Retailer Target beat earnings and revenue estimates last quarter, and has doubled its annual sales growth guidance amid its turnaround efforts.
Earnings per share were US$1.71, up from $1.30 one year ago and above LSEG-compiled estimates of $1.46. Net sales rose 6.7% to $25.44 billion, passing estimates of $24.64 billion.
“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,” said CEO Michael Fiddelke.
“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. As we look ahead, we're focused on staying disciplined and flexible in an uncertain operating environment and continuing to invest boldly in our team, capabilities, and an elevated guest experience to unlock our full potential over time.”
Target credited the sales increase to a 6.4% rise in merchandise sales to $24.89 billion, above estimates of $24.18 billion. This was driven by its baby & kids and health & wellness categories, according to Fiddelke.
It also reported 24.6% growth in non-merchandise sales. Total comparable sales traffic was up 4.4% year-over-year.
Adjusted operating income was up 29.1% to $1.14 billion. Its gross margin was 29.0%, improving from 28.2% last year.
Target lifted its annual net sales growth guidance from 2% to 4%, and has projected net sales will grow in all four quarters of 2026. Earnings per share will be at the high end of its $7.50-8.50 guidance range, it said, compared with estimates of $8.14.
The company’s sales had previously fallen year-over-year for four consecutive quarters. CFO Jim Lee said in March that its capital expenditures would climb by more than $1 billion to $5 billion this year to support the turnaround plan.
Target (NYSE: TGT) shares closed 3.9% lower at $122.33, but rose 0.6% after-hours. Its market capitalisation is $55.56 billion.
