Stronger Q1 lifts Target (NYSE: TGT) sales 6.7% and EPS outlook
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Target Corporation reported stronger-than-expected first quarter 2026 results, with clear signs of a demand recovery. Net sales rose 6.7% to $25.4 billion, driven by 5.6% comparable sales growth as traffic increased 4.4%. Digital comparable sales grew 8.9%, led by more than 27% growth in same-day delivery and nearly 25% growth in non-merchandise revenue such as advertising and memberships.
GAAP and Adjusted diluted EPS were both $1.71. GAAP EPS declined 24.5% from $2.27 a year ago, which included large interchange fee settlement gains, while Adjusted EPS rose 31.6% from $1.30. Gross margin improved to 29.0%, and Adjusted operating margin increased to 4.5%. Management raised 2026 guidance, now targeting net sales growth around 4%, full-year operating margin more than 20 basis points above the 2025 Adjusted level of 4.6%, and GAAP and Adjusted EPS near the high end of the prior $7.50 to $8.50 range.
Positive
- Demand re-acceleration and mix improvement: Q1 2026 comparable sales grew 5.6% after a 3.8% decline a year earlier, with 4.4% traffic growth and 8.9% digital comparable sales growth, indicating broad-based recovery across channels and categories.
- Margin and earnings strength excluding one-time items: Adjusted EPS rose 31.6% to $1.71, while Adjusted operating margin expanded from 3.7% to 4.5% and gross margin improved from 28.2% to 29.0%, showing healthier underlying profitability.
- Guidance raised for 2026: Management now targets net sales growth around 4% versus 2025, operating margin more than 20 basis points above the 4.6% 2025 Adjusted level, and GAAP and Adjusted EPS near the high end of the prior $7.50–$8.50 range.
Negative
- Lower ROIC and GAAP earnings versus a strong prior year: After-tax ROIC fell to 12.4% from 15.1%, and GAAP diluted EPS declined 24.5% to $1.71, partly due to lapping large prior-year interchange settlement gains.
Insights
Stronger-than-expected Q1, healthier core trends, and higher 2026 guidance make this update meaningfully positive.
Target delivered a sharp turnaround in demand, with Q1 2026 comparable sales up 5.6% versus a 3.8% decline a year earlier. Traffic grew 4.4%, and digitally originated comparable sales rose 8.9%, showing broad-based strength across stores and online. Net sales reached $25.4 billion, up 6.7%.
Profit quality improved even though headline GAAP EPS fell due to last year’s non-recurring interchange settlement gains. Adjusted EPS increased 31.6% to $1.71, while gross margin expanded from 28.2% to 29.0%. Adjusted operating margin climbed from 3.7% to 4.5%, helped by better supply chain productivity and higher advertising and other non-merchandise revenues, partially offset by higher compensation and marketing expense.
The company raised its 2026 outlook, now expecting net sales growth around 4% versus 2025, operating margin more than 20 basis points above the 2025 Adjusted 4.6% level, and GAAP and Adjusted EPS near the high end of the prior $7.50–$8.50 range. First-quarter capital expenditures of $1.0 billion—up 31%—underscore continued investment in new stores and remodels. After-tax ROIC of 12.4% versus 15.1% reflects lapping prior-year settlement gains and business transformation costs rather than weaker core operations.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Net sales: $25.4B
GAAP diluted EPS: $1.71
Adjusted EPS: $1.71
+5 more
8 metrics
Net sales
$25.4B
Q1 2026, up 6.7% year over year
GAAP diluted EPS
$1.71
Q1 2026 vs $2.27 in Q1 2025
Adjusted EPS
$1.71
Q1 2026 vs $1.30 in Q1 2025, +31.6%
Comparable sales growth
5.6%
Q1 2026, vs -3.8% in Q1 2025
Gross margin rate
29.0%
Q1 2026 vs 28.2% in Q1 2025
Adjusted operating margin
4.5%
Q1 2026 vs 3.7% in Q1 2025
Capital expenditures
$1.0B
Q1 2026, 31% higher than prior year
After-tax ROIC
12.4%
Trailing twelve months vs 15.1% prior period
Key Terms
Adjusted EPS, comparable sales, operating income margin rate, after-tax return on invested capital (ROIC), +2 more
6 terms
Adjusted EPS financial
"First quarter GAAP and Adjusted EPS1 was $1.71, 24 percent lower than prior-year GAAP EPS..."
Adjusted earnings per share (adjusted eps) is a measure of a company's profit per share that has been modified to exclude certain one-time or unusual items, such as costs from restructuring or asset sales. It provides a clearer picture of the company’s core performance by removing events that may distort the usual earnings. Investors use adjusted eps to better understand a company's ongoing profitability and compare it more accurately over time.
comparable sales financial
"Comparable sales grew 5.6 percent in the first quarter, reflecting a comparable store sales 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.
operating income margin rate financial
"First quarter operating income margin rate and Adjusted operating income margin rate3 were 4.5 percent in 2026..."
Operating income margin rate is the percentage of revenue a company keeps as profit from its regular business activities after paying the costs of making and selling its products or services. It tells investors how efficiently a company turns sales into core profit—like measuring how much of every dollar of household income is left after paying recurring bills—so rising or falling margins signal changes in pricing power, cost control, or business health.
after-tax return on invested capital (ROIC) financial
"For the trailing twelve months through first quarter 2026, after-tax return on invested capital (ROIC) was 12.4 percent..."
Roundel digital advertising financial
"Primarily represents revenue related to advertising services provided via the Company's Roundel digital advertising business offering."
non-GAAP financial
"Target Corporation Reports First Quarter Earnings — Page 10 of 12 TARGET CORPORATION Reconciliation of 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.
Earnings Snapshot
Net sales: $25.4B · Guidance included
Q1 2026
Net sales
$25.4B
+6.7% year over year
GAAP diluted EPS
$1.71
-24.5% year over year
Adjusted EPS
$1.71
+31.6% year over year
Comparable sales
5.6%
vs -3.8% a year earlier
Gross margin rate
29.0%
from 28.2% a year earlier
Adjusted operating margin
4.5%
from 3.7% a year earlier
Guidance
For 2026, Target expects net sales growth around 4% versus 2025, full-year operating margin more than 20 basis points above the 4.6% 2025 Adjusted margin, and GAAP and Adjusted EPS near the high end of the prior $7.50–$8.50 range.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 20, 2026
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
| Registrant’s telephone number, including area code: | ||||||||||||||
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On May 20, 2026, Target Corporation issued a News Release containing its financial results for the three months ended May 2, 2026. The News Release is attached hereto as Exhibit 99.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| 99 | Target Corporation’s News Release dated May 20, 2026, containing its financial results for the three months ended May 2, 2026. | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL). | |||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TARGET CORPORATION | ||||||||
| Date: May 20, 2026 | By: | /s/ Jim Lee | ||||||
| Name: Jim Lee | ||||||||
| Title: Executive Vice President and Chief Financial Officer | ||||||||
3
| Exhibit 99 | |||||
 | |||||||||||
FOR IMMEDIATE RELEASE
| Contacts: | John Hulbert, Investors, (612) 761-6627 | |||||||
| Joe Poulos, Media, (612) 696-3400 | ||||||||
Target Corporation Reports First Quarter Earnings
•First quarter net sales grew 6.7 percent over last year, well above expectations.
◦Topline strength was broad-based across merchandise categories, sales channels and across the quarter.
▪Comparable traffic grew 4.4 percent compared with Q1 2025.
▪Net sales in all six core merchandising categories were higher than a year ago.
▪Digital comparable sales grew 8.9 percent, led by more than 27% growth in same-day delivery powered by Target Circle 360.
◦Non-merchandise sales grew nearly 25 percent, reflecting strong growth in Roundel ad revenue, Target Circle 360 membership revenue, and the Target+ marketplace.
•First quarter GAAP and Adjusted EPS1 was $1.71, 24 percent lower than prior-year GAAP EPS (which included non-recurring legal settlement gains), and 32 percent higher than prior-year Adjusted EPS.
For additional media materials, please visit:
https://corporate.target.com/news-features/article/2026/05/q1-2026-earnings
MINNEAPOLIS (May 20, 2026) – Target Corporation (NYSE: TGT) today announced its first quarter 2026 financial results.
The Company reported first quarter GAAP and Adjusted earnings per share (EPS) of $1.71, compared with prior-year GAAP EPS2 of $2.27 and Adjusted EPS of $1.30. The attached tables provide reconciliations of non-GAAP to GAAP measures. All earnings per share figures are calculated on a diluted basis.
“First quarter financial results were stronger than expected, providing encouraging early signs that our clarified strategy is resonating with our guests and driving broad-based growth across our business,” said Michael Fiddelke, Chief Executive Officer of Target. “While we’re pleased with our Q1 performance, our focus remains on building consistent, long-term growth, and we recognize there is much more work in
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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 Q1 2025 GAAP EPS included $441 million of after-tax net gains on interchange fee settlements, which were excluded from Adjusted EPS. Note (a) to the Operating Metrics table provides additional information about interchange fee settlements. | ||
Target Corporation Reports First Quarter Earnings — Page 2 of 12
front of us. As we look ahead, we’re focused on staying disciplined and flexible in an uncertain operating environment and continuing to invest boldly in our team, capabilities, and an elevated guest experience to unlock our full potential over time.”
Guidance
The Company has the following updated expectations for 2026:
•Net sales growth in a range around 4 percent compared with 2025 - two percentage points higher than the prior range. The Company continues to expect to grow net sales in every quarter of the year.
•Full-year 2026 operating income margin rate more than 20 basis points higher than the 4.6 percent Adjusted operating income margin rate in 2025.
•GAAP and Adjusted EPS near the high end of the prior guidance range of $7.50 to $8.50.
Operating Results
Net Sales of $25.4 billion in the first quarter were 6.7 percent higher than last year, reflecting a 6.4 percent increase in merchandise sales and a 24.6 percent increase in non-merchandise sales. Comparable sales grew 5.6 percent in the first quarter, reflecting a comparable store sales increase of 4.7 percent and comparable digital sales growth of 8.9 percent. First quarter operating income and Adjusted operating income3 were $1.1 billion, a 22.9 percent decrease from prior-year GAAP operating income and a 29.1 percent increase from prior-year Adjusted operating income.
First quarter operating income margin rate and Adjusted operating income margin rate3 were 4.5 percent in 2026, compared with the prior-year GAAP operating income margin rate of 6.2 percent and an Adjusted operating income rate of 3.7 percent. First quarter gross margin rate was 29.0 percent, compared with 28.2 percent in 2025, reflecting improved productivity in supply chain facilities, growth in advertising and other non-merchandise revenues, and lower markdown rates, partially offset by higher product costs. First quarter SG&A expense rate and Adjusted SG&A expense rate3 was 21.9 percent, compared to 2025 GAAP SG&A expense rate of 19.3 percent and Adjusted SG&A expense rate of 21.7 percent. This increase reflects the impact of higher compensation costs, including additional hours and training for field teams along with higher incentive compensation, planned spending related to capital projects, and higher marketing expense, partially offset by the leverage benefit of strong topline growth.
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3 Q1 2025 GAAP SG&A expenses, GAAP SG&A expense rate, GAAP operating income, and GAAP operating income margin rate included $593 million of pretax gains on interchange fee settlements, which was excluded from Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, non-GAAP financial measures. See the tables of this release for additional information. | ||
Target Corporation Reports First Quarter Earnings — Page 3 of 12
Interest Expense and Taxes
The Company’s first quarter 2026 net interest expense was $117 million, in line with $116 million last year.
First quarter 2026 effective income tax rate was 24.4 percent, compared with the prior-year rate of 25.0 percent, reflecting lower discrete tax expenses in the current year.
Capital Deployment and Return on Invested Capital
First quarter capital expenditures of $1.0 billion were 31 percent higher than last year, driven primarily by increased investments in new stores and store remodels.
The Company paid dividends of $516 million in the first quarter, compared with $510 million last year, reflecting a 1.8 percent increase in the dividend per share, partially offset by the impact of a lower share count.
The Company did not repurchase any stock in the first 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 first quarter 2026, after-tax return on invested capital (ROIC) was 12.4 percent, compared with 15.1 percent for the trailing twelve months through first quarter 2025. The tables in this release provide additional information about the Company’s ROIC calculation.
Webcast Details
Target will webcast its first 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 “Q1 2026 Target Corporation Earnings Conference Call” under “Events & Presentations”). A replay of the webcast will be provided when available. The replay number is 1-866-491-2847.
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Target Corporation Reports First Quarter Earnings — Page 4 of 12
Miscellaneous
Statements in this release regarding the Company’s future financial performance, including its fiscal 2026 full-year guidance, which excludes, among others, impacts from any tariff refunds, 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.
# # #
Target Corporation Reports First Quarter Earnings — Page 5 of 12
TARGET CORPORATION
Consolidated Statements of Operations
| Three Months Ended | ||||||||||||||||||||
| (millions, except per share data) (unaudited) | May 2, 2026 | May 3, 2025 | Change | |||||||||||||||||
| Net sales | $ | 25,443 | $ | 23,846 | 6.7 | % | ||||||||||||||
| Cost of sales | 18,061 | 17,128 | 5.4 | |||||||||||||||||
Selling, general and administrative expenses | 5,562 | 4,591 | 21.1 | |||||||||||||||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) | 685 | 655 | 4.6 | |||||||||||||||||
Operating income | 1,135 | 1,472 | (22.9) | |||||||||||||||||
| Net interest expense | 117 | 116 | 1.3 | |||||||||||||||||
| Net other income | (15) | (26) | (43.0) | |||||||||||||||||
Earnings before income taxes | 1,033 | 1,382 | (25.2) | |||||||||||||||||
| Provision for income taxes | 252 | 346 | (27.2) | |||||||||||||||||
| Net earnings | $ | 781 | $ | 1,036 | (24.6) | % | ||||||||||||||
Basic earnings per share | $ | 1.72 | $ | 2.28 | (24.4) | % | ||||||||||||||
Diluted earnings per share | $ | 1.71 | $ | 2.27 | (24.5) | % | ||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
| Basic | 453.8 | 455.0 | (0.3) | % | ||||||||||||||||
| Diluted | 455.8 | 456.5 | (0.2) | % | ||||||||||||||||
| Antidilutive shares | 1.0 | 2.4 | ||||||||||||||||||
| Dividends declared per share | $ | 1.14 | $ | 1.12 | 1.8 | % | ||||||||||||||
Target Corporation Reports First Quarter Earnings — Page 6 of 12
TARGET CORPORATION
Consolidated Statements of Financial Position
| (millions, except footnotes) (unaudited) | May 2, 2026 | January 31, 2026 | May 3, 2025 | |||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 3,534 | $ | 5,488 | $ | 2,887 | ||||||||||||||
| Inventory | 12,317 | 12,304 | 13,048 | |||||||||||||||||
| Other current assets | 2,214 | 2,213 | 1,824 | |||||||||||||||||
| Total current assets | 18,065 | 20,005 | 17,759 | |||||||||||||||||
| Property and equipment, net | 34,175 | 33,749 | 33,182 | |||||||||||||||||
| Operating lease assets | 3,652 | 3,703 | 3,739 | |||||||||||||||||
| Other noncurrent assets | 2,118 | 2,033 | 1,505 | |||||||||||||||||
| Total assets | $ | 58,010 | $ | 59,490 | $ | 56,185 | ||||||||||||||
| Liabilities and shareholders’ investment | ||||||||||||||||||||
| Accounts payable | $ | 12,188 | $ | 12,622 | $ | 11,823 | ||||||||||||||
| Accrued and other current liabilities | 6,063 | 6,478 | 6,029 | |||||||||||||||||
| Current portion of long-term debt and other borrowings | 1,133 | 2,130 | 1,139 | |||||||||||||||||
| Total current liabilities | 19,384 | 21,230 | 18,991 | |||||||||||||||||
| Long-term debt and other borrowings | 14,282 | 14,326 | 14,334 | |||||||||||||||||
| Noncurrent operating lease liabilities | 3,416 | 3,462 | 3,564 | |||||||||||||||||
| Deferred income taxes | 2,438 | 2,265 | 2,338 | |||||||||||||||||
| Other noncurrent liabilities | 2,095 | 2,042 | 2,011 | |||||||||||||||||
| Total noncurrent liabilities | 22,231 | 22,095 | 22,247 | |||||||||||||||||
| Shareholders’ investment | ||||||||||||||||||||
| Common stock | 38 | 38 | 38 | |||||||||||||||||
| Additional paid-in capital | 7,220 | 7,247 | 7,011 | |||||||||||||||||
| Retained earnings | 9,552 | 9,297 | 8,360 | |||||||||||||||||
| Accumulated other comprehensive loss | (415) | (417) | (462) | |||||||||||||||||
| Total shareholders’ investment | 16,395 | 16,165 | 14,947 | |||||||||||||||||
| Total liabilities and shareholders’ investment | $ | 58,010 | $ | 59,490 | $ | 56,185 | ||||||||||||||
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 454,177,135, 452,840,187, and 454,364,799 shares issued and outstanding as of May 2, 2026, January 31, 2026, and May 3, 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 Reports First Quarter Earnings — Page 7 of 12
TARGET CORPORATION
Consolidated Statements of Cash Flows
| Three Months Ended | ||||||||||||||
| (millions) (unaudited) | May 2, 2026 | May 3, 2025 | ||||||||||||
| Operating activities | ||||||||||||||
| Net earnings | $ | 781 | $ | 1,036 | ||||||||||
| Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 813 | 787 | ||||||||||||
| Share-based compensation expense | 54 | 69 | ||||||||||||
| Deferred income taxes | 173 | 36 | ||||||||||||
| Noncash (gains) / losses and other, net | (42) | (4) | ||||||||||||
| Changes in operating accounts: | ||||||||||||||
| Inventory | (13) | (308) | ||||||||||||
| Other assets | (85) | 146 | ||||||||||||
| Accounts payable | (557) | (1,344) | ||||||||||||
| Accrued and other liabilities | (408) | (143) | ||||||||||||
| Cash provided by operating activities | 716 | 275 | ||||||||||||
| Investing activities | ||||||||||||||
| Expenditures for property and equipment | (1,035) | (790) | ||||||||||||
| Other | 2 | 3 | ||||||||||||
| Cash used in investing activities | (1,033) | (787) | ||||||||||||
| Financing activities | ||||||||||||||
| Additions to long-term debt | — | 991 | ||||||||||||
| Reductions of long-term debt | (1,032) | (1,534) | ||||||||||||
| Dividends paid | (516) | (510) | ||||||||||||
| Repurchase of stock | — | (250) | ||||||||||||
| Shares withheld for taxes on share-based compensation | (89) | (60) | ||||||||||||
| Cash used in financing activities | (1,637) | (1,363) | ||||||||||||
| Net decrease in cash and cash equivalents | (1,954) | (1,875) | ||||||||||||
| Cash and cash equivalents at beginning of period | 5,488 | 4,762 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 3,534 | $ | 2,887 | ||||||||||
Target Corporation Reports First Quarter Earnings — Page 8 of 12
TARGET CORPORATION
Operating Results
| Net Sales | Three Months Ended | ||||||||||
(millions) (unaudited) | May 2, 2026 | May 3, 2025 | |||||||||
| Apparel & accessories | $ | 3,846 | $ | 3,711 | |||||||
| Beauty | 3,398 | 3,101 | |||||||||
| Food & beverage | 6,263 | 5,902 | |||||||||
| Hardlines (Fun 101) | 3,522 | 3,074 | |||||||||
| Home furnishings & décor | 3,239 | 3,220 | |||||||||
| Household essentials | 4,570 | 4,357 | |||||||||
| Other merchandise sales | 56 | 40 | |||||||||
| Merchandise sales | 24,894 | 23,405 | |||||||||
Advertising revenue (a) | 246 | 163 | |||||||||
| Credit card profit sharing | 130 | 141 | |||||||||
| Other | 173 | 137 | |||||||||
| Net sales | $ | 25,443 | $ | 23,846 | |||||||
(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) | May 2, 2026 | May 3, 2025 | ||||||||||||||||||||||||
| Dollars | Rate | Dollars | Rate | |||||||||||||||||||||||
| Gross margin | $ | 7,382 | 29.0 | % | $ | 6,718 | 28.2 | % | ||||||||||||||||||
| SG&A expenses | 5,562 | 21.9 | 4,591 | 19.3 | ||||||||||||||||||||||
Adjusted SG&A expenses (a) | 5,562 | 21.9 | 5,183 | 21.7 | ||||||||||||||||||||||
Depreciation and amortization (exclusive of depreciation included in cost of sales) | 685 | 2.7 | 655 | 2.7 | ||||||||||||||||||||||
| Operating income | 1,135 | 4.5 | 1,472 | 6.2 | ||||||||||||||||||||||
Adjusted operating income (a) | 1,135 | 4.5 | 879 | 3.7 | ||||||||||||||||||||||
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) 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.
Target Corporation Reports First Quarter Earnings — Page 9 of 12
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 | |||||||||||||
| (unaudited) | May 2, 2026 | May 3, 2025 | ||||||||||||
| Comparable sales change | 5.6 | % | (3.8) | % | ||||||||||
| Drivers of change in comparable sales | ||||||||||||||
| Number of transactions (traffic) | 4.4 | (2.4) | ||||||||||||
| Average transaction amount | 1.1 | (1.4) | ||||||||||||
| Comparable Sales by Channel | Three Months Ended | ||||||||||
| (unaudited) | May 2, 2026 | May 3, 2025 | |||||||||
| Stores originated comparable sales change | 4.7 | % | (5.7) | % | |||||||
| Digitally originated comparable sales change | 8.9 | 4.7 | |||||||||
| Merchandise Sales by Channel | Three Months Ended | |||||||||||||
| (unaudited) | May 2, 2026 | May 3, 2025 | ||||||||||||
| Stores originated | 79.7 | % | 80.2 | % | ||||||||||
| Digitally originated | 20.3 | 19.8 | ||||||||||||
| Total | 100 | % | 100 | % | ||||||||||
| Merchandise Sales by Fulfillment Channel | Three Months Ended | |||||||||||||
| (unaudited) | May 2, 2026 | May 3, 2025 | ||||||||||||
| Stores | 97.6 | % | 97.6 | % | ||||||||||
| Other | 2.4 | 2.4 | ||||||||||||
| Total | 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) | May 2, 2026 | January 31, 2026 | May 3, 2025 | May 2, 2026 | January 31, 2026 | May 3, 2025 | ||||||||||||||||||||||||||||||||
| 170,000 or more sq. ft. | 274 | 273 | 273 | 49,045 | 48,824 | 48,824 | ||||||||||||||||||||||||||||||||
| 50,000 to 169,999 sq. ft. | 1,581 | 1,576 | 1,562 | 197,978 | 197,274 | 195,436 | ||||||||||||||||||||||||||||||||
| 49,999 or less sq. ft. | 147 | 146 | 146 | 4,460 | 4,420 | 4,404 | ||||||||||||||||||||||||||||||||
| Total | 2,002 | 1,995 | 1,981 | 251,483 | 250,518 | 248,664 | ||||||||||||||||||||||||||||||||
(a)In thousands; reflects total square feet less office, supply chain facility, and vacant space.
Target Corporation Reports First Quarter Earnings — Page 10 of 12
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 | |||||||||||||||||||||||||||||||||||||||||||
| May 2, 2026 | May 3, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| (millions, except per share data) (unaudited) | Pretax | Net of Tax | Per Share | Pretax | Net of Tax | Per Share | Change | |||||||||||||||||||||||||||||||||||||
GAAP diluted EPS | $ | 1.71 | $ | 2.27 | (24.5) | % | ||||||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||
Interchange fee settlements (a) | $ | — | $ | — | $ | — | $ | (593) | $ | (441) | $ | (0.97) | ||||||||||||||||||||||||||||||||
Adjusted EPS | $ | 1.71 | $ | 1.30 | 31.6 | % | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Adjusted SG&A Expenses and Adjusted Operating Income | Three Months Ended | ||||||||||||||||||||||||||||
| May 2, 2026 | May 3, 2025 | ||||||||||||||||||||||||||||
| SG&A Expenses | Operating Income | SG&A Expenses | Operating Income | ||||||||||||||||||||||||||
| (dollars in millions) (unaudited) | Dollars | Rate | Dollars | Rate | Dollars | Rate | Dollars | Rate | |||||||||||||||||||||
| Reported, GAAP measure | $ | 5,562 | 21.9 | % | $ | 1,135 | 4.5 | % | $ | 4,591 | 19.3 | % | $ | 1,472 | 6.2 | % | |||||||||||||
| Adjustments | |||||||||||||||||||||||||||||
Interchange fee settlements (a) | — | — | — | — | 593 | 2.5 | (593) | (2.5) | |||||||||||||||||||||
| Adjusted, Non-GAAP measure | $ | 5,562 | 21.9 | % | $ | 1,135 | 4.5 | % | $ | 5,183 | 21.7 | % | $ | 879 | 3.7 | % | |||||||||||||
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.
Target Corporation Reports First Quarter Earnings — Page 11 of 12
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 | May 2, 2026 | May 3, 2025 | ||||||||||||||||||||||||
Operating income | $ | 4,781 | $ | 5,742 | ||||||||||||||||||||||
+ Net other income | 84 | 102 | ||||||||||||||||||||||||
EBIT | 4,865 | 5,844 | ||||||||||||||||||||||||
+ Operating lease interest (a) | 173 | 165 | ||||||||||||||||||||||||
- Income taxes (b) | 1,103 | 1,373 | ||||||||||||||||||||||||
| Net operating profit after taxes | $ | 3,935 | $ | 4,636 | ||||||||||||||||||||||
Denominator | May 2, 2026 | May 3, 2025 | May 4, 2024 | |||||||||||||||||
| Current portion of long-term debt and other borrowings | $ | 1,133 | $ | 1,139 | $ | 2,614 | ||||||||||||||
| + Noncurrent portion of long-term debt | 14,282 | 14,334 | 13,487 | |||||||||||||||||
| + Shareholders' investment | 16,395 | 14,947 | 13,840 | |||||||||||||||||
+ Operating lease liabilities (c) | 3,792 | 3,922 | 3,723 | |||||||||||||||||
- Cash and cash equivalents | 3,534 | 2,887 | 3,604 | |||||||||||||||||
| Invested capital | $ | 32,068 | $ | 31,455 | $ | 30,060 | ||||||||||||||
Average invested capital (d) | $ | 31,761 | $ | 30,757 | ||||||||||||||||
After-tax return on invested capital (e) | 12.4 | % | 15.1 | % | ||||||||||||||||
(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 21.9 percent and 22.8 percent for the trailing twelve months ended May 2, 2026, and May 3, 2025, respectively. For the twelve months ended May 2, 2026, and May 3, 2025, includes tax effect of $1.1 billion and $1.3 billion, respectively, related to EBIT, and $38 million 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 May 2, 2026, includes the impact of business transformation costs incurred within the trailing twelve-month period, which decreased after-tax ROIC by 0.6 percentage points. For the trailing twelve months ended May 3, 2025, includes the impact of after-tax net gains on interchange fee settlements, which increased after-tax ROIC by 1.4 percentage points. Business transformation costs are described in our Annual Report on Form 10-K for the year ended January 31, 2026. Note (a) to the Operating Metrics table provides additional information about interchange fee settlements.
Target Corporation Reports First Quarter Earnings — Page 12 of 12
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 | $7.50 - $8.50 | |||||||
Estimated adjustments | ||||||||
Other (a) | ||||||||
Adjusted diluted earnings per share guidance | $7.50 - $8.50 | |||||||
(a)The guidance does not currently reflect any discrete items.
FAQ
How did Target (TGT) perform in Q1 2026 versus last year?
Target’s Q1 2026 net sales rose 6.7% to $25.4 billion, with comparable sales up 5.6% after a 3.8% decline a year earlier. GAAP diluted EPS was $1.71 versus $2.27, while Adjusted EPS increased to $1.71 from $1.30.
What were Target’s key margin and profit metrics for Q1 2026?
Target’s Q1 2026 gross margin rate improved to 29.0% from 28.2%. Adjusted operating income was $1.1 billion with a 4.5% Adjusted operating margin, up from 3.7%. GAAP operating income was also $1.1 billion, down 22.9% from last year’s GAAP figure.
How are Target’s store and digital channels performing in Q1 2026?
Comparable sales grew 5.6%, driven by a 4.7% increase in store-originated comparable sales and 8.9% digital comparable sales growth. Same-day delivery powered by Target Circle 360 grew more than 27%, and merchandise sales increased across all six core categories.
What 2026 guidance did Target provide in this 8-K filing?
For 2026, Target expects net sales growth around 4% versus 2025, full-year operating income margin more than 20 basis points above the 4.6% 2025 Adjusted margin, and GAAP and Adjusted EPS near the high end of the prior $7.50–$8.50 range.
What happened to Target’s return on invested capital (ROIC)?
For the trailing twelve months through Q1 2026, Target’s after-tax ROIC was 12.4%, down from 15.1% a year earlier. The company notes that prior periods included after-tax net gains on interchange fee settlements and recent periods include business transformation costs.