Target Corporation reported stronger-than-expected first-quarter results Wednesday, posting broad-based sales growth across all six of its core merchandising categories as the retailer continued to gain early traction from a sweeping turnaround strategy launched earlier this year.
The retailer said first-quarter net sales rose 6.7% to $25.4 billion, while comparable sales increased 5.6%, driven by a 4.4% increase in traffic and continued strength in digital channels. Diluted earnings per share totaled $1.71, up 32% from adjusted EPS of $1.30 in the prior-year period.
The results marked an encouraging start for CEO Michael Fiddelke, who officially assumed the company’s top role in February and quickly unveiled a $6 billion turnaround plan focused on store remodels, merchandising improvements, enhanced staffing and training, and investments in technology and the guest experience.
“First quarter financial results were stronger than expected, providing encouraging early signs that our clarified strategy is resonating with our guests and driving broad-based growth across our business,” Fiddelke said in the earnings release.
In comments to reporters cited by CBS News, Fiddelke said the company remains “guardedly optimistic” as it works through its operational overhaul amid ongoing macroeconomic uncertainty.
Target executives said customer demand improved across merchandise categories, including apparel, beauty, food and beverage, and hardlines. The company highlighted strong response to new collaborations such as Roller Rabbit, along with expanded assortments of toys priced under $10.
Digital sales continued to outpace store growth, with comparable digital sales increasing 8.9% during the quarter. Same-day delivery powered by Target Circle 360 rose more than 27%, while non-merchandise revenue climbed nearly 25%, fueled by growth in the company’s Roundel retail media business, Target Circle 360 membership revenue, and the Target+ marketplace.
Comparable store sales increased 4.7% during the quarter, while digitally originated comparable sales rose 8.9%.
Gross margin expanded to 29.0% from 28.2% a year ago, aided by lower markdown rates, improved supply chain productivity and higher advertising revenue. However, selling, general and administrative expenses increased as the retailer boosted compensation, staffing hours and training investments tied to its turnaround efforts.
Net earnings declined 24.6% to $781 million, largely because the prior-year quarter included gains tied to interchange fee settlements.
Target also raised its full-year outlook, saying it now expects net sales growth “in a range around 4 percent,” up two percentage points from its prior forecast. The company said it continues to expect sales growth in every quarter of 2026 and projected full-year earnings near the high end of its previous adjusted EPS range of $7.50 to $8.50.
Capital expenditures totaled $1 billion during the quarter, up 31% from a year ago, primarily reflecting increased investments in new stores and remodel projects.
Analysts are expected to closely monitor retailer commentary this earnings season for signs that consumers are changing shopping behavior in response to higher gasoline prices linked to escalating tensions involving Iran. While Target executives acknowledged broader economic uncertainty, the company said first-quarter sales momentum remained broad-based across categories and channels.
