Target 2026 Q1 Earnings Misses Targets as Net Income Rises 10%

Target Corporation reported its fiscal 2026 Q1 earnings on May 30, 2025. The company's total revenue decreased by 2.8% to $23.85 billion, failing to meet market expectations of $24.35 billion. Despite this, net income grew 10% to $1.04 billion. For fiscal 2025, Target adjusted its sales guidance to reflect a low-single digit decline, while maintaining its full-year EPS guidance between $7 and $9, indicating expectations of improved performance in the latter half of the year.

Revenue
In the first quarter of 2026, Target's total revenue fell by 2.8% to $23.85 billion. Sales decreased to $23.41 billion, with Apparel and Accessories contributing $3.71 billion, Beauty generating $3.10 billion, and Food and Beverage delivering $5.90 billion. Hardlines accounted for $3.07 billion, while Home Furnishings and Decor brought in $3.22 billion. Household Essentials added $4.36 billion, Other Merchandise Sales were at $40 million, and Other Revenue amounted to $441 million. Advertising Revenue was $163 million, Credit Card Profit Sharing noted $141 million, and Other sources contributed $137 million.

Earnings/Net Income
Target's earnings per share (EPS) saw a rise of 11.8% to $2.28 in Q1 2026, up from $2.04 in the previous year. Net income increased by 10% to $1.04 billion, reflecting continued profitability for over two decades in the same fiscal quarter. This EPS growth indicates a positive performance for the company.

Price Action
The stock price of Target slightly decreased by 0.03% on the latest trading day, fell 1.10% over the past week, and declined by 2.99% month-to-date.

Post-Earnings Price Action Review
A strategy of purchasing Target shares following a revenue miss and holding for 30 days led to poor outcomes, with a return of -13.95% and a Sharpe ratio of -0.09, indicating high volatility and significant risk. This approach failed to match the market's performance, as evidenced by the benchmark's return of 83.88% and the strategy's negative CAGR of -2.98%. The considerable maximum drawdown of -59.18% further underscores the strategy's instability, emphasizing the need for a more balanced investment approach.

CEO Commentary
"In the first quarter, our team navigated a highly challenging environment and focused on delivering the outstanding assortment, experience, and value guests expect from Target," said Brian Cornell, Chair and Chief Executive Officer. While sales fell short of expectations, Cornell highlighted strong digital growth and a successful designer collaboration. He also announced a multi-year acceleration office to enhance decision-making speed and execution of strategic initiatives, reflecting cautious optimism as Target strives to improve performance.

Guidance
For fiscal 2025, Target anticipates a low-single digit decline in sales and projects GAAP EPS to range from $8.00 to $10.00. Adjusted EPS, excluding gains from litigation settlements, is expected to be between $7.00 and $9.00. The company plans capital expenditures of $4 billion to $5 billion to support strategic initiatives aimed at enhancing consumer experience and operational efficiency.

Additional News
Target Corporation has announced significant leadership changes following its Q1 earnings miss. Christina Hennington, Chief Strategy and Growth Officer, is set to step down on May 25, transitioning to a consulting role until early September. Additionally, Chief Legal and Compliance Officer Amy Tu will also resign, marking both departures as "involuntary terminations without cause." To bolster operations and agility, Target has established an "enterprise acceleration office" led by COO Michael Fiddelke. This initiative aims to streamline internal processes and better utilize technology and data for improved decision-making.