Target reported fiscal second-quarter results that exceeded analyst expectations, with the retailer attributing its performance to both operational improvements and a substantial one-time tariff refund. The company’s net sales increased 5.3% year-over-year, while comparable sales growth reached 3.8%, outpacing Wall Street estimates of 2.4%.
A significant portion of the quarter’s bottom-line performance came from tariff-related payments. Target received a $752 million boost to net earnings, or $1.65 per share, from tariff refunds. The company’s second-quarter gross margin and operating income included a $994 million pretax benefit from the repayment. For the three-month period ended Aug. 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 period.
Based on stronger sales momentum and the tariff-related gains, Target raised its full-year outlook. The retailer increased its net sales growth guidance to approximately 5%, up by 1 percentage point from prior expectations. Full-year earnings per share guidance, including the tariff refunds, was raised to between $9.90 and $10.90. Excluding the refund, the company projected EPS of $8.25 to $9.25 per share, up from its previous range of $7.50 to $8.50 per share.
The retailer demonstrated particular strength in digital channels, with comparable sales jumping 8.7% in the quarter, and same-day delivery growing more than 25%. Across its six major categories, Target saw gains in food and beauty, though apparel and home categories underperformed. In response, the company has reduced prices on more than 10,000 items and changed 75% of its decorative accessories assortment. Additionally, Target opened 17 new stores during the second quarter. CEO Michael Fiddelke emphasized that sustainable growth remains the priority, noting the company has substantial work ahead despite two consecutive quarters of positive results. Target’s stock rose 4% on the day and is up more than 55% this year.
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