Target Corporation Reports Second Quarter Earnings

Rhea-AI Summary

Target (NYSE:TGT) reported second quarter 2026 net sales of $26.5 billion, up 5.3% year over year, with comparable sales up 3.8% driven by 3.6% growth in traffic. Store comps rose 2.7% and digital comps 8.7%, led by more than 25% growth in same-day delivery.

Non‑merchandise sales grew 20.1%, supported by Roundel advertising, Target Circle 360 and the Target+ marketplace. GAAP and Adjusted diluted EPS were $4.11 versus $2.05, including $994 million of tariff refunds that added $1.65 to EPS and 3.7 percentage points to the 9.6% operating margin. Excluding refunds, EPS rose about 20%.

Target raised full‑year 2026 guidance to net sales growth around 5% and an operating margin around 6% (including about 90 bps from tariff refunds), and now expects GAAP and Adjusted EPS of $9.90–$10.90. Capital expenditures were $1.4 billion in the quarter, up 27%, ROIC for the trailing 12 months reached 15.4%, and Target paid $518 million in dividends while not repurchasing shares.

Positive

• Net sales growth of 5.3% to $26.5 billion in Q2 2026
• Comparable sales up 3.8%, with digital comps +8.7% and store comps +2.7%
• Operating income nearly doubled to $2.56 billion; margin 9.6% including tariff refunds
• Diluted EPS increased to $4.11 from $2.05; about 20% growth excluding refunds
• Raised 2026 guidance: sales growth around 5%, EPS $9.90–$10.90, margin around 6%
• ROIC improvement to 15.4% from 14.3% over trailing 12 months

Negative

• Second quarter SG&A expense rose 6.8%, with SG&A rate increasing to 21.6% from 21.3%
• Q2 operating margin and EPS benefited from a one‑time $994 million tariff refund
• Capital expenditures increased 27% year over year to $1.4 billion in the quarter
• The Company repurchased no stock in Q2 2026 despite $8.3 billion remaining authorization

Market reaction after 2Q26 earnings report: TGT -3.50%

-3.50% $147.15 198.3x vol

15m delay

-3.50% Vs previous close

$147.15 Last Price

$144.00 $159.00 Day Range

$66.83B Market Cap

198.3x Rel. Volume

Following this news, TGT has declined 3.50%, reflecting a moderate negative market reaction. Our momentum scanner has triggered 11 alerts so far, indicating notable trading interest and price volatility. The stock is currently trading at $147.15. Trading volume is exceptionally heavy at 198.3x the average, suggesting significant selling pressure.

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Market Context

Net Selling was the insider-context classification over the analyzed period. That platform signal ad...

Analysis

Net Selling was the insider-context classification over the analyzed period. That platform signal adds caution when assessing the earnings update; investors could weigh reported progress against refund-related comparability and monitor subsequent margin quality.

Key Figures

Q2 net sales: $26.5 billion Comparable sales: 3.8% Diluted EPS: $4.11 vs. $2.05 prior year +5 more

8 metrics

Q2 net sales $26.5 billion Q2 2026; up 5.3% year over year

Comparable sales 3.8% Q2 2026

Diluted EPS $4.11 vs. $2.05 prior year Q2 2026 GAAP and Adjusted EPS

Tariff refund benefit $994 million Q2 2026 pretax benefit

Full-year net sales guidance Around 5% growth Updated 2026 guidance

Full-year EPS guidance $9.90 to $10.90 Updated 2026 GAAP and Adjusted EPS guidance

Excluding-refund EPS increase $0.75 Increase versus prior guidance midpoint

Operating margin guidance comparison 50 basis points higher Excluding tariff refunds versus last year's Adjusted operating margin

Previous Earnings Reports

5 past events · Latest: May 20 (Positive)

Same Type Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
May 20	First-quarter earnings	Positive	-3.9%	Sales and comparable growth improved while EPS and guidance increased
Nov 19	Third-quarter earnings	Negative	-2.8%	Sales and comparable results declined alongside lower GAAP EPS
Aug 20	Second-quarter earnings	Negative	-6.3%	Sales and comparable results declined while EPS fell year over year
May 21	First-quarter earnings	Negative	-5.2%	Sales and comparable results declined despite digital sales growth
Mar 04	Fourth-quarter earnings	Positive	-3.0%	Comparable and digital sales grew with EPS near guidance high end

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

Earnings-tagged history showed negative reactions in all five events, including positive-result releases, with an average move of -4.23%.

Key Terms

comparable sales, non-gaap, sg&a, roic, +1 more

5 terms

comparable sales financial

"with comparable sales growth of 3.8 percent driven by a 3.6 percent increase"

"Comparable sales" are the total sales from stores or products that have been open for a certain period, usually the same time last year or last quarter. They help show whether a business is growing by comparing similar locations or products over time, much like checking if your favorite store's sales are going up compared to previous years.

non-gaap financial

"Adjusted operating income margin rate, non-GAAP financial measures"

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

View in glossary

sg&a financial

"Second quarter SG&A expense rate was 21.6 percent"

SG&A stands for Selling, General, and Administrative expenses. It includes the costs a company spends on selling products, running the business day-to-day, and managing staff, like advertising, rent, and salaries. These expenses matter because they affect how much profit a company can make from its sales.

roic financial

"after-tax return on invested capital (ROIC) was 15.4 percent"

Return on invested capital (ROIC) measures how well a company turns the money it uses to run and grow the business into profit, expressed as a percentage. Think of it like how much fruit a tree yields for each seed and watering dollar invested: higher ROIC means management is extracting more value from each dollar put into the company. Investors use it to compare how efficiently different companies deploy capital and whether returns justify the risk of holding the stock.

View in glossary

ieepa regulatory

"International Emergency Economic Powers Act (IEEPA) tariff refunds"

A U.S. law that gives the president broad authority to control trade, freeze assets, and block financial transactions during a declared national emergency. Investors care because those powers can abruptly restrict a company's ability to sell products, access cash, or do business with certain countries or parties, creating sudden risks to revenues, supply chains and share prices — like an emergency brake that can stop or reroute parts of a business overnight.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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MINNEAPOLIS, Aug. 19, 2026 /PRNewswire/ --

• Second quarter net sales grew 5.3 percent over last year, with comparable sales growth of 3.8 percent driven by a 3.6 percent increase in comparable traffic.
  • On a two-year basis, second quarter Net Sales compounded annual growth rate was 2.1%, a 30 basis point acceleration to prior quarter.
  • Topline strength was broad-based across sales channels, demographics, merchandise categories, and across the quarter.
    • Store comparable sales grew 2.7 percent, and Digital comparable sales grew 8.7 percent, led by more than 25 percent growth in same-day delivery.
    • Net sales in all six core merchandising categories grew versus a year ago with double-digit growth in Fun 101 and high single-digit growth in Food & Beverage and Beauty.
    • The company continues to focus on a differentiated retail experience, investing in style, design, newness, and in value, having lowered prices on more than 10,000 items over the past year.
  • Non-merchandise sales grew over 20 percent, reflecting strong growth in Roundel ad revenue, Target Circle 360 membership revenue, and the Target+ marketplace.
• Second quarter GAAP and Adjusted EPS¹ was $4.11, compared with prior-year GAAP and Adjusted EPS of $2.05, an increase of 100 percent, which included tariff refund² benefits of $1.65 for Q2 2026. GAAP and Adjusted EPS increased 20 percent year-over-year, excluding tariff refunds.

For additional media materials, please visit:
https://corporate.target.com/news-features/article/2026/08/q2-2026-earnings

 Target Corporation (NYSE: TGT) today announced its second quarter 2026 financial results.

The Company reported second quarter GAAP and Adjusted earnings per share (EPS) of $4.11, compared with prior-year GAAP and Adjusted EPS of $2.05. Second quarter 2026 results include $994 million of pretax tariff refund benefits within gross margin and operating income. These gains contributed $752 million to net earnings and $1.65 to both GAAP and Adjusted EPS. The attached tables provide reconciliations of non-GAAP to GAAP measures. All earnings per share figures are calculated on a diluted basis.

"Second quarter results build on the encouraging momentum we saw in the first quarter, giving us increasing confidence that our strategy is resonating with our guests and strengthening our leadership position in style, design, and value," said Michael Fiddelke, Chief Executive Officer of Target. "Over the past year, we've reduced prices on more than 10,000 frequently purchased items as part of our commitment to delivering outstanding value every day, while continuing to invest in newness, convenience, and an elevated shopping experience. 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."

Guidance³

Given our performance through the first half of the year, the Company has the following updated expectations for 2026:

• Full-year net sales growth in a range around 5 percent, one percentage point higher than the prior guidance range.

• Full-year 2026 operating income margin rate in a range around 6 percent, including approximately 90 basis points of benefit from Q2 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.

• An updated GAAP and Adjusted EPS guidance range of $9.90 to $10.90, which includes second quarter tariff refund benefits of approximately $1.65. Excluding tariff refunds, the midpoint of the guidance range reflects a $0.75 increase versus prior guidance of $7.50 to $8.50.

Operating Results

Net Sales of $26.5 billion in the second quarter were 5.3 percent higher than last year, reflecting a 5.0 percent increase in merchandise sales and a 20.1 percent increase in non-merchandise sales. Comparable sales grew 3.8 percent in the second quarter, reflecting a comparable store sales increase of 2.7 percent and comparable digital sales increase of 8.7 percent. Second quarter operating income, which included a $994 million benefit from tariff refunds, was $2.6 billion, compared with prior-year operating income of $1.3 billion. Operating income margin rate of 9.6 percent, which included 3.7 percentage points of benefit from the tariff refunds, increased from the prior-year operating income margin rate of 5.2 percent. Second quarter gross margin rate was 33.7 percent, reflecting 3.7 percentage points of benefit from tariff refunds. Excluding tariff refunds, second quarter gross margin rate expanded approximately 100 basis points over prior year margin rate of 29.0 percent, reflecting the comparison over last year's elevated markdowns and purchase order cancellation costs, as well as continued growth in advertising and non-merchandise sales. Second quarter SG&A expense rate was 21.6 percent, compared with prior-year SG&A expense rate of 21.3 percent. This increase reflects the impact of higher compensation costs, including additional hours for field teams and higher incentive compensation, as well as planned spending related to capital projects, partially offset by the leverage benefit of strong topline growth.

Interest Expense and Taxes

The Company's second quarter 2026 net interest expense was $98 million, compared with $116 million last year, reflecting higher interest income in the current year.

Second quarter 2026 effective income tax rate was 23.7 percent, compared with the prior year rate of 23.2 percent reflecting higher pretax earnings partially offset by additional tax credit benefits in the current year.

Capital Deployment and Return on Invested Capital

Second quarter capital expenditures of $1.4 billion were 27 percent higher than last year, driven primarily by increased investments in store remodels and new stores.

The Company paid dividends of $518 million in the second quarter, compared with $509 million last year, reflecting a 1.8 percent 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 by Target's Board of Directors in August 2021.

For the trailing twelve months through second quarter 2026, after-tax return on invested capital (ROIC) was 15.4 percent, compared with 14.3 percent for the trailing twelve months through second quarter 2025. The tables in this release provide additional information about the Company's ROIC calculation.

Webcast Details

Target will webcast its second quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Corporate.Target.com/Investors (click on "Q2 2026 Target Corporation Earnings Conference Call" under "Events & Presentations"). A replay of the webcast will be provided when available. The replay number is 1-800-365-2419.

Miscellaneous

Statements in this release regarding the Company's future financial performance, including its fiscal 2026 full-year guidance and strategic plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company's results to differ materially. The most important risks and uncertainties are described in Item 1A of the Company's Form 10-K for the fiscal year ended January 31, 2026. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement.

About Target

Target Corporation (NYSE: TGT) brings together style, design and value to offer a distinct assortment and elevated shopping experience across more than 2,000 U.S. stores and online. Powered by more than 400,000 team members, Target serves millions of families each week and invests in the communities where they live and work to support growth and opportunity for all.

1 Adjusted EPS, Adjusted selling, general and administrative (SG&A) expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, non-GAAP financial measures, exclude the impact of certain discretely managed items, when applicable. See the tables of this release for additional information.

2 During the three and six months ended August 1, 2026, we recognized $994 million related to International Emergency Economic Powers Act (IEEPA) tariff refunds ("tariff refunds") received during the second quarter of 2026 as a reduction of Cost of Sales. Note (a) to the Operating Metrics table provides additional information about the impact of tariff refunds.

3 The Company's guidance excludes any potential future tariff refunds.

 

TARGET CORPORATION
Consolidated Statements of Operations
		Three Months Ended						Six Months Ended
(millions, except per share data) (unaudited)		August 1, 2026		August 2, 2025		Change		August 1, 2026		August 2, 2025		Change
Net sales		$    26,539		$    25,211		5.3 %		$    51,982		$    49,057		6.0 %
Cost of sales		17,603		17,903		(1.7)		35,664		35,031		1.8
Selling, general, and administrative expenses		5,725		5,359		6.8		11,286		9,950		13.4
Depreciation and amortization (exclusive of  depreciation included in cost of sales)		651		632		3.2		1,337		1,287		3.9
Operating income		2,560		1,317		94.4		3,695		2,789		32.5
Net interest expense		98		116		(16.1)		215		232		(7.4)
Net other expense / (income)		3		(17)		(114.9)		(13)		(43)		(72.0)
Earnings before income taxes		2,459		1,218		101.9		3,493		2,600		34.3
Provision for income taxes		582		283		105.8		835		629		32.7
Net earnings		$     1,877		$        935		100.8 %		$     2,658		$     1,971		34.9 %
Basic earnings per share		$       4.13		$       2.06		100.8 %		$       5.85		$       4.33		35.1 %
Diluted earnings per share		$       4.11		$       2.05		100.3 %		$       5.83		$       4.32		34.8 %
Weighted average common shares outstanding
Basic		454.4		454.6		0.0 %		454.1		454.8		(0.1) %
Diluted		456.6		455.6		0.2 %		456.2		456.1		0.0 %
Antidilutive shares		0.7		5.0				0.9		2.3
Dividends declared per share		$       1.16		$       1.14		1.8 %		$       2.30		$       2.26		1.8 %

 

TARGET CORPORATION   Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)		August 1, 2026		January 31, 2026		August 2, 2025
Assets
Cash and cash equivalents		$        5,411		$        5,488		$        4,341
Inventory		13,249		12,304		12,881
Other current assets		2,268		2,213		1,812
Total current assets		20,928		20,005		19,034
Property and equipment, net		34,767		33,749		33,568
Operating lease assets		3,587		3,703		3,694
Other noncurrent assets		1,953		2,033		1,555
Total assets		$       61,235		$       59,490		$       57,851
Liabilities and shareholders' investment
Accounts payable		$       13,306		$       12,622		$       12,019
Accrued and other current liabilities		6,738		6,478		6,068
Current portion of long-term debt and other borrowings		1,136		2,130		1,136
Total current liabilities		21,180		21,230		19,223
Long-term debt and other borrowings		14,221		14,326		15,320
Noncurrent operating lease liabilities		3,332		3,462		3,514
Deferred income taxes		2,504		2,265		2,413
Other noncurrent liabilities		2,155		2,042		1,961
Total noncurrent liabilities		22,212		22,095		23,208
Shareholders' investment
Common stock		38		38		38
Additional paid-in capital		7,329		7,247		7,084
Retained earnings		10,890		9,297		8,766
Accumulated other comprehensive loss		(414)		(417)		(468)
Total shareholders' investment		17,843		16,165		15,420
Total liabilities and shareholders' investment		$       61,235		$       59,490		$       57,851

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 454,291,461, 452,840,187, and 454,396,092 shares issued and outstanding as of August 1, 2026, January 31, 2026, and August 2, 2025, respectively.

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented.

 

TARGET CORPORATION
Consolidated Statements of Cash Flows
		Six Months Ended
(millions) (unaudited)		August 1, 2026		August 2, 2025
Operating activities
Net earnings		$       2,658		$       1,971
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization		1,597		1,558
Share-based compensation expense		154		133
Deferred income taxes		238		112
Noncash (gains) / losses and other, net		(4)		1
Changes in operating accounts:
Inventory		(945)		(141)
Other assets		22		151
Accounts payable		612		(1,125)
Accrued and other liabilities		187		(302)
Cash provided by operating activities		4,519		2,358
Investing activities
Expenditures for property and equipment		(2,404)		(1,864)
Other		7		11
Cash used in investing activities		(2,397)		(1,853)
Financing activities
Additions to long-term debt		—		1,984
Reductions of long-term debt		(1,070)		(1,571)
Dividends paid		(1,034)		(1,019)
Repurchase of stock		(3)		(258)
Shares withheld for taxes on share-based compensation		(92)		(62)
Cash used in financing activities		(2,199)		(926)
Net decrease in cash and cash equivalents		(77)		(421)
Cash and cash equivalents at beginning of period		5,488		4,762
Cash and cash equivalents at end of period		$       5,411		$       4,341

 

TARGET CORPORATION
Operating Results
Net Sales	Three Months Ended				Six Months Ended
(millions) (unaudited)	August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Apparel & accessories	$       4,090		$       4,086		$       7,937		$       7,797
Beauty	3,639		3,396		7,037		6,498
Food & beverage	5,991		5,588		12,255		11,490
Hardlines (Fun 101)	3,894		3,522		7,415		6,597
Home furnishings & décor	3,668		3,662		6,906		6,880
Household essentials	4,617		4,422		9,187		8,779
Other merchandise sales	48		43		104		83
Merchandise sales	25,947		24,719		50,841		48,124
Advertising revenue (a)	279		217		525		379
Credit card profit sharing	139		134		269		275
Other	174		141		347		279
Net sales	$      26,539		$      25,211		$      51,982		$      49,057

(a)

Primarily represents revenue related to advertising services provided via the Company's Roundel digital advertising business offering. Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement.

 

Operating Metrics		Three Months Ended
(dollars in millions) (unaudited)		August 1, 2026				August 2, 2025
		Dollars		Rate		Dollars		Rate
Gross margin (a)		$  8,936		33.7 %		$  7,308		29.0 %
SG&A expenses		5,725		21.6		5,359		21.3
Adjusted SG&A expenses (b)		5,725		21.6		5,359		21.3
Depreciation and amortization (exclusive of depreciation included in cost of sales)		651		2.5		632		2.5
Operating income (a)		2,560		9.6		1,317		5.2
Adjusted operating income (a)(b)		2,560		9.6		1,317		5.2
Operating Metrics		Six Months Ended
(dollars in millions) (unaudited)		August 1, 2026				August 2, 2025
		Dollars		Rate		Dollars		Rate
Gross margin (a)		$ 16,319		31.4 %		$ 14,026		28.6 %
SG&A expenses		11,286		21.7		9,950		20.3
Adjusted SG&A expenses (b)		11,286		21.7		10,543		21.5
Depreciation and amortization (exclusive of depreciation included in cost of sales)		1,337		2.6		1,287		2.6
Operating income (a)		3,695		7.1		2,789		5.7
Adjusted operating income (a)(b)		3,695		7.1		2,196		4.5

Note: Gross margin is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales.
(a)	For the three and six months ended August 1, 2026, gross margin, Operating income, and Adjusted operating income include a $994 million benefit from tariff refunds received during the second quarter of 2026, which are classified as a reduction of Cost of Sales. Tariff refunds provided 3.7 and 1.9 percentage points of benefit to Gross margin rate, Operating income margin rate, and Adjusted operating income margin rate for the three and six month periods, respectively.
(b)	Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, which are non-GAAP measures, exclude the impact of certain items. Management believes that these measures are useful in providing period-to-period comparisons of the results of our operations. The Reconciliation of Non-GAAP Financial Measures tables provide additional information.

Sales Metrics

Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed.  Digitally originated sales include all Merchandise Sales initiated through mobile applications and the Company's websites.

Comparable Sales		Three Months Ended				Six Months Ended
(unaudited)		August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Comparable sales change		3.8 %		(1.9) %		4.7 %		(2.8) %
Drivers of change in comparable sales
Number of transactions (traffic)		3.6		(1.3)		4.0		(1.8)
Average transaction amount		0.2		(0.6)		0.7		(1.0)
Comparable Sales by Channel		Three Months Ended				Six Months Ended
(unaudited)		August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Stores originated comparable sales change		2.7 %		(3.2) %		3.7 %		(4.4) %
Digitally originated comparable sales change		8.7		4.3		8.8		4.5
Merchandise Sales by Channel		Three Months Ended				Six Months Ended
(unaudited)		August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Stores originated		80.4 %		81.1 %		80.1 %		80.7 %
Digitally originated		19.6		18.9		19.9		19.3
Total		100 %		100 %		100 %		100 %
Merchandise Sales by Fulfillment Channel		Three Months Ended				Six Months Ended
(unaudited)		August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Stores		97.6 %		97.7 %		97.6 %		97.7 %
Other		2.4		2.3		2.4		2.3
Total		100 %		100 %		100 %		100 %

 

Note: Merchandise Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Same Day Delivery.

Number of Stores and Retail Square Feet		Number of Stores						Retail Square Feet (a)
(unaudited)		August 1, 2026		January 31, 2026		August 2, 2025		August 1, 2026		January 31, 2026		August 2, 2025
170,000 or more sq. ft.		274		273		273		49,045		48,824		48,824
50,000 to 169,999 sq. ft.		1,598		1,576		1,562		200,321		197,274		195,436
49,999 or less sq. ft.		147		146		147		4,460		4,420		4,445
Total		2,019		1,995		1,982		253,826		250,518		248,705

(a)	In thousands; reflects total square feet less office, supply chain facility, and vacant space.

TARGET CORPORATION

Reconciliation of Non-GAAP Financial Measures

To provide additional transparency, the Company has disclosed non-GAAP adjusted diluted earnings per share (Adjusted EPS), adjusted SG&A expenses, adjusted SG&A expense rate, adjusted operating income, and adjusted operating income margin rate. When applicable, these measures exclude certain discretely managed items. Management believes this information is useful in providing period-to-period comparisons of the results of Target's operations. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). The most comparable GAAP measures are diluted earnings per share, SG&A expenses, SG&A expense rate, operating income, and operating income margin rate. Adjusted EPS, Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate should not be considered in isolation or as a substitution for analysis of Target's results as reported in accordance with GAAP. Other companies may calculate these measures differently, or not provide similar measures, limiting the usefulness of the measures for comparisons with other companies. 

Reconciliation of Non-GAAP Adjusted EPS

Three Months Ended

August 1, 2026

August 2, 2025

(millions, except per share data) (unaudited)

Pretax

Net of Tax

Per Share

Pretax

Net of Tax

Per Share

Change

GAAP and Adjusted EPS

$   4.11

$   2.05

100.3 %

Reconciliation of Non-GAAP Adjusted EPS

Six Months Ended

August 1, 2026

August 2, 2025

(millions, except per share data) (unaudited)

Pretax

Net of Tax

Per Share

Pretax

Net of Tax

Per Share

Change

GAAP diluted EPS

$   5.83

$   4.32

34.8 %

Adjustments

Interchange fee settlements (a)

$     —

$     —

$     —

$  (593)

$   (441)

$ (0.97)

Adjusted EPS

$   5.83

$   3.35

73.7 %

 

Reconciliation of Non-GAAP Adjusted SG&A Expenses and Adjusted Operating Income		Three Months Ended
		August 1, 2026					August 2, 2025
		SG&A Expenses		Operating Income (b)			SG&A Expenses		Operating Income
(dollars in millions) (unaudited)		Dollars	Rate	Dollars	Rate		Dollars	Rate	Dollars	Rate
GAAP and Adjusted measures		$   5,725	21.6 %	$   2,560	9.6 %		$   5,359	21.3 %	$   1,317	5.2 %
Reconciliation of Non-GAAP Adjusted SG&A Expenses and Adjusted Operating Income		Six Months Ended
		August 1, 2026					August 2, 2025
		SG&A Expenses		Operating Income (b)			SG&A Expenses		Operating Income
(dollars in millions) (unaudited)		Dollars	Rate	Dollars	Rate		Dollars	Rate	Dollars	Rate
Reported, GAAP measure		$  11,286	21.7 %	$   3,695	7.1 %		$   9,950	20.3 %	$   2,789	5.7 %
Adjustments
Interchange fee settlements (a)		—	—	—	—		$       593	1.2 %	$    (593)	(1.2) %
Adjusted, Non-GAAP measure		$  11,286	21.7 %	$   3,695	7.1 %		$  10,543	21.5 %	$   2,196	4.5 %

Note: Amounts may not foot due to rounding.
(a)	Includes gains, net of legal fees, related to settlements during the first quarter of 2025 of credit card interchange fee litigation matters in which the Company was a plaintiff. The adjustment removes the favorable impact of the settlement gains from prior-year EPS, SG&A expenses and Operating income.
(b)	Note (a) to the Operating Metrics tables provides information about the impact of tariff refunds on Operating income and Operating income margin rate.

We have also disclosed after-tax ROIC, which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies.

After-Tax Return on Invested Capital
(dollars in millions) (unaudited)
		Trailing Twelve Months
Numerator		August 1, 2026		August 2, 2025
Operating income		$     6,024		$        5,425
+ Net other income		64		99
EBIT		6,088		5,524
+ Operating lease interest (a)		172		166
- Income taxes (b)		1,402		1,305
Net operating profit after taxes		$     4,858		$        4,385

 

Denominator		August 1, 2026		August 2, 2025		August 3, 2024
Current portion of long-term debt and other borrowings		$     1,136		$       1,136		$      1,640
+ Noncurrent portion of long-term debt		14,221		15,320		13,654
+ Shareholders' investment		17,843		15,420		14,429
+ Operating lease liabilities (c)		3,733		3,883		3,786
- Cash and cash equivalents		5,411		4,341		3,497
Invested capital		$    31,522		$      31,418		$    30,012
Average invested capital (d)		$    31,470		$      30,715
After-tax return on invested capital (e)		15.4 %		14.3 %

(a)	Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases was owned or accounted for under finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.
(b)	Calculated using the effective tax rates, which were 22.4 percent and 22.9 percent for the trailing twelve months ended August 1, 2026, and August 2, 2025, respectively. For the twelve months ended August 1, 2026, and August 2, 2025, includes tax effect of $1.4 billion and $1.3 billion, respectively, related to EBIT, and $39 million and $38 million, respectively, related to operating lease interest.
(c)	Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.
(d)	Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period.
(e)	For the trailing twelve months ended August 1, 2026, includes the impact of tariff refunds, which increased after-tax ROIC by 2.4 percentage points, and business transformation costs incurred in the trailing twelve-month period, which decreased after-tax ROIC by 0.6 percentage points. For the trailing twelve months ended August 2, 2025, includes the impact of after-tax net gains on interchange fee settlements, which increased after-tax ROIC by 1.4 percentage points.

2026 GAAP EPS, SG&A expenses, SG&A expense rate, operating income, and operating (income) margin rate may include the impact of certain discrete items, which may be excluded in calculating Adjusted EPS, Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate. The guidance does not currently reflect any such discrete items, which are subject to variability and therefore cannot be reconciled without unreasonable efforts. In the past, these items have included both gains and losses, including certain asset impairments, severance, and other items that are discretely managed.

Reconciliation of Non-GAAP Adjusted EPS Guidance
(per share) (unaudited)		Full Year 2026
GAAP diluted earnings per share guidance		$9.90 - $10.90
Estimated adjustments
Other
Adjusted diluted earnings per share guidance		$9.90 - $10.90

Note:  The guidance includes second quarter tariff refund benefits of approximately $1.65, but excludes any potential future refunds.

 

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SOURCE Target Corporation

FAQ

What were Target (TGT) earnings per share for Q2 2026?

Target reported diluted GAAP and Adjusted EPS of $4.11 for Q2 2026. According to Target, this compares with $2.05 a year earlier and includes approximately $1.65 per share from $994 million of tariff refunds recognized in the quarter.

How did Target (TGT) Q2 2026 sales perform versus Q2 2025?

Target’s Q2 2026 net sales were $26.5 billion, up 5.3% year over year. According to Target, comparable sales rose 3.8%, driven by a 3.6% increase in traffic, 2.7% comparable store growth, and 8.7% comparable digital sales growth, including strong same‑day delivery.

How did tariff refunds impact Target’s Q2 2026 results (TGT)?

Tariff refunds significantly boosted Q2 2026 profitability for Target. According to Target, it recognized $994 million of tariff refunds in cost of sales, adding about $752 million to net earnings, $1.65 to EPS, and 3.7 percentage points to the operating margin rate.

What is Target’s fiscal 2026 guidance after its Q2 2026 earnings (TGT)?

Target now expects full‑year 2026 net sales growth around 5% and an operating margin around 6%. According to Target, GAAP and Adjusted EPS are guided to $9.90–$10.90, including the Q2 tariff refund benefit of approximately $1.65 per share already recognized.

Did Target (TGT) repurchase shares in Q2 2026 and how much did it pay in dividends?

Target did not repurchase any shares during Q2 2026. According to Target, it paid $518 million in dividends in the quarter, a 1.8% increase in dividend per share, and retained about $8.3 billion of remaining capacity under its existing repurchase authorization.

How did Target’s ROIC change through Q2 2026 and what does it indicate for investors?

Target’s trailing 12‑month after‑tax ROIC rose to 15.4% from 14.3% a year earlier. According to Target, this improvement reflects stronger profitability and capital deployment, which may interest investors evaluating how efficiently the company is using invested capital to generate returns.

How much did Target (TGT) invest in capital expenditures in Q2 2026?

Target’s Q2 2026 capital expenditures totaled $1.4 billion, up 27% from last year. According to Target, increased spending was driven primarily by higher investments in store remodels and new stores, supporting its strategy to enhance the in‑store experience and expand its store base.