Target on Wednesday reported earnings and revenue that exceeded Wall Street expectations, as the retailer posted stronger-than-expected sales growth and signaled early progress in its turnaround efforts driven by improving customer traffic.

The company said net sales rose more than 6% year over year as it works to win back shoppers following a prolonged period of weak performance, News.Az reports, citing CNBC.

Same-store sales increased 5.6%, marking Target’s first positive comparable sales result in five quarters.

Target also reported broad-based strength across its business, with traffic in both stores and digital channels rising 4.4% compared with the same period last year. Digital comparable sales climbed 8.9%, which the company attributed largely to growth in same-day delivery services tied to its membership program, Target Circle 360.

“Even with this early progress, we know our work is just beginning, and we have confidence we’re on the right path because guests are responding in areas where we are leaning in and driving change,” CEO Michael Fiddelke said during a call with reporters. He added that the company is focused on strengthening its combination of style, design, and value across both products and customer experience.

Non-merchandise revenue saw particularly strong growth, rising nearly 25%, supported by gains in membership income and the Target+ marketplace. Target, similar to Walmart and Amazon, has been expanding these areas to increase convenience and improve profitability.

The company reported sales growth across all six of its core merchandising categories, with especially strong performance in health and wellness, toys, and baby products. It opened seven new stores during the quarter and currently has more than 100 store remodels underway.

For its fiscal first quarter, Target reported earnings per share of $1.71 versus $1.46 expected, and revenue of $25.44 billion compared with $24.64 billion forecast by analysts, according to LSEG data.

Following the strong results, Target raised its full-year outlook. The company now expects net sales growth of 4% for 2026, up by 2 percentage points from its previous forecast. It also said earnings per share are expected to land near the upper end of its prior guidance range of $7.50 to $8.50, while analysts had expected $8.14 per share.

Despite the improved outlook, executives maintained a cautious tone regarding the broader economic environment. “Despite our updated guidance, we’re maintaining a cautious outlook given the work we know we have in front of us and ongoing uncertainty in the macroeconomic environment,” Fiddelke said.

For the three-month period ending May 2, Target reported net income of $781 million, or $1.71 per share, down from $1.04 billion, or $2.27 per share, in the same period last year.

Merchandise revenue came in at $24.89 billion, beating estimates of $24.18 billion. The company said this was its strongest revenue beat since November 2021.

Target highlighted particularly strong growth in its baby and kids categories, noting a more than 5 percentage point acceleration in the second half of the quarter. Health and wellness products also delivered double-digit growth, supported by new product additions.

Gross margin stood at 29% for the quarter, slightly above Wall Street expectations of 28.7%.

News.Az 

By Nijat Babayev