Target announced fiscal second-quarter results demonstrating continued progress in its retail turnaround strategy, with net sales increasing 5.3% compared to the prior year. Comparable sales growth of 3.8% exceeded Wall Street estimates of 2.4%, driven by what the company characterized as strength across multiple product categories. The company also raised its full-year net sales growth guidance to approximately 5%, up one percentage point from its prior outlook.
A significant portion of the earnings improvement came from a one-time tariff refund totaling $994 million on a pretax basis, which contributed $752 million to net earnings or $1.65 per share. Including this refund, 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. The company adjusted its full-year earnings per share guidance to between $9.90 and $10.90 with the refund included, or $8.25 to $9.25 excluding the one-time payment, up from previous guidance of $7.50 to $8.50.
Digital operations showed particular strength with comparable sales jumping 8.7%, while same-day delivery increased more than 25%. The company reported that food and beauty categories performed well, with all six major categories posting growth. However, apparel and home segments underperformed relative to other areas. Target indicated plans to continue improving these categories, noting it had redesigned 75% of its decorative accessories assortment.
CEO Michael Fiddelke emphasized that the company remains focused on sustained, long-term growth rather than viewing two consecutive strong quarters as a sufficient achievement. Target has implemented price reductions on over 10,000 items as part of efforts to attract customers back to stores, and opened 17 new locations during the quarter. The company’s stock rose 4% following the announcement and is up more than 55% for the year.
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