Target shares fell 4% in pre-market trading on Wednesday after the retailer reported better-than-expected comparable sales for its latest quarter but tempered its full-year guidance amid signs of weakening consumer momentum.
The Minneapolis-based retailer posted a 3.8% rise in comparable sales for the quarter ended August 1, exceeding LSEG estimates of 2.5% growth. Traffic increased 3.6% while digital comparable sales surged 8.7%, though the company did not provide a breakdown of the performance by category. Target also raised its full-year net sales growth forecast to around 5%, up from its prior estimate of roughly 4%.
Financial benefits from tariff refunds supported the quarterly results, contributing nearly $1 billion to gross margin and operating income. Excluding approximately $1.65 per share in tariff-related benefits, Target adjusted the midpoint of its annual profit forecast upward by 75 cents. In May, the company had guided earnings toward the upper end of a $7.50 to $8.50 range.
Macroeconomic headwinds are intensifying, with Goldman Sachs economists projecting U.S. real consumer spending growth to decelerate to between 1.0% and 1.5% in the second half of 2026, down from the stronger pace observed in the spring following tax refunds. Retail sales data for July showed a 0.6% month-over-month decline, marking the largest drop in 14 months.
U.S. stock futures were little changed ahead of the Federal Reserve’s release of minutes from its July policy meeting. The S&P 500 hovered near flat levels, while the Nasdaq traded slightly lower.
Target’s stock decline reflects investor caution despite the sales beat, as concerns mount over broader consumer spending trends and their impact on retail performance.
