Target Corp on Tuesday more than doubled its annual sales growth forecast, signaling that a turnaround strategy is starting to pay off. The retailer now expects comparable sales to grow by more than 2% in fiscal 2026, up from a previous forecast of about 1% growth. Shares rose 5% in premarket trading.
Turnaround Strategy
The improved outlook comes as Target's efforts to revamp its merchandise, improve inventory management, and enhance the customer experience gain traction. The company has been focusing on core categories like apparel, home goods, and beauty, while also expanding its private-label brands.
"We are seeing early signs of progress from the changes we have made," said CEO Brian Cornell in a statement. "Our teams are executing with discipline, and we are confident in our ability to deliver sustainable growth."
Financial Performance
Target reported first-quarter earnings that beat analyst expectations, with adjusted earnings per share of $2.30 versus estimates of $2.10. Revenue came in at $25.4 billion, slightly above the consensus of $25.3 billion. Comparable sales rose 1.5% in the quarter, driven by stronger traffic and higher average ticket sizes.
The company also announced plans to open 30 new stores this year, including smaller-format locations in urban areas, as it seeks to expand its footprint.
Market Reaction
Investors cheered the news, pushing Target's stock up 5.2% to $185.40 in premarket trading. The shares have gained 12% year-to-date, outperforming the broader retail sector.
"Target is showing that its turnaround is real," said retail analyst Jane Hali. "The company is addressing its challenges head-on and is well-positioned for the back half of the year."
However, some analysts remain cautious, noting that consumer spending could soften amid persistent inflation and higher interest rates. Target maintained its cautious stance on the consumer environment, citing ongoing uncertainty.
