Q2 2026 results
| Metric | Result | Change |
|---|---|---|
| Net sales | $26.5 billion | 5.3% higher than last year |
| Comparable sales | 3.8% | Not stated |
| Operating margin rate | 9.6% | Compared with 5.2% last year |
| GAAP and adjusted EPS | $4.11 | Compared with $2.05 last year |
| Inventory | $13.2 billion | Up 3% from last year |
Guidance and outlook
- Full year net sales growth is expected to be in a range around 5%.
- Full year EPS is expected to be in a range of $9.90 to $10.90.
- Full year operating margin rate, excluding tariff refunds, is expected to be around 0.5 percentage point higher than last year's 4.6%.
How management sounded
Positive (+6 on our -10 to +10 scale). Management raised full-year guidance and highlighted strong traffic growth, though they remained realistic about the multiyear turnaround needed in home and apparel categories. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Traffic sustainability
Asked: How sustainable is the traffic momentum, and why did home and apparel lag?
Answer: Traffic is a key indicator of trust, and the company is encouraged by the response to store changes. Home and apparel are longer lead-time categories requiring multiyear work, though specific segments like kids apparel are showing growth.
Back-to-school
Asked: What are the expectations for the back-to-school season?
Answer: Early results are encouraging, with strong performance in school supplies and apparel, supported by improved in-stock positions.
Home and apparel turnaround
Asked: Why is the turnaround in home and apparel taking longer?
Answer: These are longer lead-time businesses, and the company is executing changes category by category with plans extending into 2027.
Tariff refunds
Asked: Are there more tariff refunds expected, and how should investors view the earnings base?
Answer: Most refunds are accounted for, and investors should focus on adjusted EPS excluding these one-time benefits to understand underlying performance.
What to watch before the next call
- Execution of the remaining multiyear turnaround plans for home and apparel categories.
- Performance of the new Target Beauty Studio rollout in over 600 stores.
- Management of inventory levels and in-stock reliability as the company continues to drive store transitions.
