01—Abstract
Summary
Summary of the 10-Q filed May 30, 2025. Cited figures are marked; the original filing is the authoritative source.
Target Corporation reported its first-quarter results for fiscal year 2025, ending May 3, 2025.
Net sales decreased by 2.8% to $23.8 billiona, driven by a 3.8% decline in comparable sales, which was a result of a 2.4% decrease in traffic and a 1.4% decrease in average transaction amount. Despite the sales dip, GAAP diluted earnings per share saw a significant increase of 11.7% to $2.27, largely influenced by a substantial one-time gain of $593 million from credit card interchange fee settlements, which positively impacted operating income and SG&A expenses. Management highlighted challenges such as declining consumer confidence, potential tariff impacts, and a shift in consumer spending away from discretionary categories.
While comparable store sales declined, digitally originated comparable sales showed resilience with a 4.7%b increase. The company maintained its dividend payment and continued its share repurchase program, demonstrating a commitment to returning capital to shareholders amidst a mixed operational environment.
02—Key points
Key Highlights
- Net sales for the quarter decreased by 2.8% to $23.8 billion, while comparable sales fell by 3.8% due to lower traffic and average transaction amounts.
- GAAP diluted earnings per share (EPS) increased by 11.7% to $2.27, significantly boosted by a $593 million pretax gain from credit card interchange fee settlements.
- Adjusted diluted EPS, excluding the settlement gain, decreased by 35.9% to $1.30, reflecting underlying operational pressures.
- Digitally originated comparable sales grew by 4.7%, indicating continued strength in the company's online channels, while store-originated comparable sales declined by 5.7%.
- Inventory levels increased to $13.0 billion, up from $12.7 billion at the end of the previous quarter and $11.7 billion year-over-year, indicating slower sales velocity.
- The company maintained its quarterly dividend, paying $1.12 per share, and continued its share repurchase program, deploying $251 million during the quarter.
- Operating income increased by 13.6% to $1.5 billion, primarily due to the significant gain from the interchange fee settlements.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Target Corp kept $0.04.
- Revenue$23.85B100.0%
- Cost of revenue−$17.13B71.8%
- Gross profit$6.72B28.2%
- Operating costs−$5.25B22.0%
- Operating income$1.47B6.2%
- Interest, other & tax−$436.0M1.8%
- Net income$1.04B4.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 30, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $23.85B$24.53B | −2.8% |
| Cost of Revenue | $17.13B$17.47B | −2.0% |
| Gross Profit | $6.72B$7.06B | −4.8% |
| SG&A Expenses | $4.59B$5.15B | −10.8% |
| Operating Income | $1.47B$1.30B | +13.6% |
| Net Income | $1.04B$942.00M | +10.0% |
| EPS (Basic) | $2.28$2.04 | +11.8% |
| EPS (Diluted) | $2.27$2.03 | +11.8% |
| Shares Outstanding (Basic) | 455.00M462.20M | −1.6% |
| Shares Outstanding (Diluted) | 456.50M463.90M | −1.6% |
05—Questions
Frequently Asked Questions
What drove the increase in Net Sales?
Net sales actually decreased by 2.8% to $23.8 billion in the first quarter of fiscal year 2025, compared to the same period last year. This decline was primarily due to a 3.8% decrease in comparable sales, driven by lower store traffic and a reduction in the average transaction amount.
How did the credit card interchange fee settlement impact the results?
The credit card interchange fee settlement resulted in a significant pretax gain of $593 million, which was recorded within SG&A expenses. This gain substantially boosted the reported operating income and GAAP diluted earnings per share, but it is excluded from the Adjusted EPS calculation.
What is the company's outlook on inventory levels?
Inventory levels increased to $13.0 billion as of May 3, 2025, which is higher than both the previous quarter and the prior year. Management attributed this increase to lower-than-expected sales across core merchandise categories, indicating slower inventory turnover.
Is Target continuing to return capital to shareholders?
Yes, Target demonstrated its commitment to shareholder returns by maintaining its quarterly dividend, paying $1.12 per share. Additionally, the company continued its share repurchase program, investing $251 million to buy back its stock during the quarter.
06—Continue