10-QPeriod: Q2 FY2026

TARGET CORP Quarterly Report for Q2 Ended Aug 2, 2025

Filed August 29, 2025For Securities:TGT

Summary

Target Corporation reported its second-quarter results for the period ending August 2, 2025, showing a slight decrease in net sales to $25.21 billion from $25.45 billion in the prior year. Diluted earnings per share also declined to $2.05 from $2.57 year-over-year. The company experienced a 1.9% decrease in comparable sales, driven by a 1.3% drop in traffic, though digitally originated sales saw a 4.3% increase. Operating income fell by 19.4% to $1.32 billion, primarily due to a lower gross margin rate and increased SG&A expenses as a percentage of sales. Despite the topline and bottom-line declines, Target maintained a healthy cash position, with cash and cash equivalents totaling $4.34 billion. The company continued its capital allocation strategy, paying dividends and engaging in share repurchases, though at a reduced pace compared to the previous year. Management cited evolving consumer and regulatory landscapes, including tariffs, as factors influencing business operations and outlook. The company is actively managing these challenges through vendor negotiations, assortment adjustments, and pricing strategies.

Financial Highlights

47 data points
Beta

Revenue

$25.21B

29.0% Gross Margin

Net Income

$935.00M

3.7% Net Margin

EPS (Diluted)

$2.05

Total Assets

$57.85B

Cash & Equivalents

$4.34B

Free Cash Flow

$1.01B

Financial Statements
Beta
Revenue$25.21B
Cost of Revenue$17.90B
Gross Profit$7.31B
SG&A Expenses$5.36B
Operating Income$1.32B
Net Income$935.00M
EPS (Basic)$2.06
EPS (Diluted)$2.05
Shares Outstanding (Basic)454.60M
Shares Outstanding (Diluted)455.60M

Key Highlights

  • 1Net sales for the quarter were $25.21 billion, a 0.9% decrease compared to the prior year's $25.45 billion.
  • 2Comparable sales declined by 1.9%, with a 1.3% decrease in traffic and a 0.6% decrease in average transaction amount.
  • 3Digitally originated comparable sales increased by 4.3%, indicating continued strength in online channels.
  • 4Operating income decreased by 19.4% to $1.32 billion, impacted by a lower gross margin rate.
  • 5Diluted earnings per share (EPS) fell to $2.05 from $2.57 in the prior year's comparable period.
  • 6The company's cash and cash equivalents stood at $4.34 billion, providing a strong liquidity position.
  • 7Target paid a quarterly dividend of $1.14 per share, a slight increase from the prior year's $1.12 per share, and continued its share repurchase program.

Frequently Asked Questions

The decrease in net sales was primarily driven by a 1.9% decline in comparable sales, which was influenced by a 1.3% decrease in customer traffic and a 0.6% decrease in the average transaction amount. While overall comparable sales were down, digitally originated sales showed a healthy increase of 4.3%.

Operating income decreased by 19.4% due to a lower gross margin rate, which declined from 30.0% to 29.0% for the quarter. This was attributed to factors such as higher markdown rates, purchase order cancellation costs, and changes in the sales mix, partially offset by growth in advertising revenue and lower inventory shrink.

Target is closely monitoring the evolving consumer and regulatory landscape, including the impact of tariffs. The company is implementing strategies such as negotiating with vendors, adjusting product assortments, modifying sourcing locations, managing order quantities and timing, and adjusting pricing to mitigate potential impacts on sales and results of operations.

Target follows a disciplined approach prioritizing profitable business growth and maintaining operations. Second, it aims to grow its competitive quarterly dividend annually. Finally, any excess cash is returned to shareholders through share repurchases, while maintaining credit rating goals.