and 2023, ~~and 2022,~~ respectively.

~~22.~~ 24. Defined Contribution Plans

Team members who meet eligibility requirements can participate in a defined contribution 401(k) plan by investing up to 80 percent of their eligible earnings, as limited by statute or regulation. We match 100 percent of each team member's contribution up to 5 percent of eligible earnings. Company match contributions are made to funds designated by the participant, none of which are based on Target common stock.

In addition, we maintain an unfunded, nonqualified deferred compensation plan for a broad management group whose participation in our 401(k) plan is limited by statute or regulation. These team members choose from a menu of crediting rate alternatives that are generally the same as the investment choices in our 401(k) plan, but also includes a fund based on Target common stock. We credit an additional 2 percent per year to the accounts of all active participants, excluding executive officers, in part to recognize the risks inherent to their participation in this plan. We also maintain a frozen, unfunded, nonqualified deferred compensation plan covering less than 50 participants. Our total liability under these plans was ~~$684~~ $717 million and ~~$627~~ $684 million as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively.

We mitigate our risk of offering the nonqualified plans through investing in company-owned life insurance and prepaid forward contracts that substantially offset our economic exposure to the returns of these plans. These investments are general corporate assets and are marked to market with the related gains and losses recognized in the Consolidated Statements of Operations in the period they occur.

~~23.~~ 25. Pension Plans

We have a U.S. qualified defined benefit pension plan covering team members who meet eligibility requirements. This plan is closed to new participants. Active participants accrue benefits under a final average pay feature or a cash balance feature. We also have unfunded, nonqualified pension plans for team members with qualified plan compensation restrictions, as well as international plans. Eligibility and the level of benefits under all plans vary depending on each team member's full-time or part-time status, date of hire, age, length of service, and/or compensation.

Contributions and Estimated Future Benefit Payments

Our pension obligations can be met over time through a combination of company contributions to these plans and earnings on plan assets. In ~~2024~~ 2025 and ~~2023,~~ 2024, we made no contributions to our qualified defined benefit pension plan. We are not required to make any contributions to our qualified defined benefit pension plan in ~~2025.~~ 2026. However, depending on investment performance and plan funded status, we may elect to make a contribution.

Cost of Plans

Assumptions

The weighted average assumptions used to measure net periodic benefit expense each year are the rates as of the beginning of the year (i.e., the prior measurement date). Our most recent compound annual rate of return on qualified plan assets was ~~1.2~~ 0.8 percent, ~~3.9~~ 5.4 percent, ~~6.3~~ 6.2 percent, and ~~5.7~~ 5.9 percent for the 5-year, 10-year, 15-year, and 20-year time periods, respectively.

The market-related value of plan assets is used in calculating the expected return on assets. Historical differences between expected and actual returns are deferred and recognized in the market-related value over a 5-year period from the year in which they occur.

We review the expected long-term rate of return annually and revise it as appropriate. Additionally, we monitor the mix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and reduce volatility in our assets. Our ~~2024~~ 2025 expected annualized long-term rate of return assumptions were 7.0 percent for domestic equity securities, 7.0 percent for international equity securities, 6.0 percent for long-duration debt securities, 9.0 percent for balanced funds, and 8.0 percent for other investments. These estimates are a judgmental matter in which we consider the composition of our asset portfolio, our historical long-term investment performance, and current market conditions.

Benefit Obligation

(a)

The actuarial ~~gain~~ loss / (gain) was primarily driven by changes in the weighted average discount rate.

(b)

Accumulated benefit obligation—the present value of benefits earned to date assuming no future salary growth—is materially consistent with the projected benefit obligation in each period presented.

Plan Assets

Our asset allocation policy is designed to reduce the long-term cost of funding our pension obligations. The plan invests with both passive and active investment managers depending on the investment. The plan also seeks to reduce the risk associated with adverse movements in interest rates by employing an interest rate hedging program, which includes the use of derivative instruments.

(a)

Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets in both periods presented.

(b)

Other assets include private equity, high-yield debt, natural resources and timberland funds, derivative instruments, and real estate.

(a)

Investments in government securities and long-term government bonds.

(b)

Investments in corporate and municipal bonds.

(c)

Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

Amounts Included in Shareholders' Investment

Actuarial gains and losses are recorded in Accumulated Other Comprehensive Loss (AOCI) and amortized using the corridor approach. As of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ pretax net actuarial losses recorded in AOCI totaled ~~$939~~ $857 million and ~~$969~~ $939 million, respectively.

~~24.~~ 26. Accumulated Other Comprehensive Loss

Note: Amounts are net of tax.

(a)

Represents amortization of gains and losses on cash flow hedges, net of $6 million of taxes, which is recorded in Net Interest Expense.

~~25.~~ 27. Segment Reporting

Our Chief Operating Decision ~~Maker—our~~ Maker (CODM)—our Chief Executive Officer—monitors our consolidated net earnings and operating income ~~and net earnings~~ to evaluate performance and make operating ~~decisions.~~ decisions including whether to invest profits into capital projects, make equity or other investments, or return capital to shareholders. Consolidated assets as presented on our Consolidated Statements of Financial Position is the only view of assets regularly reviewed by our CODM. We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Virtually all of our consolidated revenues are generated in the United States. The vast majority of our properties and equipment are located within the United States.

(a)

N Note 3

ote

provides a description of Merchandising Cost of Sales and Supply Chain and Digital Fulfillment Costs.

(b)

For 2025, includes $250 million related to

business transformation costs

described in

Note 7

and $593 million of pretax net gains related to settlements of credit card interchange fee litigation matters described in

Note 6

28. Subsequent Event

On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized by the statute. Target is the importer of record for certain merchandise that was previously subject to such tariffs under IEEPA. The ruling does not establish a refund process, and significant uncertainty remains regarding how and when any amounts may be recovered. We are evaluating the ruling and potential actions available to us. Because the process, timing, and amount of any recovery are uncertain, we are unable to estimate the financial effects, if any, at this time.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there were no changes which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

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

For the Report of Management on Internal Control and the Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting, see

Part II, Item 8, Financial Statements and Supplementary Data

Item 9B. Other Information

On December 5, 2024, Christina Hennington, Target’s Executive Vice President and Chief Strategy and Growth Officer, adopted a written plan for the sale of Target common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. Ms. Hennington’s written plan covers 13,514 shares of Target common stock in the aggregate. It provides for the sale of 11,965 shares of Target common stock and also provides for a gift of 1,549 shares of Target common stock. This written plan is scheduled to expire on April 2, 2026. Not applicable.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Certain information required by Part III is incorporated by reference from Target's definitive Proxy Statement for the 2026 Annual Meeting of Shareholders ~~to be held on June 11, 2025~~ (our Proxy Statement). Except for those portions specifically incorporated in this Form 10-K by reference to the Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this Form 10-K.

Item 10. Directors, Executive Officers and Corporate Governance

The following sections of the Proxy Statement are incorporated herein by reference:

•

Item one—Election of directors

•

General information about corporate governance and the Board—

◦

Committees

◦

Business ethics and conduct

•

Compensation Discussion and Analysis—Compensation policies and risk—Securities trading policy

•

Questions and answers about the ~~2025~~ 2026 Annual Meeting—Access to information—Question 16

•

Questions and answers about the ~~2025~~ 2026 Annual Meeting—Communications—Question 19

Management's Discussion (MD&A) +42 −55 ~58

thinking…

Show diff

Executive Overview

In ~~2024,~~ 2025, we ~~drove our strategy (as described on~~ operated in a dynamic and uncertain environment characterized by cautious consumers who remained value-focused and selective in discretionary spending along with unprecedented tariff volatility.

~~) by investing in core strengths that deepened connection~~ Against this backdrop, we took decisive actions to strengthen our business and position Target for long-term growth with ~~existing guests, while introducing innovations that further differentiated Target, unlocked new channels of growth,~~ a clear strategic focus around four priorities: leading with merchandising authority; elevating the guest experience; accelerating technology; and ~~gave consumers more reasons to become loyal Target guests.~~ strengthening team and communities. During ~~2024, we~~ 2025, we:

•

~~Continued~~ Took action on our initiative to ~~emphasize newness~~ transform various aspects of our business, including organizational simplification to streamline decision-making, reduce complexity, and ~~differentiation across our assortment, including a steady flow of exclusive products and designer collaborations, such as:~~ drive efficiency;

◦

2,000 new wellness products introduced in January of 2025—600 of which were exclusive to Target;

◦

our exclusive official "Taylor Swift | The Eras Tour Book";

◦

our large assortment of exclusive Wicked products including Wicked Quenchers from Stanley;

◦

partnerships with celebrities such as Dwayne “The Rock” Johnson, Tom Holland, Jennifer Aniston, Ashley Tisdale and more;

◦

the Diane von Furstenberg for Target collection;

◦

The Cuddle Collab limited-edition collection for pets and pet lovers; and

◦

a limited-time pickleball collection with tennis and lifestyle brand Prince;

•

~~Launched or expanded several owned brands, including dealworthy~~ Advanced the multi-year transformation of our Hardlines business into "Fun 101", an evolution in bringing greater cultural relevance and style authority to the assortment;

— our new low-price line of essentials — and Auden

, Cat & Jack

, Gigglescape

, and up&up

, with 11 of our owned brands exceeding $1 billion in annual sales;

•

~~Expanded~~ Continued innovation within our owned brands portfolio, including design partnerships and collaborations across multiple categories, such as our new fresh floral owned brand, Good Little Garden, the ~~selection of products available on our~~ kate spade new york x Target ~~Plus digital marketplace;~~ collection, and partnerships with celebrities including Taylor Swift and Tom Holland;

•

Launched Precision Plus by Roundel™, a retail media capability that improves advertising outcomes by leveraging data and AI-learning, and expanded our ~~reimagined~~ Target Circle loyalty program to deliver an easier and more personalized shopping and saving experience, including a free-to-join option and a paid membership for same-day delivery, as well as the integration of Target Circle Card (formerly RedCard); Plus third-party digital marketplace;

•

~~Continued~~ Leveraged our nearly 2,000-store network (including 18 new stores opened in 2025) to ~~enhance~~ fulfill the vast majority of sales through stores, supporting speed and cost efficiency, with two-thirds of digital sales fulfilled through our ~~Roundel digital media products and services, including through a new self-service buying tool, Roundel Media Studio, and experiential events integrated with marketing activities;~~ same-day fulfillment options;

•

~~Invested~~ Realized significant improvements in ~~new artificial intelligence (AI) technology, including modernized AI-powered~~ inventory ~~management systems and Store Companion, an AI-powered chatbot designed to make team members' jobs easier and enhance~~ shrink throughout the ~~shopping experience;~~ year, with shrink rates reaching pre-pandemic levels;

•

~~Opened 23 new stores, many~~ Enhanced artificial intelligence capabilities across merchandising, planning, inventory management, and personalization, and expanded the use of ~~which are full-size stores, reflecting our large-format focus~~ AI-powered tools to simplify work for store and ~~stores as hubs strategy;~~ headquarters teams; and

•

~~Fulfilled over 65~~ Continued our longstanding commitment to community engagement and giving, including giving 5 percent of ~~our digital sales through our same-day fulfillment options (Order Pickup, Drive Up, and Same Day Delivery), which grew 7.7 percent compared~~ profit to ~~2023, including double-digit percentage growth in both Same Day Delivery and Drive Up.~~ communities, as well as over 1 million team member volunteer hours annually.

Business Environment

Beginning in 2025, the U.S. imposed a variety of additional tariffs on a wide range of imported products using various legal authorities, including IEEPA. Those additional tariffs were subsequently modified through incremental increases, decreases, pauses, and limited exemptions. Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or through our vendors, with China as the single largest source of merchandise we import.

On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute. The ruling does not establish a refund process, and significant uncertainty remains regarding how and when any amounts may be recovered. We are evaluating the ruling and potential actions available to us. Because the process, timing, and amount of any recovery are uncertain, we are unable to estimate the financial effects, if any, at this time. The ultimate resolution of this matter could materially affect our consolidated financial position, results of operations, and cash flows.

We are closely monitoring the evolving consumer and regulatory landscape, including new tariffs announced in February 2026 in response to the U.S. Supreme Court ruling on IEEPA tariffs, and adjusting plans as needed. The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods.

Business Transformation Initiatives

In 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets. We incurred costs and charges related to our business transformation initiatives in 2025, including a reduction in our headquarters workforce.

Note 7

to the Financial Statements provides additional information.

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

Financial Summary

Fiscal ~~2024~~ 2025 included the following notable items:

•

GAAP ~~and Adjusted~~ diluted earnings per share were ~~$8.86.~~ $8.13 and Adjusted EPS

were $7.57.

•

Net Sales were ~~$106.6~~ $104.8 billion, a decrease of ~~$0.8~~ $1.8 billion, or ~~0.8~~ 1.7 percent, from the prior ~~year, driven by one less week in the current~~ year.

•

Comparable sales ~~increased 0.1~~ decreased 2.6 percent, driven by a ~~1.4~~ 2.2 percent ~~increase~~ decrease in traffic and ~~partially offset by~~ a ~~1.3~~ 0.4 percent decrease in average transaction amount.

•

Operating income of ~~$5.6~~ $5.1 billion ~~was 2.5 percent lower than the 53-week prior-year period.~~ and Adjusted operating income

~~Note: Amounts may not foot due to rounding. Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes~~ of $4.8 billion were 8.1 percent and 14.2 percent lower, respectively, than the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on prior-year.

•

We recognized $593 million of net gains related to settlements of credit card interchange fee litigation matters.

•

We incurred $250 million of costs related to business transformation initiatives.

Note: Amounts may not foot due to rounding.

Adjusted diluted earnings per share (Adjusted EPS) and Adjusted operating income, non-GAAP metrics, exclude the impact of certain items. Management believes that Adjusted EPS and Adjusted operating income are useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on

(a)

2023 consisted of 53 weeks compared with 52 weeks in ~~2024~~ 2025 and ~~2022.~~ 2024.

We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our ~~capital-allocation~~ capital allocation effectiveness over time. For the trailing twelve months ended ~~February 1, 2025,~~ January 31, 2026, after-tax ROIC was ~~15.4~~ 13.8 percent, compared to ~~16.1~~ 15.4 percent for the trailing twelve months ended February ~~3, 2024.~~ 1, 2025. The calculation of ROIC is provided on

Analysis of Results of Operations

Note: Gross margin is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales.

(a)

~~In 2024, we changed the presentation~~ 2023 consisted of ~~revenue~~ 53 weeks compared with 52 weeks in ~~our Consolidated Statements of Operations, consolidating the previous three-line format (Sales, Other Revenue,~~ 2025 and ~~Total Revenue) to a single line labeled "Net Sales", which reflects all revenues (formerly Total Revenue).~~ 2024.

Note 2

to the Financial Statements provides additional information. We believe this presentation better reflects our strategy, which includes growing capabilities and business offerings that leverage Target's assets and competitive strengths.

(b)

~~Refer~~ Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, which are non-GAAP measures, exclude the impact of certain items. Management believes that these measures are useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on

~~Note 3~~ .

A discussion regarding Analysis of Results of Operations and Analysis of Financial Condition for 2024, as compared to ~~the Financial Statements for additional information about a reclassification of prior year amounts to conform with current year presentation.~~ 2023, is included in Part II, Item 7, MD&A

(c)

2023 consisted of 53 weeks compared with 52 weeks in 2024 and 2022.

(a)

Reflects the impact of a reclassification of prior year amounts to conform with current year presentation. Refer to

Note 3

to the Financial Statements for additional information.

Note: Gross margin is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales. Previously our gross margin rate was calculated based only on Merchandise Sales. The calculation change aligns with our 2024 transition to a single-line revenue presentation on our Consolidated Statements of Operations, with prior period amounts updated to conform to the current year presentation. We also updated prior period gross margin rates to conform to the current year calculations, which resulted in an approximate 1 percentage point increase in our gross margin rate for both 2023 and 2022.

A discussion regarding Analysis of Results of Operations and Analysis of Financial Condition for 2023, as compared to 2022, is included in Part II, Item 7, MD&A

to our

Annual Report on Form 10-K for the year ended February 1, 2025

February 3, 2024

Net Sales

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

Note 2

to the Financial Statements provides more information.

Merchandise Sales are net of expected returns, and our estimate of gift card breakage.

Note 2

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

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

The extra week in 2023 contributed $1.7 billion to Net Sales.

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

Part I, Item 1, Business of this Form 10-K

and

Note 2

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

TD Bank Group offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the Target MasterCard Credit Card (Target Credit Cards). Additionally, we offer a branded proprietary Target Debit Card and Target Circle Card Reloadable Account. Collectively, we refer to these products as Target Circle Cards. Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target. We monitor the percentage of purchases that are paid for using Target Circle Cards (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of incremental purchases on our Target Circle Cards are also incremental sales for Target. For the years ended February 1, 2025, February 3, 2024, and January 28, 2023, total Target Circle Card Penetration was 17.8 percent, 18.6 percent, and 19.8 percent, respectively. See the Customer Loyalty Programs section within

Item 1. Business on

for information about the rebranding of RedCards.

Gross Margin (GM) Rate

Our gross margin rate was 28.2 percent in 2024 and 27.5 percent in 2023. The increase reflected the net impact of

•

merchandising activities, including cost improvements which more than offset higher promotional and clearance markdown rates, as well as growth in advertising and marketplace revenues;

•

lower book to

physical inventory adjustments in 2024; and

•

higher supply chain & digital fulfillment costs due to new supply chain facilities coming online and an increase in digital volume.

Selling, General and Administrative (SG&A) Expense Rate

Our SG&A expense rate was 20.6 percent in 2024, compared with 20.0 percent in 2023, reflecting the net impact of cost increases across our business, including higher team member pay and benefits and higher general liability expenses, partially offset by the benefit of lower store remodel-related expenses.

Store Data

(a)

In thousands; reflects total square feet less office, distribution center, and vacant space.

Gross Margin (GM) Rate

Our gross margin rate was 27.9 percent in 2025 and 28.2 percent in 2024. The decrease reflected the net impact of:

•

merchandising activities, including higher markdown rates and purchase order cancellation costs, partially offset by growth in advertising and other revenues;

•

changes in category sales mix; and

•

lower inventory shrink.

Selling, General and Administrative (SG&A) Expense Rate

Our SG&A expense rate was 20.6 percent in 2025, consistent with 2024. The 2025 rate included a 0.6 percentage point benefit from interchange fee settlements, partially offset by 0.2 percentage points of business transformation costs. Excluding these items, our Adjusted SG&A expense rate was 20.9 percent in 2025, compared with 20.6 percent in 2024, reflecting the deleveraging impact of lower Net Sales and the net impact of other costs.

Other Performance Factors

Net Interest Expense

Net interest expense was $445 million for 2025, compared with $411 million for ~~2024, compared with $502 million for 2023.~~ 2024. The ~~decrease~~ increase in net interest expense was primarily due to ~~an increase in interest income.~~ higher average debt levels.

Provision for Income Taxes

Our ~~2024~~ 2025 effective income tax rate was ~~22.2~~ 22.3 percent compared with ~~21.9~~ 22.2 percent in ~~2023.~~ 2024. The increase ~~primarily~~ reflects ~~lower~~ global minimum taxes and discrete tax expense in the current year related to share-based compensation, primarily offset by benefits ~~compared to the prior year.~~ from tax credits.

Numerous countries, including certain jurisdictions in which we operate, have enacted legislation to implement the model rules of the Organization for Economic Cooperation and Development Pillar Two framework (Pillar Two), which is designed to ensure large multinational enterprises are subject to a 15 percent global minimum tax on income earned in each jurisdiction in which they operate. We do not expect the enacted rules, which will be applicable to us in 2025, to materially impact our 2025 financial results.

Under the Pillar Two framework, any existing deferred tax assets not disclosed in our financial statements will not be available for future use. Accordingly, we are disclosing the existence of gross tax loss carryforwards of $1.1 billion in Canada and $0.2 billion in Luxembourg. The losses are deemed to have a remote possibility of realization; therefore, a deferred tax asset and valuation allowance are not established.

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share (Adjusted ~~EPS). This metric excludes~~ EPS), adjusted SG&A expenses, adjusted SG&A expense rate, adjusted operating income, and adjusted operating income margin rate. These measures exclude certain items presented below. We believe this information is useful in providing period-to-period comparisons of the results of our operations. ~~This measure is~~ These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the U.S. (GAAP). The most comparable GAAP ~~measure is~~ measures are diluted earnings per ~~share.~~ share, SG&A expenses, SG&A expense rate, operating income, and operating income margin rate. Adjusted ~~EPS~~ EPS, adjusted SG&A expenses, adjusted SG&A expense rate, adjusted operating income, and adjusted operating income margin rate should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate ~~Adjusted EPS differently than we do,~~ these measures differently, or not provide similar measures, limiting the usefulness of the ~~measure~~ measures for comparisons with other companies.

Note: Amounts may not foot due to rounding.

(a)

2023 consisted of 53 weeks compared with 52 weeks in ~~2024~~ 2025 and ~~2022.~~ 2024.

(b)

~~Other items unrelated to current period operations, none of which were individually significant.~~ Note 7

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

(c)

Note 6

to the Financial Statements provides additional information.

Adjustments Affecting Comparability

Note: Amounts may not foot due to rounding.

(a)

~~2023 consisted of 53 weeks compared with 52 weeks in 2024 and 2022.~~ Rates are calculated by dividing the applicable amount by Net Sales.

(b)

~~Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.~~ Note 7

provides additional information.

(c)

Note 6

provides additional information.

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

(a)

~~Consisted~~ Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases. Calculated using the discount rate for each lease and recorded as a component of ~~53 weeks.~~ rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.

(b)

~~Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases.~~ Calculated using the ~~discount rate~~ effective tax rates, which were 22.3 percent and 22.2 percent for ~~each~~ the trailing twelve months ended January 31, 2026, and February 1, 2025, respectively. For the trailing twelve months ended January 31, 2026, and February 1, 2025, includes tax effect of $1.2 billion and $1.3 billion, respectively, related to EBIT, and $38 million and $35 million, respectively, related to operating lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors. interest.

(c)

~~Calculated using the effective tax rates, which were 22.2 percent~~ Total short-term and 21.9 percent for the trailing twelve months ended February 1, 2025, and February 3, 2024, respectively. Includes tax effect of $1.3 billion related to EBIT for each of the trailing twelve month periods ended February 1, 2025, and February 3, 2024, and $35 million and $26 million, respectively, related to long-term operating lease ~~interest.~~ liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities.

(d)

~~Total short-term~~ Average based on the invested capital at the end of the current period and ~~long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities.~~ the invested capital at the end of the comparable prior period.

(e)

~~Average based~~ For the trailing twelve months ended January 31, 2026, includes the impact of after-tax net gains on ~~the invested capital at the end~~ interchange fee settlements and business transformation costs, which had a net favorable impact on after-tax ROIC of ~~the current period and the invested capital at the end of the comparable prior period.~~ 0.8 percentage points.

Notes 6

and

to the Financial Statements provide additional information.

Analysis of Financial Condition

Liquidity and Capital Resources

Capital Allocation

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

Our year-end cash and cash equivalents balance increased to $5.5 billion from $4.8 billion ~~from $3.8 billion~~ in ~~2023.~~ 2024. Our cash and cash equivalents balance includes short-term investments of ~~$3.9~~ $4.6 billion and ~~$2.9~~ $3.9 billion as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments.

Operating Cash Flows

Cash flows provided by operating activities were $6.6 billion in 2025 compared with $7.4 billion in ~~2024 compared with $8.6 billion in 2023.~~ 2024. The operating cash flow decrease ~~is primarily due to higher income tax payments and~~ reflects lower net earnings, as well as the ~~combined~~ net impact of ~~inventory and~~ lower accounts payable ~~activity.~~ leverage and inventory purchases in the current year.

Inventory

Year-end inventory was $12.3 billion in 2025, compared with $12.7 billion in ~~2024, compared~~ 2024. The decrease reflects the combined impact of timing of receipts and alignment of inventory with ~~$11.9 billion~~ sales trends, partially offset by higher merchandise costs in ~~2023. The increase in inventory levels reflects~~ 2025.

•

earlier inventory receipts compared to the prior year, including to support merchandising strategies; and

•

inventory investments in select merchandise categories to support sales growth and an improved in-stock position.

Capital Expenditures

Note: Amounts may not foot due to rounding.

Capital expenditures in ~~2024~~ 2025 reflect ~~investments~~ continued investment in our strategic initiatives, including investments in both stores and in our supply chain, enhancing our capabilities and guest experience across stores and digital channels. The ~~decrease~~ increase in capital expenditures in ~~2024~~ 2025 compared with ~~2023~~ 2024 primarily reflects ~~a slowdown~~ an increased investment in ~~store remodel activities.~~ both new stores and remodels.

We expect capital expenditures in ~~2025~~ 2026 of approximately $4 $5 billion to ~~$5 billion, with the majority focused on~~ support our store ~~assets, including both new stores~~ experience and ~~remodels, as well as~~ remodel program, continued investment in supply chain and technology ~~projects.~~ projects, and investment in new stores. We expect to open about 20 30 new stores during ~~2025 and to resume a faster pace of remodel activities compared with 2024.~~ 2026.

Dividends

We paid dividends totaling $2.1 billion ($4.52 per share) in 2025 and $2.0 billion ($4.44 per share) in ~~2024 and $2.0 billion ($4.36 per share) in 2023,~~ 2024, a per share increase of 1.8 percent. We declared dividends totaling $2.1 billion ($4.54 per share) in 2025 and $2.1 billion ($4.46 per share) in ~~2024 and $2.1 billion ($4.38 per share) in 2023,~~ 2024, a per share increase of 1.8 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.

Share Repurchases

During 2025 and 2024, we deployed $0.4 billion and $1.0 billion to repurchase shares. ~~We did not repurchase any shares during 2023.~~ See

Part II

Item 5

Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

of this Annual Report on Form 10-K and

Note 20 22

to the Financial Statements for more information.

Financing

Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of ~~February 1, 2025,~~ January 31, 2026, our credit ratings were as follows:

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

We ~~have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In October 2024, we obtained a new committed~~ issued $1.0 billion ~~364-day~~ of unsecured ~~revolving credit facility that will expire~~ debt in ~~October 2025~~ both March and ~~terminated our prior 364-day credit facility. This credit facility~~ June 2025, and ~~our $3.0~~ repaid $1.5 billion of unsecured ~~revolving credit facility that will expire~~ debt in October 2028 provide a liquidity backstop to our commercial paper program. No balances were outstanding under either credit facility at any time during 2024 or 2023. We did not have any balances outstanding under our commercial paper program as of February 1, 2025 or February 3, 2024. April 2025.

Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of February 1, 2025, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade. Note 17

~~Note 15~~ to the Financial Statements provides additional information.

We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities. In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 and terminated our prior 364-day credit facility. This credit facility and our $3.0 billion unsecured revolving credit facility that will expire in October 2028 provide a liquidity backstop to our commercial paper program. No balances were outstanding under either credit facility or our commercial paper program at any time during 2025 or 2024.

Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as of January 31, 2026, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

Note 17

to the Financial Statements provides additional information.

Future Cash Requirements

We enter into contractual obligations in the ordinary course of business that may require future cash payments. Such obligations include, but are not limited to, purchase commitments, debt service, leasing arrangements, and liabilities related to deferred compensation and pensions. The

Notes to the Consolidated Financial Statements

provide additional information.

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

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and apply judgments that affect the reported amounts. In the

Notes to the Consolidated Financial Statements

, we describe the significant accounting policies used in preparing the consolidated financial statements. Our management has discussed the

development, selection, and disclosure of our critical accounting estimates with the Audit & Risk Committee of our Board

of Directors. The following items require significant estimation or judgment:

Inventory and cost of sales:

The vast majority of our inventory is accounted for under the retail inventory accounting method using the last-in, first-out method (LIFO). Our inventory is valued at the lower of LIFO cost or market. We reduce inventory for estimated losses related to shrink and markdowns. Our shrink estimate is based on historical losses and is adjusted to reflect results of actual physical inventory counts. We generally perform counts at each location annually, with counts taking place throughout the year. A 10 percent increase or decrease in our ~~2024~~ 2025 year-end inventory shrink reserve would impact our cost of sales by approximately ~~$150~~ $110 million. Historically, our actual physical inventory count results have shown our estimates to be reasonably accurate. Market adjustments for markdowns are recorded when the salability of the merchandise has diminished. Salability can be impacted by consumer preferences and seasonality, among other factors. We believe the risk of inventory obsolescence is largely mitigated because our inventory typically turns in less than three months. Inventory was ~~$12.7~~ $12.3 billion and ~~$11.9~~ $12.7 billion as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively, and is further described in

Note 8 10

to the Financial Statements.

Vendor income:

We receive various forms of consideration from our vendors (vendor income), principally earned as a result of volume rebates, promotions, certain advertising ~~allowances,~~ activities, and markdown allowances. Vendor income is recorded as a reduction of cost of sales except in arrangements where the payment is a reimbursement of specific, incremental, and identifiable costs and recorded as an offset to those costs. Vendor income earned can vary based on a number of factors, including purchase volumes, sales volumes, and our pricing and promotion strategies.

We establish a receivable for vendor income that is earned but not yet received. Based on historical trending and data, this receivable is computed by forecasting vendor income collections and estimating the amount earned. The majority of the year-end vendor income receivables are collected within the following fiscal quarter, and we do not believe there is a reasonable likelihood that the assumptions used in our estimate will change significantly. Historically, adjustments to our vendor income receivable have not been material. Vendor income receivable was ~~$543~~ $542 million and ~~$513~~ $543 million as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively. Vendor income is described further in

Note 4

to the Financial Statements.

Long-lived assets:

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The evaluation is performed primarily at the store level. An impairment loss is recognized when estimated undiscounted future cash flows from the operation and/or eventual disposition of the asset or asset group are less than its carrying amount, and is measured as the excess of its carrying amount over fair value. We estimate fair value by obtaining market appraisals, obtaining valuations from third-party brokers, or using other valuation techniques. We recorded impairments of $69 million, $68 million, and $102 ~~million, and $66~~ million in 2025, 2024, and 2023, ~~and 2022,~~ respectively, which are described further in

Note 10 12

to the Financial Statements.

Insurance/self-insurance:

We retain a substantial portion of the risk related to certain general liability, workers' compensation, property loss, and team member medical and dental claims. However, we maintain stop-loss coverage to limit the exposure related to certain risks. Liabilities associated with these losses include estimates of both claims filed and losses incurred but not yet reported. We use actuarial methods which consider a number of factors to estimate our ultimate cost of losses. General liability and workers' compensation liabilities are recorded based on our estimate of their net present value; other liabilities referred to above are not discounted. Our workers' compensation and general liability accrual was ~~$772~~ $881 million and ~~$650~~ $772 million as of January 31, 2026, and February 1, 2025, ~~and February 3, 2024,~~ respectively. We believe that the amounts accrued are appropriate; however, our liabilities could be significantly affected if future occurrences or loss developments differ from our assumptions. For example, a 10 percent increase or decrease in average claim costs would have impacted our self-insurance expense by ~~$77~~ $87 million in ~~2024.~~ 2025. Historically, adjustments to our estimates have not been material. Refer to

Part II