Net Sales

12 Months Ended

Feb. 01, 2025

Revenue from Contract with Customer [Abstract]

Net Sales

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.

Net Sales (millions)	2024		2023		2022
Apparel and accessories (a)	$	16,505	$	16,485	$	17,646
Beauty (b)	13,173		12,538		11,092
Food and beverage (c)	23,828		23,899		22,918
Hardlines (d)	15,784		16,162		17,739
Home furnishings and décor (e)	16,699		17,760		19,463
Household essentials (f)	18,614		18,746		18,483
Other merchandise sales	217		213		247
Merchandise sales	104,820		105,803		107,588
Advertising revenue	649		522		404
Credit card profit sharing	576		667		734
Other	521		420		394
Net sales	$	106,566	$	107,412	$	109,120

(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 February 1, 2025, and February 3, 2024, the liability for estimated returns was $172 million and $170 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.

Gift Card Liability Activity (millions)	February 3, 2024		Gift Cards Issued During Current Period But Not Redeemed (b)		Revenue Recognized From Beginning Liability		February 1, 2025
Gift card liability (a)	$	1,162	$	878	$	(831)	$	1,209

(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 3 and 5 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, Shipt membership and service revenues, rental income, Target Circle 360 membership revenue, and other miscellaneous revenues.