Target (TGT) investor relations material

Executive summary

• Leadership introduced a growth-focused strategy centered on merchandising authority, guest experience, technology acceleration, and strengthening teams and communities.

• Organizational changes and board additions were made to drive simplicity, speed, and transformational change.

• Fourth quarter net sales were $30.5 billion, down 1.5% year-over-year, with Food & Beverage, Beauty, and Toys showing growth.

• Non-merchandise sales, including membership and marketplace, grew over 25%, with Target Circle 360 membership more than doubling.

• Early signs of improved sales trends and guest engagement are evident, with significant investments planned to sustain momentum.

Financial highlights

• 2025 gross margin rate declined by 30 basis points year-over-year, mainly due to incremental tariff costs, but Q4 gross margin improved to 26.6% from 26.2%.

• Adjusted operating income and EPS grew in Q4 2025 despite a sales decline, with Q4 Adjusted EPS at $2.44 and full-year Adjusted EPS at $7.57.

• Non-recurring tariff and inventory adjustment costs pressured 2025 results but are not expected to repeat in 2026.

• Same-day delivery sales rose over 30% last year, and Target Circle 360 membership doubled.

• Fourth quarter operating income was $1.4 billion, down 5.9% year-over-year; Adjusted operating income was $1.5 billion, slightly above last year.

Outlook and guidance

• Net sales are expected to grow around 2% in 2026, with comparable sales up slightly and growth in every quarter.

• Operating income margin is projected to be about 20 basis points higher than the 4.6% adjusted rate in 2025.

• GAAP and adjusted EPS guidance for 2026 is $7.50–$8.50, representing 5%-6% growth over last year.

• Stronger profit growth is anticipated in the back half of 2026 due to timing of shrink, CapEx, and SG&A expenses.

• Long-term, the company expects to accelerate to low to mid-single-digit top-line growth and expand operating margins above pre-pandemic levels.