Target Lifts FY26 Outlook After Q2 Profit Growth On Tariff Benefit, Comps

(RTTNews) - Retail major Target Corp. on Wednesday lifted fiscal 2026 outlook, after reporting more-than-doubled profit in its second quarter, mainly on significant tariff benefit and higher net sales and comparable sales.

In pre-market activity on the NYSE, the shares were losing around 1.23 percent, trading at $150.75, after closing Tuesday's regular trading 0.97% higher.

Michael Fiddelke, Chief Executive Officer of Target, stated, "While there's still meaningful work ahead, we're encouraged by the progress we're making and remain focused on executing with discipline, staying agile in a dynamic operating environment, and investing in our team and capabilities to drive sustainable, profitable growth over the long term."

Looking ahead for fiscal 2026, Target now expects earnings per share, on a reported and adjusted basis, in a range of $9.90 to $10.90, compared with prior guidance of $7.50 to $8.50. The outlook includes approximately $1.65 in second quarter tariff refund benefits. Excluding tariff refunds, the midpoint of the guidance range reflects a $0.75 increase.

Operating income margin rate is now expected in a range around 6 percent, including approximately 90 basis points of benefit from tariff refunds. Excluding tariff refunds, full-year operating income margin rate is expected to be in a range around 50 basis points higher than last year's adjusted operating income margin rate of 4.6 percent.

Target also raised its full-year net sales growth guidance to a range around 5 percent, one percentage point higher than the prior guidance.

In the second quarter, net earnings were $1.877 billion, up 100.8% from $935 million earned in the same quarter last year.

Earnings per share, on a reported and adjusted basis, reached $4.11 compared with $2.05 a year ago, representing a 100.3 percent increase.

The latest earnings result included tariff refund benefits of $752 million or $1.65 per share. Adjusted earnings per share increased 20 percent year-over-year, excluding tariff refunds.

Operating income totaled $2.560 billion, up 94.4 percent from the prior year period, mainly reflecting a $994 million benefit from tariff refunds. Operating income margin rate was 9.6 percent, including 3.7 percentage points of benefit from the tariff refunds, higher than last year's 5.2 percent.

Net sales for the second quarter reached $26.539 billion, a 5.3 percent increase from $25.211 billion last year. The company attributed the sales growth to a 5 percent increase in merchandise sales and a 20.1 percent increase in non-merchandise sales.

The company noted that net sales in all six core merchandising categories grew from last year with double-digit growth in Fun 101 and high single-digit growth in Food & Beverage and Beauty.

In the quarter, comparable sales grew 3.8 percent in the second quarter. The retailer saw comparable store sales increase by 2.7 percent and comparable digital sales rise 8.7 percent led by more than 25 percent growth in same-day delivery.

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