Target raises fiscal 2026 sales outlook as traffic rebounds across categories

Target Corp. raised its fiscal 2026 sales outlook June 30 after a traffic-led rebound pushed Q1 adjusted operating income up 29.1%.

"Our performance reflects broad-based momentum as guests respond to our investments in value, convenience and newness," Target Chief Executive Officer Brian Cornell said in a statement.

Adjusted earnings per share jumped 32% year over year in the quarter ended May 3. The company now expects full-year operating margin to improve by more than 20 basis points from fiscal 2025 and guided earnings near the high end of its prior $7.50-to-$8.50 per share range. The raised outlook marks a reversal from earlier caution, when Target had flagged softer discretionary spending heading into the year.

The outlook raise shows Target's consumer engagement is strengthening after a period of cautious spending. Investors will watch the Q2 earnings report for whether traffic momentum can sustain through the back half of the year, particularly as comparisons grow tougher against the prior-year period.

Target's performance stands out against mixed signals across the retail sector. Walmart posted a 5.1% increase in adjusted operating income in its fiscal first quarter, supported by e-commerce growth and higher-margin advertising revenue. Dollar General's 12.4% earnings gain was driven largely by margin expansion rather than sales growth, with gross margin improving 65 basis points. Target's traffic-led rebound, spanning both discretionary and staple categories, positions it as an outlier among big-box retailers.

The company has been investing in store remodels, same-day delivery options and exclusive brand launches to drive foot traffic. These initiatives appear to be gaining traction, with consumers responding across income tiers and geographic regions. Target did not disclose specific same-store sales figures for the quarter. Shares rose in after-hours trading following the announcement.

This article is for informational purposes only and does not constitute investment advice.