Target Q2 2026 earnings: sales and profit top forecasts as turnaround gains steam
Target's adjusted profit and sales beat estimates as comparable sales jumped 3.8%, and the company raised its full-year guidance.
| Q2 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $2.46 | $2.31 | +6.5% |
| Revenue | $26.54B | $26.32B | +0.8% |
Key takeaways
- Target’s adjusted profit of $2.46 per share beat Wall Street’s forecast of about $2.31, and revenue of $26.54 billion also came in above the roughly $26.32 billion analysts expected — a stronger quarter than the market had priced in.
- Comparable sales (sales at stores and digital channels open at least a year) rose 3.8%, well above the ~2.4% analysts expected, and the growth came from more shoppers actually visiting and buying — traffic was up 3.6% — rather than just higher prices.
- Online sales were a bright spot, growing 8.7% with same-day delivery up more than 25%, while in-store comparable sales grew a more modest 2.7%.
- The improvement was broad-based: all six of Target’s merchandise categories grew, with electronics/toys/other general merchandise up double digits and food-and-beverage and beauty each up at a high-single-digit rate, suggesting the rebound isn’t riding on just one category.
- The headline reported profit figure of $4.11 per share looks much larger than the year-ago quarter, but nearly $1.65 of that came from a one-time $994 million refund Target received on tariffs it had paid on imported goods; the $2.46 adjusted figure strips that out and is the more like-for-like comparison to expectations.
- Target raised its full-year guidance, now expecting sales growth of about 5% and full-year earnings of $9.90 to $10.90 per share (or $8.25 to $9.25 excluding the tariff refund) — up from its prior outlook of $7.50 to $8.50 — signaling more confidence heading into the rest of the year.
- Even with the strong quarter, profitability remains thin by historical standards: trailing-year gross margin sits around 28% and operating margin near 4.5%, meaning Target keeps only a few cents of profit on every dollar of sales, underscoring that this is still an early-stage recovery rather than a return to peak profitability.
- CEO Michael Fiddelke said the company is “encouraged” by the progress but tempered expectations, noting “two strong quarters is not the goal. Sustained, durable top and bottom line growth over time is what we’re after.”
Q2 2026 in context
| Metric | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Revenue | $26.5B | $25.2B | +5.3% |
| Net income | $1.9B | $935M | +100.7% |
| Free cash flow | $2.4B | $1.0B | +141.2% |
| Diluted EPS | $4.11 | $2.05 | +100.5% |
| Gross margin | 33.7% | 29.0% | +4.7 pts |
| Operating margin | 9.6% | 5.2% | +4.4 pts |
| Net margin | 7.1% | 3.7% | +3.4 pts |
Figures for the quarter ended Aug 2026 and the quarter ended Aug 2025, as reported to the SEC.
How the stock took it
Target Corp closed at $152.48 on Aug 18, 2026, the last session before the report, and at $158.25 on Aug 20, 2026, the first session after it — +3.8% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 28.1% | Trailing 12 months |
| Operating margin | 4.5% | Trailing 12 months |
| Net profit margin | 3.2% | Trailing 12 months |
| Pretax margin | 4.2% | Trailing 12 months |
| EPS | $7.57 | Trailing 12 months |
| Revenue growth (YoY) | 0.5% | Trailing 12 months |
| EPS growth (YoY) | -16.7% | Trailing 12 months |
| Return on equity | 21.7% | Trailing 12 months |
Sources: company report · financial data provider · earnings call