Target Corporation
TGT · NYSE
Next quarter
Expected to report Nov 18, 2026 — estimated from last year’s reporting date.
Consensus is $2.04 EPS for Oct 2026 across 13 estimates, ranging $1.71 to $2.46.
TGT Jul 2026
- 6.96%
- $2.30
- $2.46
- —
- $26.54B
Reported results
- $26.54B
- $2.56B
- $1.88B
- $4.11
Highlights
- Underlying EPS: Excluding the $1.65-per-share tariff-refund benefit, diluted EPS was $2.46, ahead of the supplied $2.30 consensus by 6.96%; reported GAAP EPS was $4.11 versus $2.05 a year ago.
- Tariff refund: Target recorded a $994 million pretax IEEPA tariff refund, contributing $752 million to net earnings and lifting operating margin by 3.7 percentage points to 9.6%.
- Sales momentum: Net sales increased 5.3% year over year to $26.54 billion, while comparable sales rose 3.8% on 3.6% traffic growth; the prior quarter delivered $25.44 billion of revenue and 1.71 of EPS.
- Digital growth: Comparable digital sales rose 8.7%, led by more than 25% growth in same-day delivery, compared with 2.7% growth in comparable store sales.
- Broad category performance: Sales grew in all six core merchandising categories, including double-digit growth in Fun 101 and high-single-digit growth in Food & Beverage and Beauty.
- Margin improvement: Excluding the tariff refund, gross margin expanded by approximately 100 basis points year over year to an underlying rate of about 30.0%, despite SG&A rising to 21.6% of sales from 21.3%.
- Guidance raised: Full-year sales growth is now expected around 5%, up one percentage point from prior guidance; EPS guidance is $9.90-$10.90, including the refund, with the ex-refund midpoint $0.75 above the previous midpoint.
- Investment: Second-quarter capital expenditures rose 27% to $1.4 billion, primarily for remodels and new stores; Target paid $518 million in dividends and made no share repurchases.
Analysis
Target’s second quarter was a stronger underlying operating print, amplified by a large tariff refund. Net sales rose 5.3% to $26.54 billion and comparable sales increased 3.8%, ahead of the weak year-ago comparison of negative 1.9% and improving from the preceding reported quarter’s $25.44 billion of revenue. Excluding the $1.65 per-share tariff benefit, EPS was $2.46, 20% above the year-ago $2.05 and ahead of the supplied $2.30 consensus by 6.96%. GAAP EPS doubled to $4.11, while operating income climbed 94.4% to $2.56 billion from $1.32 billion a year ago.
The core of the quarter was improving demand and mix: traffic grew 3.6%, digital comparable sales rose 8.7%, same-day delivery increased more than 25%, and all six core categories grew. Underlying gross margin expanded about 100 basis points, helped by easier comparisons and greater advertising and other non-merchandise contribution, although SG&A deleveraged modestly. Target raised full-year sales growth expectations to around 5% and lifted the ex-refund EPS outlook midpoint by $0.75, signaling confidence that the first-half momentum can continue. The reported profit level, however, includes the one-time $994 million pretax refund.
Sales and traffic
Target’s top line showed a meaningful recovery against last year’s decline, with strength broad-based across channels, demographics, categories and the quarter. The two-year compounded annual sales growth rate accelerated 30 basis points from the prior quarter to 2.1%, suggesting improvement beyond an easy comparison.
- Comparable sales: Comparable sales increased 3.8%, versus a 1.9% decline a year ago and 4.7% growth for the first six months. Traffic rose 3.6%, while average transaction value increased 0.2%.
- Channel mix: Comparable store sales grew 2.7%, while comparable digital sales rose 8.7%. Digital-originated merchandise represented 19.6% of merchandise sales, up from 18.9% a year ago.
- Non-merchandise: Non-merchandise sales grew 20.1% to $592 million, supported by Roundel advertising, Target Circle 360 membership revenue and the Target+ marketplace.
Tariff refund and margins
The headline earnings increase was dominated by a tariff refund, but the underlying margin trend also improved. Target recognized $994 million pretax as a reduction to cost of sales, equivalent to 3.7 percentage points of gross and operating margin and $1.65 of diluted EPS.
- Reported profitability: Gross margin was 33.7%, up from 29.0% a year ago, and operating income was $2.56 billion versus $1.32 billion. Operating margin increased to 9.6% from 5.2%.
- Underlying margin: Excluding the refund, gross margin expanded approximately 100 basis points, helped by comparison with last year’s elevated markdowns and purchase-order cancellation costs, as well as growth in advertising and other non-merchandise sales.
- Expense pressure: SG&A increased 6.8% to $5.73 billion and rose to 21.6% of sales from 21.3%, reflecting higher compensation, additional field-team hours, incentive compensation and planned capital-project spending.
Full-year guidance
Target raised its outlook after the first-half performance. The new guidance includes the second-quarter refund but excludes any potential future refunds, making the ex-refund comparison the more useful indicator of the underlying change.
- Sales: Full-year net sales growth is now expected in a range around 5%, one percentage point above the prior range.
- Operating margin: Full-year operating margin is expected around 6%, including approximately 90 basis points from tariff refunds. Excluding those refunds, the company expects a margin around 5.1%, approximately 50 basis points above last year’s 4.6% adjusted rate.
- EPS: GAAP and adjusted EPS guidance is $9.90-$10.90, including approximately $1.65 from the second-quarter refund. The ex-refund midpoint is $8.75, $0.75 above the prior guidance midpoint of $8.00.
Category and value strategy
The sales recovery was not confined to essentials. Management is pairing value investment with a push into style, design, newness and convenience, and reported growth across the full core assortment.
- Category breadth: All six core merchandising categories grew year over year. Fun 101 delivered double-digit growth, while Food & Beverage and Beauty posted high-single-digit growth.
- Value investment: Target lowered prices on more than 10,000 frequently purchased items during the past year, positioning price investment as part of its effort to rebuild traffic and guest relevance.
- Retail footprint: The store base reached 2,019 locations, up from 1,995 at fiscal year-end and 1,982 a year ago, with retail square footage of 253.8 million square feet.
Capital deployment
Target is directing more capital toward the physical network while preserving its dividend and limiting buybacks. The higher investment level is consistent with the company’s emphasis on remodels, new stores and store-enabled fulfillment.
- Capital expenditures: Second-quarter capex increased 27% year over year to $1.4 billion. Six-month property and equipment spending was $2.40 billion versus $1.86 billion a year ago.
- Shareholder returns: Target paid $518 million in quarterly dividends, up 1.8% per share, and made no share repurchases. Repurchase capacity remained approximately $8.3 billion.
- Returns and cash: Trailing twelve-month after-tax ROIC improved to 15.4% from 14.3%, though the current figure includes a 2.4-percentage-point benefit from tariff refunds. Six-month operating cash flow rose to $4.52 billion from $2.36 billion.
