01—Abstract
Summary
Summary of the 10-Q filed November 26, 2025. Cited figures are marked; the original filing is the authoritative source.
Target Corporation reported its third-quarter results for the period ending October 31, 2025.
The company experienced a decline in both net sales and comparable sales compared to the prior year, driven by a decrease in traffic and average transaction amount. This was partially offset by an increase in digitally originated sales. Operating income saw a significant year-over-year decrease due to lower sales and increased business transformation costs.
Despite the revenue challenges, Target's balance sheet remains solid with substantial assets and shareholders' equity. The company continues to prioritize capital allocation through investments in growth, dividends, and share repurchases. Investors should monitor the impact of ongoing business transformation initiatives and macroeconomic factors on future sales and profitability.
02—Key points
Key Highlights
- Net sales for the third quarter decreased by 1.5% to $25.3 billion, compared to $25.7 billion in the prior year's comparable period.
- Comparable sales declined by 2.7%, driven by a 2.2% decrease in traffic and a 0.5% decrease in the average transaction amount.
- Digitally originated comparable sales saw a positive increase of 2.4%, indicating strength in the company's online channels.
- Operating income decreased significantly by 18.9% to $0.9 billion, compared to $1.2 billion in the prior year.
- Diluted earnings per share (EPS) fell to $1.51 from $1.85 in the prior year, an 18.2% decrease.
- The company declared and paid dividends, maintaining its commitment to returning capital to shareholders.
- Inventory levels increased compared to the previous quarter, reflecting a seasonal build-up for the holiday season, but decreased year-over-year due to alignment with sales trends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Target Corp kept $0.03.
- Revenue$25.27B100.0%
- Cost of revenue−$18.14B71.8%
- Gross profit$7.13B28.2%
- Operating costs−$6.18B24.5%
- Operating income$948.0M3.8%
- Interest, other & tax−$259.0M1.0%
- Net income$689.0M2.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed November 26, 2025Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $25.27B$25.67B | −1.6% |
| Cost of Revenue | $18.14B$18.40B | −1.4% |
| Gross Profit | $7.13B$7.27B | −1.8% |
| SG&A Expenses | $5.54B$5.46B | +1.4% |
| Operating Income | $948.00M$1.17B | −18.8% |
| Net Income | $689.00M$854.00M | −19.3% |
| EPS (Basic) | $1.52$1.86 | −18.3% |
| EPS (Diluted) | $1.51$1.85 | −18.4% |
| Shares Outstanding (Basic) | 453.70M460.10M | −1.4% |
| Shares Outstanding (Diluted) | 455.10M461.50M | −1.4% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the sales decrease this quarter?
The decrease in sales was primarily driven by a decline in comparable sales, which fell by 2.7%. This decline was composed of a 2.2% decrease in the number of transactions (traffic) and a 0.5% decrease in the average transaction amount. While store-originated comparable sales declined, digitally originated comparable sales showed growth.
What is the impact of the business transformation initiative on the financial results?
The business transformation initiative, announced in May 2025, resulted in costs and charges recognized during the quarter. These include $115 million for severance and related costs and $46 million for asset-related charges. These costs contributed to the increase in the SG&A expense rate for the quarter.
How is Target managing its inventory levels?
Inventory levels were $14.9 billion as of November 1, 2025, an increase from the previous quarter ($12.7 billion) due to seasonal build-up for the holiday period. However, this represents a decrease compared to the same period last year ($15.2 billion). Management attributes the year-over-year decrease to aligning inventory with sales trends, partially offset by higher merchandise costs.
What is Target's approach to capital allocation?
Target follows a disciplined approach prioritizing investments to grow the business, followed by maintaining and growing its quarterly dividend, and finally returning excess cash to shareholders through share repurchases. The company maintained its dividend payments and continued with share repurchases during the period.
06—Continue