Target reported second-quarter results that exceeded analyst expectations and prompted the retailer to increase its full-year guidance. Net sales climbed 5.3% compared to the prior-year period, while comparable sales grew 3.8%, surpassing Wall Street estimates of 2.4%. The company noted strength across multiple product categories.
A significant portion of Target’s earnings improvement came from tariff refunds. The company received a $752 million boost to net earnings, equivalent to $1.65 per share, which contributed a $994 million pre-tax benefit to second-quarter gross margin and operating income. For the three-month period ending August 1, Target reported net income of $1.88 billion, or $4.11 per share, compared with $935 million, or $2.05 per share in the prior year.
In response to the stronger performance, Target raised its full fiscal year net sales growth guidance to approximately 5%, up 1 percentage point from prior guidance. The company adjusted its full-year earnings per share outlook to between $9.90 and $10.90 when including the tariff refunds, or $8.25 to $9.25 per share excluding that one-time benefit, compared with previous guidance of $7.50 to $8.50 per share.
Chief Executive Officer Michael Fiddelke stated the company remains focused on sustained growth, noting that continued work lies ahead. Digital comparable sales jumped 8.7% during the quarter, with same-day delivery growing more than 25%. The company also lowered prices on more than 10,000 items and opened 17 new stores during the period. Target has been attempting to return to consistent growth and rebuild its customer base amid challenging consumer spending conditions. Despite the positive earnings results, Target shares declined approximately 4% in premarket trading.
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