Target Corp on Tuesday reported fiscal second-quarter earnings that exceeded Wall Street expectations, though its shares slipped in premarket trading as investors digested the extent of one-time tariff refunds that boosted results.
The Minneapolis-based retailer posted adjusted earnings per share of $4.11, surpassing the $2.33 consensus forecast by 76.4% and more than doubling the $2.05 reported a year earlier. Revenue rose 5.3% to $26.54 billion, beating the $26.13 billion estimate by $410 million. Comparable sales increased 3.8%, driven by an 8.7% gain in digital sales and a 2.7% rise in store traffic.
Gross margin expanded to 33.7% from 29.0% a year ago, while operating margin more than doubled to 9.6%. Management attributed the margin improvement in part to $994 million in tariff refunds recognized during the quarter, equivalent to $1.65 per share. Inventory levels rose about 3% year-over-year to $13.2 billion.
Target reaffirmed its full-year net sales growth outlook at around 5%, an increase from its prior guidance. Adjusted earnings guidance was raised to a range of $9.90 to $10.90 per share, up from the previous $7.50 to $8.50 range, though the new range includes the $1.65 per share benefit from tariff refunds. Capital expenditures are projected at about $5 billion for the year, with plans to remodel roughly 130 stores and open 24 new full-size locations.
Digital initiatives continued to show momentum, with gross billings for the Roundel ad platform up nearly 20% and Target Plus marketplace gross merchandise volume rising more than 40%. Membership revenue for Target Circle 360 increased over 40% year-over-year. CEO Michael Fiddelke noted the company remains in the early stages of its strategic transition, emphasizing the need for consistent execution to sustain growth.
Premarket trading reflected investor caution, with shares down 1.64% at $149.99, extending losses from Monday’s close of $152.48. The stock remains about 4.2% below its 52-week high of $156.47 and has gained roughly 60% year-to-date.
