10-QPeriod: Q3 FY2026

TARGET CORP Quarterly Report for Q3 Ended Nov 1, 2025

Filed November 26, 2025For Securities:TGT

Summary

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.

Financial Highlights

47 data points
Beta

Revenue

$25.27B

28.2% Gross Margin

Net Income

$689.00M

2.7% Net Margin

EPS (Diluted)

$1.51

Total Assets

$59.99B

Cash & Equivalents

$3.82B

Free Cash Flow

$149.00M

Financial Statements
Beta
Revenue$25.27B
Cost of Revenue$18.14B
Gross Profit$7.13B
SG&A Expenses$5.54B
Operating Income$948.00M
Net Income$689.00M
EPS (Basic)$1.52
EPS (Diluted)$1.51
Shares Outstanding (Basic)453.70M
Shares Outstanding (Diluted)455.10M

Key Highlights

  • 1Net 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.
  • 2Comparable sales declined by 2.7%, driven by a 2.2% decrease in traffic and a 0.5% decrease in the average transaction amount.
  • 3Digitally originated comparable sales saw a positive increase of 2.4%, indicating strength in the company's online channels.
  • 4Operating income decreased significantly by 18.9% to $0.9 billion, compared to $1.2 billion in the prior year.
  • 5Diluted earnings per share (EPS) fell to $1.51 from $1.85 in the prior year, an 18.2% decrease.
  • 6The company declared and paid dividends, maintaining its commitment to returning capital to shareholders.
  • 7Inventory 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.

Frequently Asked Questions

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.

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.

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.

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.