Target 2026 Q1 Earnings Mixed Results with 10% Net Income Growth
Daily EarningsWednesday, May 21, 2025 9:05 am ET
36min readTarget (TGT) reported its fiscal 2026 Q1 earnings on May 20th, 2025. The company experienced a 2.8% decline in total revenue, falling to $23.85 billion compared to $24.53 billion in the previous year. Despite this, Target saw a notable 10% growth in net income, reaching $1.04 billion. The company's EPS rose 11.8% to $2.28. However, adjusted EPS fell short of expectations, highlighting the challenging retail environment. Target's guidance remained in line with previous projections, signaling cautious optimism for the remainder of the year.
Revenue
Target's revenue for fiscal 2026 Q1 was $23.85 billion, marking a 2.8% decrease from the previous year's $24.53 billion. Sales contributed $23.41 billion, with apparel and accessories generating $3.71 billion, beauty $3.10 billion, and food and beverage $5.90 billion. Hardlines brought in $3.07 billion, home furnishings and decor $3.22 billion, and household essentials $4.36 billion. Other merchandise sales stood at $40 million. Other revenue sources included $441 million from additional revenue streams, $163 million from advertising, $141 million from credit card profit sharing, and $137 million from other revenue.
Earnings/Net Income
Target's EPS increased by 11.8% to $2.28 in Q1 2026, compared to $2.04 in Q1 2025, reflecting continued earnings growth. The company's net income also rose by 10.0%, reaching $1.04 billion, up from $942 million the previous year. This performance underscores Target's operational resilience, although adjusted EPS indicated challenges in underlying profitability.
Price Action
The stock price of Target has edged up 0.12% during the latest trading day, has edged down 0.98% during the most recent full trading week, and has climbed 5.38% month-to-date.
Post-Earnings Price Action Review
The investment strategy of purchasing Target (TGT) shares following a positive revenue announcement and holding for 30 days has underperformed significantly. The strategy yielded a return of -39.88%, starkly below the benchmark return of 44.88%. This resulted in an excess return of -84.76%, and the compound annual growth rate (CAGR) was -15.73%, indicating notable losses over the three-year period. The strategy was also marked by a substantial maximum drawdown of -51.97% and a negative Sharpe ratio of -0.43, reflecting significant risk exposure and adverse returns.
CEO Commentary
Brad Archer, CEO, expressed confidence in Target's strong first-quarter results driven by solid business fundamentals and a robust growth pipeline. He highlighted the announcement of two multi-year contracts expected to generate over $380 million, reinforcing the company’s ability to support critical domestic initiatives across various markets. Archer emphasized the strength of the HFS segment, with a consistent 90% renewal rate since 2015, and the potential for significant long-term growth in capital investments related to modernizing infrastructure. He conveyed optimism regarding the company’s operational flexibility and strong customer relationships, positioning Target favorably in the marketplace.
Guidance
Target Hospitality reiterated its financial outlook for 2025, projecting total revenue between $265 million and $285 million and adjusted EBITDA ranging from $47 million to $57 million. The company anticipates approximately $30 million in revenue from the Dilley community contract, with full activation expected by September 2025. Additionally, capital spending for the quarter was approximately $21 million, focusing on expanding strategic network capacity and supporting ongoing growth initiatives.
Additional News
Target Corporation recently announced the departure of Christina Hennington, Chief Strategy and Growth Officer, who will transition to a strategic advisor role until September 7, 2025. Jim Lee, the current Chief Financial Officer, will assume leadership over Target's enterprise strategy and partnerships. Additionally, Target reported that it paid $510 million in dividends during the first quarter, reflecting a 1.8% increase in dividend per share. The company also repurchased $251 million worth of its shares, retiring 2.2 million shares at an average price of $114.60. These moves underscore Target’s ongoing commitment to returning value to shareholders while navigating a challenging retail environment.
Revenue
Target's revenue for fiscal 2026 Q1 was $23.85 billion, marking a 2.8% decrease from the previous year's $24.53 billion. Sales contributed $23.41 billion, with apparel and accessories generating $3.71 billion, beauty $3.10 billion, and food and beverage $5.90 billion. Hardlines brought in $3.07 billion, home furnishings and decor $3.22 billion, and household essentials $4.36 billion. Other merchandise sales stood at $40 million. Other revenue sources included $441 million from additional revenue streams, $163 million from advertising, $141 million from credit card profit sharing, and $137 million from other revenue.
Earnings/Net Income
Target's EPS increased by 11.8% to $2.28 in Q1 2026, compared to $2.04 in Q1 2025, reflecting continued earnings growth. The company's net income also rose by 10.0%, reaching $1.04 billion, up from $942 million the previous year. This performance underscores Target's operational resilience, although adjusted EPS indicated challenges in underlying profitability.
Price Action
The stock price of Target has edged up 0.12% during the latest trading day, has edged down 0.98% during the most recent full trading week, and has climbed 5.38% month-to-date.
Post-Earnings Price Action Review
The investment strategy of purchasing Target (TGT) shares following a positive revenue announcement and holding for 30 days has underperformed significantly. The strategy yielded a return of -39.88%, starkly below the benchmark return of 44.88%. This resulted in an excess return of -84.76%, and the compound annual growth rate (CAGR) was -15.73%, indicating notable losses over the three-year period. The strategy was also marked by a substantial maximum drawdown of -51.97% and a negative Sharpe ratio of -0.43, reflecting significant risk exposure and adverse returns.
CEO Commentary
Brad Archer, CEO, expressed confidence in Target's strong first-quarter results driven by solid business fundamentals and a robust growth pipeline. He highlighted the announcement of two multi-year contracts expected to generate over $380 million, reinforcing the company’s ability to support critical domestic initiatives across various markets. Archer emphasized the strength of the HFS segment, with a consistent 90% renewal rate since 2015, and the potential for significant long-term growth in capital investments related to modernizing infrastructure. He conveyed optimism regarding the company’s operational flexibility and strong customer relationships, positioning Target favorably in the marketplace.
Guidance
Target Hospitality reiterated its financial outlook for 2025, projecting total revenue between $265 million and $285 million and adjusted EBITDA ranging from $47 million to $57 million. The company anticipates approximately $30 million in revenue from the Dilley community contract, with full activation expected by September 2025. Additionally, capital spending for the quarter was approximately $21 million, focusing on expanding strategic network capacity and supporting ongoing growth initiatives.
Additional News
Target Corporation recently announced the departure of Christina Hennington, Chief Strategy and Growth Officer, who will transition to a strategic advisor role until September 7, 2025. Jim Lee, the current Chief Financial Officer, will assume leadership over Target's enterprise strategy and partnerships. Additionally, Target reported that it paid $510 million in dividends during the first quarter, reflecting a 1.8% increase in dividend per share. The company also repurchased $251 million worth of its shares, retiring 2.2 million shares at an average price of $114.60. These moves underscore Target’s ongoing commitment to returning value to shareholders while navigating a challenging retail environment.
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