Aug 19, 2026, 7:51 AM ETConsumer Defensive

Target Corporation — Q2 2026 Earnings Summary

TGTTARGET CORP

Financial Performance

Second quarter net sales reached $26.5 billion, a 5.3% increase year-over-year.
Comparable sales grew 3.8%, driven by a 3.6% increase in comparable traffic.
GAAP and Adjusted EPS were $4.11, a 100% increase from the prior year's $2.05, including $1.65 per share in tariff refund benefits.
Excluding tariff refunds, GAAP and Adjusted EPS increased 20% year-over-year.
Operating income was $2.6 billion, compared to $1.3 billion in the prior year, including a $994 million benefit from tariff refunds.
Operating income margin rate was 9.6%, including 3.7 percentage points of benefit from tariff refunds, up from 5.2% in the prior year.
Gross margin rate was 33.7%, including 3.7 percentage points of benefit from tariff refunds; excluding refunds, it expanded approximately 100 basis points to 30.0% from the prior year's 29.0%.
SG&A expense rate was 21.6%, compared to 21.3% in the prior year.
Net interest expense was $98 million, down from $116 million in the prior year.
Effective income tax rate was 23.7%, compared to 23.2% in the prior year.
Cash provided by operating activities for the six months ended August 1, 2026, was $4.5 billion, compared to $2.4 billion in the prior period.
Capital expenditures were $1.4 billion in the second quarter, a 27% increase year-over-year.
After-tax return on invested capital (ROIC) for the trailing twelve months was 15.4%, up from 14.3% in the prior period.

Full-year 2026 net sales growth guidance updated to a range around 5%, one percentage point higher than prior guidance.
Full-year 2026 operating income margin rate guidance set around 6%, including approximately 90 basis points of benefit from Q2 tariff refunds.
Excluding tariff refunds, full-year operating income margin rate is expected to be approximately 50 basis points higher than last year's Adjusted operating income margin rate of 4.6%.
Updated GAAP and Adjusted EPS guidance range for 2026 is $9.90 to $10.90, including Q2 tariff refund benefits of approximately $1.65.
Excluding tariff refunds, the midpoint of the updated EPS guidance reflects a $0.75 increase versus the prior guidance range of $7.50 to $8.50.
Guidance excludes any potential future tariff refunds.

Net sales in all six core merchandising categories grew versus the prior year.
Fun 101 (Hardlines) reported double-digit growth.
Food & Beverage and Beauty reported high single-digit growth.
Store comparable sales grew 2.7%, while digital comparable sales grew 8.7%.
Same-day delivery contributed to digital growth with more than 25% growth.
Non-merchandise sales grew over 20%, driven by Roundel ad revenue, Target Circle 360 membership revenue, and the Target+ marketplace.
The company lowered prices on more than 10,000 items over the past year.
Total number of stores increased to 2,019 as of August 1, 2026, from 1,982 in the prior year.

Topline strength was broad-based across sales channels, demographics, merchandise categories, and across the quarter.
The company focuses on a differentiated retail experience, investing in style, design, newness, and value.
Management stated confidence that the strategy is resonating with guests and strengthening leadership in style, design, and value.

Forward-looking statements are subject to risks and uncertainties described in Item 1A of the Company's Form 10-K for the fiscal year ended January 31, 2026.
SG&A expense rate increase reflects higher compensation costs, including additional hours for field teams and higher incentive compensation.
Discrete items such as asset impairments, severance, and other items are subject to variability and cannot be reconciled without unreasonable efforts.

Michael Fiddelke, CEO, expressed increasing confidence that the strategy is resonating with guests.
Management remains focused on executing with discipline, staying agile in a dynamic operating environment, and investing in the team and capabilities to drive sustainable, profitable growth.
Management acknowledged there is still meaningful work ahead but is encouraged by progress.

The company recognized $994 million related to International Emergency Economic Powers Act (IEEPA) tariff refunds during the second quarter of 2026, classified as a reduction of Cost of Sales.
The company paid dividends of $518 million in the second quarter, reflecting a 1.8% increase in the dividend per share.
The company did not repurchase any stock in the second quarter.
As of the end of the quarter, the company had approximately $8.3 billion of remaining capacity under the repurchase program approved in August 2021.
Interchange fee settlements related to credit card litigation matters occurred in the first quarter of 2025, resulting in a $593 million gain in the prior year that was excluded from Adjusted measures.