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Target Raises Full-Year Outlook as Tariff Refunds Boost Second-Quarter Earnings

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Target Raises Full-Year Outlook as Tariff Refunds Boost Second-Quarter Earnings

Target (TGT) lifted its full-year outlook on Wednesday as tariff refunds helped double the retailer's fiscal second-quarter earnings year over year.

Adjusted earnings are now anticipated to range from $9.90 to $10.90 per share for fiscal 2026, including tariff refunds that buoyed the second quarter by $1.65, the company said. It previously projected the metric in a range of $7.50 to $8.50.

Earlier this year, the US Supreme Court ruled that the Trump administration lacked authority under the International Emergency Economic Powers Act to impose certain tariffs, paving the way for refunds to companies that had paid the duties.

Sales are pegged to grow by about 5% for the ongoing fiscal year, one percentage point higher than Target's previous guidance. The Street is looking for sales of $109.02 billion, reflecting an annual increase of 4%.

For the three months through Aug. 1, Target's adjusted EPS jumped 100% to $4.11, exceeding the average analyst estimate of $2.35. The topline improved 5.3% to $26.54 billion in the second quarter, ahead of the Street's view for $26.13 billion.

Shares of the company rose 5.2% in Wednesday trade, taking their year-to-date gain to 64%.

"We saw broad-based growth across multiple dimensions of our business and importantly, the strength on the top-line translated into strong underlying profit performance as well," Chief Financial Officer Jim Lee said during an earnings call with analysts, according to a FactSet transcript.

Comparable sales rose 3.8%, more than the market's forecast for a gain of 2.4%, as traffic rebounded.

Truist Securities said the improvement in comparable sales and transactions underscore Target's investments in price and merchandise, among other areas.

The retailer cut prices on more than 10,000 "frequently purchased items" over the past year, Target Chief Executive Michael Fiddelke said in a statement.

Last week, Deutsche Bank and RBC Capital Markets said they expected Target to top consensus estimates for second-quarter comparable sales amid demand strength.

On Wednesday, off-price retailer TJX (TJX) raised its fiscal 2027 earnings outlook, while home-improvement retailer Lowe's (LOW) lowered its full-year guidance to the bottom end of its previously issued forecast.

Retail giant Walmart (WMT) is scheduled to release its latest results on Thursday, while department store operator Kohl's (KSS) financials are due next week. Warehouse chain Costco Wholesale (COST) is slated to publish its report next month.

Price: $160.59, Change: $+8.11, Percent Change: +5.32%

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