Target Corp. announced first-quarter results that included a Wall Street earnings beat and strong comparable store gains, and the retailer revealed plans to boost its home department.
The earnings announcement came just days after activist investors asked shareholders to vote against executive chairman Brian Cornell and independent director Christine Leahy in upcoming board elections.
Net earnings were $781 million, or $1.71 per diluted share, versus $1.04 billion, or $2.27 per diluted share, in the year-previous quarter, Target reported. Adjusted for one-time events, earnings per diluted share were $1.71 versus $1.30 in the year-before period.
A Zacks Investment Research analyst consensus estimate was for earnings of $1.41 per adjusted diluted share and revenue of $24.45 billion.
Comparable sales gained 5.6% in the quarter year over year, Target noted, reflecting comp store sales growth of 4.7% and comp digital sales growth of 8.9%. Net sales came in at $25.44 billion, up 6.7% from the year-past period, reflecting a 6.4% increase in merchandise sales and a 24.6% increase in non-merchandise sales.
Operating income was $1.14 billion versus $1.47 billion in the year-earlier quarter, the company indicated, while adjusted operating income was $1.14 billion versus $879 million.
Target updated its fiscal year guidance, with net sales growth of about 4% from fiscal 2026, two points higher than previously stated, and GAAP and adjusted EPS near the prior-range high end of $7.50 to $8.50.
Mercy Investment Services, SOC Investment Group and Trillium Asset Management sent a letter last week to Target shareholders asking them to vote against Cornell and Leahy at the company’s annual meeting based on operations and stock underperformance.
In a conference call, Michael Fiddelke, Target CEO (pictured above), said the top-line gains in the quarter were broad-based, with growth across both the store and digital channels led by traffic, net sales increases in the company’s core merchandise categories, broad-based strength across guest demographics and cohorts and momentum in key seasonal events as well as everyday needs.
Still, category gains differ, including results from “Fun 101,” the hardlines rebrand that covers segments such as sports, games, books and music and video games.
“In categories like Fun 101, Beauty and Food and Beverage, we’re seeing mid-single digit compound growth on a two-year basis, while sales in Home and Apparel were still below 2024,” Fiddelke said. “This is further evidence that while we’re building momentum, we’re also not yet where we aspire to be over time. We’re focused on executing our plans and are encouraged by early guest response. As we look ahead, we also acknowledge that the broader operating environment remains uncertain.”
Cara Sylvester, the company’s executive vice president and chief merchandising officer, noted on the call that Target is executing plans to strengthen its Home operation.
“In Home, we’re beginning a multi-year reinvention,” she said. “We’ll make significant edits to decorative accessories this quarter, changing out nearly three-fourths of this assortment. Later this year, we’ll introduce that same level of change to kids’ home and bedding categories as we continue to clarify our offerings and value proposition in these ever-important style categories. We have plans to continue this journey with additional home categories like kitchen and storage in 2027.”
In addition, Sylvester said the company is preparing for this fall’s launch of Target Beauty Studio in more than 600 stores. In doing so, she added, Target is building on recent momentum in the beauty category.
Lisa Roath, Target’s COO, maintained during the call that the company has made significant progress on improving in-stocks despite stronger-than-expected sales in the quarter.
Fiddelke, in revealing the early-year numbers, said, “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. 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 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.”
