Higher Pay, Sanitation Costs Drove 14% Bump in Target's Q2 SG&A, Says 10-Q
Target’s Q2 selling, general and administrative expenses were “significantly impacted” by higher employee pay and benefits during the COVID-19 pandemic, said a 10-Q filed Friday at the SEC. SG&A expenses for the quarter ended Aug. 1 rose 14% to $4.5…
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billion. Also contributing to higher expenses were spikes in merchandise volume in stores and the supply chain, safety and cleaning supplies and more rigorous cleaning protocols. Target scaled back its 2020 remodel program of small-format stores from 36 to 20; it completed 130 remodels for the year. During the six months ended Aug. 1, Target issued $2.5 billion of 5-year and 10-year notes to increase cash on hand, it said. The company entered into a $900 million 364-day credit facility, increasing undrawn committed credit facilities to $3.4 billion. It temporarily suspended share repurchases, but the dividend policy remains unchanged, it said. In March, Target temporarily suspended physical inventory counts in stores due to the virus, resuming in June using a statistical sampling method; it has continued to record estimated losses due to shrink and markdowns based on historical rates, it said.