Target (TGT) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 2025 were $25.2 billion, down 0.9% year-over-year, with comparable sales declining 1.9% and digital comparable sales up 4.3%.

• Traffic and sales trends improved sequentially from Q1, with all six major categories showing improvement and strong performance in stores.

• Michael Fiddelke was appointed as the next CEO, with the transition set for fiscal 2026.

• Leadership is focused on merchandising authority, guest experience, and technology investment to drive growth.

• Consumers responded positively to new seasonal assortments and key events like back-to-school and summer holidays.

Financial highlights

• Q2 GAAP and Adjusted EPS were $2.05, down from $2.57 last year, mainly due to inventory adjustment, tariff-related costs, and higher markdowns.

• Operating income for Q2 was $1.3 billion, a 19.4% decrease year-over-year.

• Gross margin rate was 29.0%, down from 30.0% last year, with 210 bps pressure from merchandising and tariffs, partially offset by 130 bps improvement in inventory shrink.

• After-tax ROIC for the trailing twelve months was 14.3%, down from 16.6% a year ago.

• EBITDA for Q2 was $2.1 billion, down 12.2% year-over-year.

Outlook and guidance

• Fiscal 2025 sales expected to decline low-single digits; GAAP EPS guidance is $8.00–$10.00, Adjusted EPS $7.00–$9.00.

• Expect more favorable comparisons in the back half as most one-time tariff and inventory costs are behind.

• Cautious approach remains due to ongoing consumer, macroeconomic, and tariff uncertainty.

• Q3 will feature expanded Game Day assortments, exclusive activewear, and affordable Halloween offerings.

• The company is moving with urgency to accelerate performance and position for long-term, profitable growth.