Target Raises Its 2026 Outlook as Store Traffic and Digital Sales Improve

Target raised its 2026 sales outlook after reporting stronger store traffic and digital demand, offering a positive company-level signal as national retail activity remains mixed.

The retailer reported on Aug. 19 that net sales reached $26.5 billion for the quarter ended Aug. 1, up 5.3% from a year earlier. Comparable sales rose 3.8%, driven by a 3.6% increase in comparable traffic.

What improved at Target

Comparable store sales increased 2.7%, while comparable digital sales rose 8.7%. Target said same-day delivery grew by more than 25% and was a major driver of the digital result.

The company reported growth in all six core merchandising categories. Fun 101 posted double-digit growth, while Food & Beverage and Beauty recorded high-single-digit gains.

Target said it lowered prices on more than 10,000 items during the past year. It also said 95% of its school-supplies assortment was priced at or below the prior year’s retail prices as it focused on value during the back-to-school season.

The figures indicate that customers visited stores more often and used digital fulfillment more heavily during the quarter. Target attributed the progress to a combination of value, merchandise changes and convenience, but the results do not establish that any one change, including lower prices, caused the entire rebound.

Why the profit headline needs context

Target reported second-quarter diluted earnings per share of $4.11, compared with $2.05 a year earlier. The company said the increase included a $994 million pretax tariff-refund benefit, which contributed $1.65 to earnings per share.

Excluding tariff refunds, Target said second-quarter earnings per share increased 20% from the prior year. That makes sales, traffic and channel performance more direct indicators of customer demand than the doubled earnings figure alone.

Target recorded the refund as a reduction in cost of sales. Its updated full-year earnings guidance includes approximately $1.65 per share from the second-quarter refund but excludes any potential future tariff refunds.

How the results fit the national retail picture

The broader U.S. retail picture was mixed in July. The Census Bureau’s advance estimate put retail and food-services sales at $763.6 billion, down 0.6% from June but up 5.0% from July 2025.

The monthly decline carries a 0.4-percentage-point margin of error at the agency’s stated 90% confidence level, meaning the estimate does not provide strong statistical evidence that the underlying change was different from zero. The figures are adjusted for seasonal and calendar effects but not for price changes, and the advance estimates may be revised.

The comparison with Target is not direct. Target’s fiscal second quarter covered May through Aug. 1, while the Census report measured July alone. Taken together, the figures show that consumer spending remained higher than a year earlier, but demand was not moving at the same pace across retailers or measurement periods.

What Target expects next

Target raised its full-year 2026 net-sales outlook to growth of about 5%, one percentage point above its prior guidance. The company said it plans to continue emphasizing value, convenience and refreshed merchandise during the remainder of the back-to-school and back-to-college seasons.

Target also said it will introduce Target Beauty Studio in more than 600 stores and continue enhancements in apparel and home, including planned changes to kids’ home and bedding.

The next test will be whether traffic and digital growth continue without another one-time refund supporting earnings. Nationally, the Census Bureau’s next advance retail-sales report, covering August, is scheduled for Sept. 16, 2026.

Sources

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