Target reported second-quarter net sales of $26.5 billion on Wednesday, a 5.3% increase from a year ago, and raised its full-year guidance on the strength of two consecutive quarters of growth. The quarter's comparable sales came in at 3.8%, beating the 2.4% Wall Street consensus, according to CNBC. Store comparable sales grew 2.7% and digital comparable sales grew 8.7%, with same-day delivery rising more than 25%.
All six of Target's core merchandise categories posted year-over-year gains, with the company's Fun 101 (hardlines) segment posting double-digit growth and food and beverage and beauty each growing at a high-single-digit rate. Earnings per share came in at $4.11, compared with $2.05 in the year-prior period. That figure included a $994 million pretax benefit from International Emergency Economic Powers Act tariff refunds received during the quarter, which contributed $1.65 per share to the bottom line.
Excluding the refunds, EPS grew 20% year over year. For the full year, Target now expects net sales growth of approximately 5%, a one-point improvement over what it had previously forecast. The company set a new full-year EPS guidance range of $9.90 to $10.90, which includes the $1.65 tariff refund benefit.
Stripping out the refund, the midpoint of the new guidance range reflects a $0.75 increase over the prior guidance midpoint of $8.00, the company said. Target's stock still dropped roughly 4% in premarket trading despite the stronger-than-expected numbers. On a call with reporters, CEO Michael Fiddelke framed the quarter as an early milestone rather than a destination.
"Q2 is an important step forward in the plan we laid out earlier this year to open a new chapter of growth for Target," he said, according to CNBC, before cautioning that "two strong quarters is not the goal. Sustained, durable top and bottom line growth over time is what we're after." Non-merchandise revenue — which includes Roundel advertising, Target Circle 360 membership fees, and the Target+ marketplace — grew more than 20% in the quarter. Capital expenditures of $1.4 billion were 27% above year-ago levels, driven by store remodels and new openings.
The company opened 17 stores during the quarter, bringing its total footprint to 2,019 locations, and paid $518 million in dividends. It did not repurchase any stock. Target returned to positive comparable-sales territory for the first time in five quarters during the first quarter of fiscal 2026, with a 5.6% gain that prompted the company to lift its full-year sales growth target to roughly 4%.
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