Target posts stronger than expected Q1 results

US retailer Target Corporation reported its financial results for the first quarter of 2026, revealing earnings that exceeded initial marketplace expectations.

The company posted first quarter GAAP and adjusted earnings per share, also known as EPS, of 1.71 dollars on a diluted basis. This compares with a prior-year GAAP EPS of 2.27 dollars and an adjusted EPS of 1.30 dollars.

"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," Michael Fiddelke, chief executive officer of Target Corp, said in a press statement. "While we're pleased with our Q1 performance, our focus remains on building consistent, long-term growth, and we recognize there is much more work in front of us."

Revenue and comparable sales growth

Net sales for the first quarter reached 25.40 billion dollars, marking a 6.7 percent increase compared to the same period last year. This performance was supported by a 6.4 percent growth in merchandise sales alongside a 24.6 percent increase in non-merchandise revenues.

Comparable sales for the quarter grew by 5.6 percent. This metric was driven by a 4.7 percent rise in comparable store sales alongside an 8.9 percent growth in comparable digital sales.

Operating income and adjusted operating income for the first quarter stood at 1.10 billion dollars. This represents a 22.9 percent decrease compared to the prior-year GAAP operating income, but a 29.1 percent increase when measured against the prior-year adjusted operating income.

Capital allocation and updated full year guidance

First quarter capital expenditures rose by 31 percent year-over-year, or YoY, to 1 billion dollars. The investment increase was primarily directed toward new brick and mortar locations and store remodels.

The company distributed dividends totaling 516 million dollars during the first quarter, compared to 510 million dollars in the prior year. This reflects a 1.8 percent increase in the dividend per share, which was partially offset by a reduced overall share count.

Looking ahead, Target Corp has upgraded its full-year guidance for 2026. Net sales growth is now anticipated to be in a range around 4 percent compared with 2025, which represents an increase of two percentage points above the previously projected range.

The retailer continues to forecast net sales growth across every quarter of the fiscal year. Additionally, the full-year 2026 operating income margin rate is expected to be more than 20 basis points higher than the 4.6 percent recorded in 2025, with both GAAP and adjusted EPS projected near the high end of the initial guidance range of 7.50 dollars to 8.50 dollars.