# Target (TGT) Q1 FY2026 earnings

Results filed 2026-05-20 for the quarter ended 2026-05-02. Source page: https://earnings.opennash.com/companies/tgt/2026-q1/
Press release and exhibits: https://www.sec.gov/Archives/edgar/data/27419/000002741926000020/0000027419-26-000020-index.htm
> Summaries and transcripts are machine-generated and can contain errors.

## In brief

First quarter net sales grew 6.7 percent over last year, with GAAP and Adjusted EPS of $1.71, 24 percent lower than prior-year GAAP EPS and 32 percent higher than prior-year Adjusted EPS.

Target's first quarter net sales were $25.4 billion, 6.7 percent higher than last year, with comparable sales up 5.6 percent. Traffic grew 4.4 percent, digital comparable sales rose 8.9 percent, and all six core merchandise categories grew. GAAP and Adjusted EPS were both $1.71. That is below last year's GAAP $2.27, which included legal settlement gains, but above last year's Adjusted $1.30.
Management raised its full-year net sales growth outlook to a range around 4 percent, two points higher than before, and expects EPS near the high end of $7.50 to $8.50. The tension is cost: SG&A rose to 21.9 percent of sales on higher pay, training and marketing, and capital spending was up 31 percent. Management calls the operating environment uncertain.

## Key numbers

| Metric | Value | Change | Basis |
| --- | --- | --- | --- |
| Net sales | $25.4 billion | 6.7 percent higher than last year | GAAP |
| Net earnings | $781 | (24.6)% | GAAP |
| Diluted EPS | $1.71 | 24 percent lower than prior-year GAAP EPS | GAAP |
| Adjusted diluted EPS | $1.71 | 32 percent higher than prior-year Adjusted EPS | non-GAAP |
| Gross margin rate | 29.0 percent | compared with 28.2 percent in 2025 | GAAP |
| Operating income | $1.1 billion | a 22.9 percent decrease from prior-year GAAP operating income | GAAP |
| Operating income margin rate | 4.5 percent | compared with prior-year GAAP rate of 6.2 percent and Adjusted rate of 3.7 percent | GAAP |
| Cash provided by operating activities | 716 |  | GAAP |
| Comparable sales change | 5.6 percent |  |  |

## Segments and operating metrics

| Name | Value | Change |
| --- | --- | --- |
| Comparable traffic | 4.4 percent | compared with Q1 2025 |
| Digital comparable sales | 8.9 percent |  |
| Food & beverage | $6,263 | vs $5,902 |
| Hardlines (Fun 101) | $3,522 | vs $3,074 |
| Household essentials | $4,570 | vs $4,357 |
| Beauty | $3,398 | vs $3,101 |
| Advertising revenue | $246 | vs $163 |
| Non-merchandise sales | 24.6 percent | increase |

## Outlook

| Metric | Period | Outlook |
| --- | --- | --- |
| Net sales growth | 2026 | a range around 4 percent |
| Operating income margin rate | 2026 | more than 20 basis points higher than the 4.6 percent Adjusted operating income margin rate in 2025 |
| GAAP and Adjusted EPS | 2026 | $7.50 to $8.50 |

## Key takeaways

1. **Sales growth was broad-based across categories and channels** Net sales in all six core merchandising categories were higher than a year ago, and comparable traffic grew 4.4 percent. Digital comparable sales grew 8.9 percent.
2. **EPS fell year over year only because of settlements** GAAP EPS of $1.71 compares with $2.27 last year, which included $441 million of after-tax net gains on interchange fee settlements. Against prior-year Adjusted EPS of $1.30 it was 32 percent higher.
3. **Gross margin improved but SG&A absorbed the gain** Gross margin rate rose to 29.0 percent from 28.2 percent. The SG&A expense rate was 21.9 percent versus an Adjusted 21.7 percent, on higher compensation, capital project and marketing costs.
4. **Full-year sales outlook raised by two points** Net sales growth is now expected in a range around 4 percent, two percentage points higher than the prior range. EPS is expected near the high end of $7.50 to $8.50.
5. **Capex surged while buybacks paused** Capital expenditures of $1.0 billion were 31 percent higher than last year, driven by new stores and remodels. The Company did not repurchase any stock, and ROIC was 12.4 percent versus 15.1 percent.

## Questions

**What were Target's first quarter 2026 results?** Net sales were $25.4 billion, up 6.7 percent, with comparable sales up 5.6 percent. GAAP and Adjusted EPS were both $1.71.
**Why did Target's EPS fall from last year?** Prior-year GAAP EPS of $2.27 included $441 million of after-tax net gains on interchange fee settlements. Versus prior-year Adjusted EPS of $1.30, this year's $1.71 was 32 percent higher.
**What is Target's updated 2026 guidance?** Net sales growth is expected in a range around 4 percent, two points above the prior range. Operating income margin rate is expected more than 20 basis points above 2025's 4.6 percent Adjusted rate, and EPS near the high end of $7.50 to $8.50.
**How did Target's margins change in the quarter?** Gross margin rate rose to 29.0 percent from 28.2 percent. Operating income margin rate was 4.5 percent, versus 3.7 percent Adjusted a year ago.
**How is Target using its cash?** Capital expenditures were $1.0 billion, up 31 percent, and dividends paid were $516 million. Target did not repurchase stock and had about $8.3 billion of repurchase capacity remaining.