Target (TGT) Q1 2026 earnings
Aim It posted earnings and revenue that beat Wall Street expectations on Wednesday, reporting net sales rose more than 6% year over year as the retailer tried to win back customers at a time when sales were declining.
Target’s same-store sales increased 5.6%, marking its first positive same-store sales figure in five quarters.
The retailer said traffic across its stores and digital platforms rose 4.4% compared to last year’s first fiscal quarter and saw broad-based strength across its categories. Digital comparable sales increased 8.9%; The company attributed this growth to same-day delivery through its Target Circle 360 membership.
“Despite this early progress, we know our work is just getting started and we are confident that we are on the right track because guests are responding to the areas where we are leaning in and encouraging change,” CEO Michael Fiddelke said in a call with reporters. “These are areas where we add style, design and value not only to the products we sell, but also to how we sell them, creating a distinct Target experience.”
Specifically, non-product sales increased nearly 25%, including what the company described as strong growth in membership revenue and the Target+ marketplace. Like Walmart and Amazon, Target has sought to expand these business units to both offer greater convenience to customers and increase profits.
The company said it saw sales growth in all six key sales categories, with a particularly strong response from consumers in the health and wellness, toy and baby segments. It opened seven new stores in the first fiscal quarter and has more than 100 renovation projects underway.
Here’s what the retailer reported for its fiscal first quarter compared to Wall Street’s expectations, based on a survey of LSEG analysts:
- Earnings per share: Expected to be $1.46 while it was $1.71
- Revenues: $25.44 billion against expectations of $24.64 billion
While reporting first-quarter developments, Target also raised its full-year revenue outlook. The retailer said it expects a 4% increase in net sales compared to 2025, up 2 percentage points from the previous forecast. It also expects earnings per share to be near the upper end of its previously provided forecast range of $7.50 to $8.50. Analysts expected profit $8.14 per share.
“Despite our updated guidance, we maintain a cautious outlook given the work we know is ahead of us and the ongoing uncertainty in the macroeconomic environment,” Fiddelke told reporters. he said.
For the three months ended May 2, Target reported net income of $781 million, or $1.71 per share, down from $1.04 billion, or $2.27 per share, in the same period a year ago. Adjusted earnings per share were $1.30 in the same period last year.
It reported merchandise revenue of $24.89 billion, beating estimates of $24.18 billion. Target’s revenue increase reported Wednesday was the largest since November 2021.
Fiddelke told reporters that some of Target’s strongest strengths this quarter were in the baby and kids category, with an acceleration of more than 5 percent in the second half of the quarter, as well as product additions in the health and wellness category that drove double-digit sales growth in that segment.
Target’s gross margin was 29% in the first quarter, compared to Wall Street estimates of 28.7%.
The company is struggling as it tries to prove to investors that it can end its sales decline and win back consumers’ brand loyalty. Wednesday’s gains come as Wall Street watches more discerning consumers wary of rising gas prices and macroeconomic uncertainty.
Despite higher gas prices and an overall decline in discretionary spending, executives said consumers continue to show interest in the new products Target is adding to its assortment.
“We see a consumer who continues to be resilient despite facing headwinds and tailwinds in the first quarter,” Fiddelke said.
Target said it is focusing on improving its merchandising, guest experience and technology, hoping to return to sustainable growth.
CFO Jim Lee said in March that Target would increase spending this year to accelerate its turnaround, with capital expenditures for the year expected to be about $5 billion, up more than $1 billion from last fiscal year. These investments will go towards investments in the supply chain and stores, among other areas.
Target said its key priorities for the current second fiscal quarter include: It’s the “largest food and beverage crossover” in more than a decade, in addition to the launch of Target Beauty Studio in more than 600 stores and an overhaul of nearly 75% of decorative accessories.
“We will not confuse this progress with potential,” Fiddelke said. “Our focus is on delivering consistent growth not just in 2026, but for decades to come.”
Lee told reporters the company was “working through the process” to apply for a tariff refund and acknowledged that the tariff environment remains dynamic. He said it was too early to determine how policy changes affected margins.
