Target (TGT) Q1 2027 earnings summary

Executive summary

• Net sales grew 6.7% year-over-year to $25.4 billion, with broad-based growth across all six core merchandise categories and both stores and digital channels, driven by a 4.4% increase in traffic and 8.9% digital sales growth, including over 27% growth in same-day delivery.

• Comparable sales increased 5.6% year-over-year, reflecting strong performance in toys, wellness, food & beverage, and baby categories, with double-digit growth in toys and wellness.

• Non-merchandise sales, including advertising, membership, and marketplace revenue, surged nearly 25%.

• Early momentum is attributed to refreshed strategy focusing on merchandising authority, guest experience, technology, and team strength, with new leadership roles supporting execution.

• The company is executing significant changes in assortment, store experience, and supply chain, aiming for sustainable long-term growth while remaining cautious about the near-term environment.

Financial highlights

• Net sales reached $25.4 billion, up 6.7% year-over-year, with digital sales accounting for 20.3% of merchandise sales.

• Gross margin rate improved to 29%, up 80 basis points, due to productivity initiatives, supply chain leverage, and higher non-merchandise revenues.

• SG&A expense rate was 21.9%, higher than last year due to the absence of prior legal settlements and increased compensation and marketing.

• Operating margin was 4.5%, lower than last year (GAAP) but 80 basis points higher than last year's adjusted rate.

• GAAP and adjusted EPS were $1.71, 24% lower than prior year GAAP EPS but 32% higher than prior year adjusted EPS.

Outlook and guidance

• Full-year net sales growth is expected around 4%, up two percentage points from prior guidance.

• EPS is projected near the high end of the $7.50–$8.50 range, reflecting Q1 profit upside but maintaining a cautious outlook due to tougher comps and moderating consumer tailwinds.

• Guidance excludes impacts from potential tariff refunds and other discrete items.

• Cost headwinds are anticipated to moderate in the second half of the year, with ongoing monitoring of freight and other expenses.