Aug 19, 2026 earnings call — Strategy-driven merchandising and store changes
Net sales were $26.5 billion, up 5.3%, with traffic up 3.6% and GAAP and Adjusted EPS of $4.11.
Revenue $26.5B (est $26.1B) · EPS $4.11 (est $2.35)
Key quotes
"In Q2, we brought that approach to life through significant transitions across Food & Beverage, Fun101, decorative accessories and home, and other priority categories, creating more reasons for guests to choose Target."
"On our most important items, those that are most frequently purchased, we've attained the strongest item availability in recent years, while overall reliability metrics have reached multiyear highs."
"Our Q2 P&L included a $994 million pretax benefit from tariff refunds, which was recorded as a reduction of Cost of Sales."
Analyst Q&A 6
Traffic and category performance
Q (Rupesh Parikh · Oppenheimer): Analyst asked if strong 1- and 2-year traffic momentum is sustainable and why home and apparel lag despite higher store traffic; also asked for any color on Back-to-School trends.
A: Management said strong traffic shows guests respond to the store changes and is their top indicator of sustainable growth. They said they are not satisfied with apparel and home and will keep working on them into 2027 and beyond, noting pockets of improvement where changes were made. For Back-to-School they said early results are encouraging, with improved in-stock and good guest response to style, design, and value.
"We are not satisfied with the performance in either of those businesses, and there's more work ahead in 2027 and beyond." — Cara Sylvester
Apparel/home reset and tariff refunds
Q (Christopher Horvers · JPMorgan): Analyst asked whether apparel and home are slow to change because of long lead times and whether more tariff refunds will come and how to think about 2027 earnings baseline.
A: Management agreed apparel and home are longer-lead-time businesses and change takes more time, calling home a multiyear journey and noting green shoots where changes began. They said the Q2 tariff refund represented the significant majority of refunds to date, that they expect some more, and prefer investors focus on adjusted EPS excluding tariff refunds as the better baseline.
"The way I would look at the underlying performance is we are trying to focus on adjusted EPS, excluding the tariff refunds." — James Lee (CFO)
Price investments and comp cadence
Q (Katharine McShane · Goldman Sachs): Analyst asked how lowering prices on many items fits with Target's strong price gaps, and asked about the cadence of comps through the quarter.
A: Management said they feel good about their price position and that value must be paired with style and design; they noted they lowered prices on over 10,000 items this year to deliver compelling value. They said comp strength was broad-based across demographics, categories, and months, and Back-to-School is performing well.
"We have lowered prices on over 10,000 items over the course of the last year." — Michael Fiddelke (CEO)
Store performance and Fun101 details
Q (David Bellinger · Mizuho): Analyst asked whether some stores still underperform and could benefit from remodels, and asked for detail on the components of Fun101 especially trading cards.
A: Management said strength was broad-based across the chain but remodels and new stores drive reliable lifts, and they highlighted improvements in inventory reliability and guest experience from investments and store openings. On Fun101 they said they completed a large space move to create unique destinations, simplified toys, and created a new fandom destination that includes trading cards and collectibles, with guests responding.
"We completed the largest space move in our company's history this past quarter, and that allowed us to bring in and create truly unique destinations." — Cara Sylvester
Where earnings can grow over 3-5 years
Q (Corey Tarlowe · Jefferies): Analyst asked what opportunities over the next 3–5 years could further enhance earnings power that investors may not fully appreciate, and what merchandising surprises remain.
A: Management said they are only 2 quarters into a multiyear plan and see more runway in improving guest experience, inventory reliability, and transforming categories like apparel and home. They emphasized these are company-wide priorities across teams and highlighted initiatives like a new immersive Beauty Studio as examples of where they will continue to invest and evolve.
"And so what we're embarking upon in the next month is our Beauty Studio that isn't just bringing new assortment in." — Cara Sylvester
How much of store reset is done
Q (Simeon Gutman · Morgan Stanley): Analyst asked what percent of the store and planograms have been touched relative to Investor Day targets and how apparel/home will evolve with faster product cycles.
A: Management said they have driven meaningful change in the first two quarters and are pleased with guest response, but they view the work as multi-year rather than a single percentage complete this year. On apparel and home, they said changes where made show encouragement, fall assortment brings newness for apparel, and home remains a multi-year journey with much more work to do.
"As we think about where we're at 2 quarters into the year, we laid out a plan with clarity on the change we wanted to drive this year." — Michael Fiddelke (CEO)