Target raises annual forecasts after second-quarter sales rise 5.3%
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Target raised its annual sales and profit forecasts on Wednesday after second-quarter net sales rose 5.3% to $26.5 billion, beating estimates. Comparable sales increased 3.8% and store traffic rose 3.6%. Shares fell about 3% in premarket trading.
Key Facts
- Diluted earnings per share rose 100% to $4.11, including a $1.65 per share tariff-refund benefit, versus the $2.32 estimate.
- Gross margin widened to 33.7% from 29% a year earlier, with a 370-basis-point lift from tariff refunds.
- Digital comparable sales increased 8.7% in the second quarter.
- Tariff refunds added about $1 billion to second-quarter profit.
- Target shares fell about 3% in premarket trading, while the stock has gained 56% year to date.
Second-Quarter Results
Net sales rose 5.3% year over year to $26.5 billion, above the $25.5 billion analyst estimate. Diluted earnings per share rose 100% to $4.11, including a $1.65 per share benefit from tariff refunds. Gross margin widened to 33.7% from 29% a year earlier, helped by a 370-basis-point tariff-refund lift. Comparable sales grew 3.8% and store traffic rose 3.6%. Digital comparable sales increased 8.7%.
Assortment and Pricing Overhaul
Target has expanded wellness offerings and added 3,000 beauty products across 60 new brands in 2026. The company reset 75% of home decorative accessories and introduced a back-to-school assortment that is more than 50% new. Target cut prices on 10,000 items over the past year, mostly in food. CEO Michael Fiddelke said more price cuts are coming and called the back-to-school response encouraging. Jefferies analyst Corey Tarlowe said the reset is one of the broadest assortment refreshes in years and is translating into improved traffic.
Outlook and Market Reaction
Target raised its full-year net sales growth view to around 5% from around 4%. The company said tariff refunds boosted second-quarter profit by about $1 billion. Shares fell about 3% in premarket trading, though the stock has surged 56% this year. Fiddelke told reporters there is 'a lot more to come' and the company needs to execute well.
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Target raises annual forecasts after second-quarter sales rise 5.3%
