Target Corporation operates as a general merchandise retailer in the United States. It offers apparel for women, men, young adults, kids, toddlers, and babies, as well as jewelry, accessories, and shoes; and beauty products, such as skin and bath care, cosmetics, hair care, oral care, deodorant, and shaving products. The company also provides food and beverage products comprising dry and perishable grocery, including snacks, candy, beverages, deli, bakery, meat, produce, and food service; electronics which includes video games and consoles, toys, sporting goods, entertainment, and luggage; bed and bath, home décor, school/office supplies, storage, small appliances, kitchenware, greeting cards, party supplies, furniture, lighting, home improvement, and seasonal merchandise; and household essentials, such as household cleaning, paper products, over-the-counter healthcare, vitamins and supplements, baby gear, and pet supplies. In addition, it sells merchandise through periodic design and creative partnerships, and shop-in-shop experience; and in-store amenities. The company sells its products through its stores; and digital channels, including Target.com. Target Corporation was incorporated in 1902 and is headquartered in Minneapolis, Minnesota.
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Target Raises Full-Year Guidance After Strong Q2 Earnings
Target reported second quarter GAAP and adjusted EPS of $4.11, up from $2.05 last year, with tariff refunds contributing $1.65 to EPS; excluding these refunds, both GAAP and adjusted earnings per share were approximately 20% higher than a year ago. Net sales rose 5.3% to $26.5 billion, with comparable sales up 3.8% and traffic up 3.6%. The company raised its full-year net sales growth guidance to around 5% and its EPS range to $9.90 to $10.90, up from $7.50 to $8.50, excluding any potential additional tariff refunds. Target also reported a gross margin rate of 33.7%, including a 3.7 percentage point benefit from IEEPA tariff refunds, and an operating margin rate of 9.6% versus 5.2% last year. The company plans to resume share repurchases in the back half of the year and continues to expect approximately $5 billion in capital expenditures for the full year.
AI assistants reshape retail as agentic commerce emerges
AI assistants are becoming a new gateway to retail, changing how consumers discover, compare, and buy products, according to a report from Retail Insight Network. McKinsey research cited in the report found that 38% of surveyed consumers in France, Germany, and the UK use AI to research products or inform purchase decisions. Major platforms are moving in this direction: Amazon renamed its Rufus assistant to Alexa for Shopping in May 2026, and OpenAI launched shopping research in ChatGPT in November 2025, with retailers like Target, Sephora, and Nordstrom integrating via its Agentic Commerce Protocol. McKinsey estimates agentic commerce could mediate between $3 trillion and $5 trillion of global consumer commerce by 2030. The report advises retailers to audit product data, monitor AI visibility, prepare for AI integration, and protect direct customer relationships as AI becomes another front door to retail.
Target Stock Surges 74% in 2026 as Turnaround Gains Traction
Target shares have climbed 74% in 2026 as new CEO Michael Fiddelke's turnaround plan begins to deliver results. Fiddelke, who took over in February, has focused on merchandising authority, elevating the shopping experience, stepping up technology, and investing in teams and communities, backed by $2 billion in incremental spending on operational improvements and store renovations. Negative store-level sales have turned positive in the first two fiscal quarters under his leadership, and Fiddelke doubled his sales growth target from 2% to 4% following encouraging initial results. The company also extended its dividend increase streak to 55 consecutive years, though the dividend yield has fallen below 3% as the stock has rallied. Target is now taking market share from Walmart and other competitors, and the stock still trades at steep earnings and dividend yield discounts relative to Walmart.
Target Earnings Estimates Rise, Zacks Rank Upgraded to Buy
Analysts have raised their earnings estimates for Target, pushing the stock to a Zacks Rank #2, or Buy. For the current quarter, the consensus estimate is now $1.98 per share, up 5.4% over the last 30 days, with six estimates moving higher and two lower. For the full year, the consensus estimate is $10.22 per share, up 5.81% over the past month, with 12 estimates raised and none lowered. Target shares have gained 21% over the past four weeks.
Walmart Stock Falls 10% Despite Earnings Beat and Raised Guidance
Walmart shares dropped nearly 10% in a week despite beating earnings and raising full-year guidance, as investors focused on a weak third-quarter outlook and higher costs. The retailer reported adjusted EPS of $0.81 versus a $0.7413 estimate, revenue up 5.94% to $187.94 billion, and lifted full-year sales growth guidance to 4% to 5% from 3.5% to 4.5%. However, Walmart guided Q3 adjusted EPS to 62 to 64 cents, below expectations, and flagged more than $2 billion in incremental fuel-related costs, while raising capex to roughly 4% of net sales. Michael Zakkour of 5 New Digital argued the selloff is sentiment-driven and that Walmart, Target, and other discount retailers will have strong holidays as consumers trade down. Target's comparable sales grew 3.8% with traffic up 3.6%, and its stock is up 73.84% year to date, while Home Depot and Lowe's are each down roughly 14% over the past year despite positive comps.
Target says home and apparel fixes will extend into 2027
Target executives acknowledged during the company's second-quarter earnings call that its home and apparel categories remain weak and will require work extending into 2027 and beyond. Chief Merchandising Officer Cara Sylvester said performance in those areas is not where it needs to be, while CEO Michael Fiddelke noted home is a multiyear journey. The retailer reported a 5.6% jump in comparable sales for the quarter, with net sales up in all six core merchandising categories, including double-digit growth in toys and high single-digit growth in food and beverage and beauty. Analysts at TD Cowen and Roth noted that home and apparel are important high-margin categories that once differentiated Target's assortment.
Target's Same-Store Sales Rise 3.8% as Turnaround Gains Traction
Target reported same-store sales growth of 3.8% year-over-year on a 3.6% improvement in foot traffic for the three months ending in early August, driving total top-line growth of 5.3% and marking the second strong quarter in a row. The strategic turnaround plan unveiled in March, which includes more store personnel and smarter merchandise assortment assisted by artificial intelligence, is showing results shortly after CEO Michael Fiddelke took the helm in August of last year. Guidance suggests more of the same is in the cards, and the stock has run up 85% from October's low. Most analysts rate Target a hold with a consensus twelve-month price target of just over $160, while the stock trades right below that level. Target is a Dividend King with 55 consecutive years of annual dividend growth and a forward-looking dividend yield of 2.9%.
Walmart Falls 9% as Comparable Sales Miss Signals Consumer Caution
Walmart shares dropped more than 9% after the retailer reported its slowest comparable-sales growth in six years, with U.S. comparable sales up 2.6% versus the 3.8% Wall Street expected and more than $80 billion of market value erased in a day. The company also raised its full-year sales and profit forecasts, and e-commerce sales rose 24%, while management guided third-quarter earnings below analyst expectations. The article argues the selloff reflects a more selective consumer rather than a broken Walmart business, noting traffic held up but average basket size weakened and Walmart cut prices on roughly 11,000 items during the quarter. It suggests the real risk may lie with discretionary retailers as households postpone larger purchases, and that Walmart's higher-income customer gains could signal whether trade-down turns into simply buying less.
Major US retailers are disclosing how they plan to use billions of dollars in tariff refunds from the federal government. Walmart received approximately $2.9 billion and will lower prices in grocery and general merchandise, while Target got $994 million and used it to boost margins, contributing $1.65 to its $4.11 earnings per share. Amazon received about $600 million and will proactively refund some customers where it can trace passed-on import charges, using the rest to cut prices. Home Depot received $730 million and used $685 million to reduce cost of goods sold, while Lowe's has received $80 million and is still weighing options. The refunds follow the Supreme Court's February ruling striking down tariffs under the 1977 International Emergency Economic Powers Act, with more than $100 billion returned to businesses as of late July.
Corporate earnings this week featured a high-stakes lineup of reports from 12 notable companies across the consumer discretionary, consumer staples, information technology, industrials, and financials sectors. All 12 reporting companies beat consensus earnings estimates, with 11 delivering year-over-year profit expansion. Revenue performance remained strong, as 11 companies topped Wall Street expectations and all 12 achieved year-over-year top-line growth, leaving one firm missing consensus estimates. Among the highlights, Home Depot posted revenue of $47.9 billion and adjusted EPS of $4.92, Lowe's beat on EPS but trimmed its full-year revenue outlook to about $92.0 billion, Walmart shares dropped 9.15% after soft guidance, Target raised its full-year adjusted EPS estimate to $9.90 to $10.90, Analog Devices issued upbeat fiscal Q4 guidance, and TJX raised its full-year EPS guidance to $5.31 to $5.36.
Target reported second-quarter net sales grew 5.3% to $26.5 billion, with comparable sales up 3.8% and comparable traffic up 3.6%. The retailer said it has already lowered prices on more than 10,000 items over the past 12 months and plans additional price reductions this year. CEO Michael Fiddelke said the results build on first-quarter momentum and increase confidence in the strategy. Target also plans to introduce Target Beauty Studio in more than 600 stores later this quarter.
Target Beats Walmart as Better Retail Stock Buy After Q2 Earnings
Target and Walmart both topped second-quarter earnings expectations and raised full-year outlooks, but Target emerged as the more attractive investment after its turnaround gained momentum while Walmart shares tumbled on softer U.S. comparable sales. Target's Q2 sales rose more than 5% year over year to $26.53 billion, beating estimates of $26.12 billion, with comparable sales up nearly 4% and traffic up 3.6%; adjusted EPS excluding a $752 million tariff refund was $2.46, up 20% and above the $2.30 consensus. Walmart's fiscal Q2 revenue increased nearly 6% to $187.93 billion, topping estimates of $186.23 billion, and adjusted EPS of $0.81 rose 19% and beat the $0.73 expectation, but U.S. comparable sales excluding fuel rose just 2.6%, decelerating from 4.1% in Q1 and missing expectations. Target trades at 18 times forward earnings versus Walmart's 36 times, and Target's recently increased $4.64 per share annual dividend yields around 3% compared with Walmart's $0.99 per share and roughly 1% yield. Target stock carries a Zacks Rank #2 (Buy), while Walmart holds a Zacks Rank #3 (Hold).
Walmart Stock Crashes 9% Despite Earnings Beat and Raised Guidance
Walmart shares fell 9% on August 20, 2026, despite beating earnings estimates and raising full-year guidance, marking its worst earnings-day reaction in ten quarters. Adjusted EPS came in at $0.81 versus a $0.7413 consensus on revenue of $187.94 billion, up 6% year over year, and management lifted FY27 adjusted EPS guidance to $2.80 to $2.87 from $2.75 to $2.85. The selloff followed CFO John David Rainey's disclosure that operating income included a net benefit of approximately 750 basis points from tariff refunds, much of which was reinvested into more than 11,000 price rollbacks, leading to soft Q3 guidance of $0.62 to $0.64 adjusted EPS. Walmart also repurchased 25.7 million shares for $3.0 billion at an average price of $117.61, above the $103.84 close, while Target rose a day earlier after booking a $994 million pretax IEEPA refund worth $1.65 per share.
Target Appoints Chandhu Nair as First Chief AI Officer
Target has appointed Chandhu Nair as its first Chief AI Officer as part of a broader push into artificial intelligence and technology investment. The new role is intended to coordinate AI efforts across Target's operations and customer touchpoints. The appointment underscores Target's plan to use advanced technologies to support growth and differentiate its retail offering. Target operates a large network of general merchandise stores across the US, so a dedicated AI leadership role ties directly into how it manages inventory, pricing, and customer experience at scale. With a market cap of about $72.2b, even incremental efficiency gains can meaningfully affect the broader business.
Walmart delivered a double beat and raised its full-year outlook, yet shares fell more than 7% in early trading. Total revenue of $187.9 billion rose 5.9% and topped the Zacks Consensus Estimate of $186.3 billion, while adjusted EPS of $0.81 crushed the $0.73 consensus by nearly 11%. Management lifted fiscal 2027 guidance across the board, but the market focused on a sharp deceleration in U.S. comparable sales to 2.6% excluding fuel, down from 4.6% a year ago and 4.1% last quarter, and on third-quarter guidance implying flat to roughly 3% EPS growth. CFO John David Rainey said the second quarter was flattered by tariff refunds and the third quarter will be depressed, encouraging investors to consider the two quarters together. Target, which reported a day earlier, grew comparable sales 3.8% and traffic 3.6%, outpacing Walmart's 1.5% traffic growth and reversing a multi-year share-gain narrative.
Walmart's Tariff Refund Couldn't Save a Soft Quarter
Walmart reported a soft quarter despite receiving roughly $2.9 billion in tariff refunds, which helped push gross margin to 25.4% and beat revenue and adjusted earnings estimates, but the stock fell more than 8% after comparable sales came in at 2.6% versus the 3.5% expected. CFO John David Rainey called the business strong, but investors backed out the one-time refund and focused on the comp-sales miss. Target received a $994 million version of the same refund and beat estimates even after stripping it out, with adjusted EPS of $2.46 against a $2.33 estimate and comparable sales of 3.8% against 2.4% expected. The refunds stem from the Supreme Court's February ruling against IEEPA tariffs, and since every major retailer got the same windfall, investors graded the underlying results, where Walmart's remainder showed a retailer charging more per grocery run to fewer customers.
Prescription Drug Prices Caused Walmart's Sales Miss
Falling prescription drug prices dragged Walmart's U.S. comparable sales down 80 to 90 basis points, masking what would otherwise have been roughly 3.4% growth. Target's 3.8% comparable sales outpaced Walmart's 2.6% because it sold its pharmacy business to CVS for $1.9 billion in 2015, sidestepping drug-price deflation entirely. Walmart's transaction growth slowed to 1.5% from 3%, signaling lower-income shoppers are making fewer trips even as higher-income consumers trade down to Walmart.
Moderna Shares Surge 177% on Positive Cancer Vaccine Trial Results
Moderna shares surged 177% after its cancer vaccine, developed with Merck, showed positive late-stage trial results. Marvell Technology shares rose 9.9% after announcing a new agreement with Alphabet to develop custom AI chips. Target shares rose 4.3% after reporting second-quarter 2026 earnings of $2.46 per share, beating the Zacks Consensus Estimate of $2.3 per share. Lowe's shares rose 2% after reporting second-quarter 2026 earnings of $4.4 per share, beating the Zacks Consensus Estimate of $4.22 per share.
Walmart reported second-quarter results that beat analyst expectations while issuing softer-than-expected guidance for the current quarter and raising its full-year outlook. The retail giant posted non-GAAP earnings per share of $0.81, exceeding estimates by $0.07, and revenue of $187.94 billion, surpassing forecasts by $1.12 billion. Despite the beat, Walmart's U.S. sales growth disappointed investors, sending shares lower along with Target and Costco. The company's updated full-year guidance reflects improved expectations for the remainder of the fiscal year.
US Target raises full-year sales growth outlook to about 5%
US discount retail giant Target has raised its full-year sales growth outlook for the second time this year, citing the effects of price cuts and a refreshed product lineup. The latest full-year sales growth outlook is about 5% year on year, up from the previous forecast of about 4%. Second-quarter comparable sales for the May-to-July period rose 3.8% from a year earlier, beating market expectations of a 2.5% increase. Earnings per share related to tariffs came to 1.65 dollars, and even excluding that item, second-quarter earnings per share were 2.46 dollars, exceeding the market forecast of 2.33 dollars. The results show that the turnaround strategy being pursued by newly appointed CEO Michael Fiddelke is beginning to deliver results ahead of the year-end shopping season.
Walmart Q2 Preview: Retailer Beats Revenue 25 Straight Quarters, Could Streak Extension Help Close Gap with Target Stock?
Walmart is set to report second-quarter financial results Thursday before market open, with analysts expecting revenue of $186.8 billion and earnings of 74 cents per share. The company has beaten revenue estimates for 25 straight quarters and has beaten earnings per share estimates in eight of the past 10 quarters. Bank of America Securities analyst Christopher Nardone has a Buy rating and $144 price target, citing strong digital sales growth and improving profit margins. Other analysts have mixed ratings, with DA Davidson maintaining a Buy and $150 target, Guggenheim maintaining Buy but lowering its target from $137 to $135, RBC Capital maintaining Outperform with a $137 target, Oppenheimer downgrading from Outperform to Perform, and Bernstein maintaining Outperform but lowering its target from $147 to $142. Rival Target reported a double beat with sales up 5.3% year-over-year and raised full-year guidance, while Placer.ai data shows Target store visits up 4.7% year-over-year in the second quarter versus Walmart's 0.7% gain, suggesting Target may be taking market share. Walmart stock is up 0.26% to $115.50 on Wednesday, with a 52-week range of $95.42 to $135.16, and is up only 3.6% year-to-date in 2026 compared to Target's 59.4% gain.
Treasury Buyback Doubling Sends Bond Yields Sharply Lower
The U.S. Treasury announced plans to double liquidity support buyback operations on longer-end securities, sending bond yields notably lower and lifting market indexes ahead of the open. The current buyback position of $2 billion per operation will now become $4 billion, with the 30-year bond dropping below 5.3%, the 10-year beneath 4.7%, and the 2-year under 4.2%. Moderna shares surged 95% after its intismeran vaccine met primary goals in Phase 3 testing for preventing cancer in melanoma patients, while partner Merck rose 7%. Target reported beats on both top and bottom lines with earnings of $2.46 per share on revenues of $26.54 billion, but shares fell 1% despite raised guidance. Lowe's posted mixed results with earnings of $4.40 per share beating estimates while revenues of $25.96 billion missed, and TJX Companies outperformed with earnings of $1.22 per share but fell 3.3% on a weaker outlook. Estee Lauder shares jumped 12% after fiscal Q4 earnings of $0.39 per share beat the $0.32 anticipated on revenues of $3.63 billion.
Nike, Target, Amer Sports Among Companies Receiving Tariff Refunds
Several major shoe and apparel companies have received refunds for reciprocal tariffs imposed last year under the International Emergency Economic Powers Act that were ruled illegal by the U.S. Supreme Court in February. Target Corp. received $994 million in the second quarter ended Aug. 1, while Nike Inc. received $986 million as of July 31, including a $302 million refund that boosted fourth-quarter net income by 407 percent. Columbia Sportswear Co. received $78 million, Amer Sports Inc. received $50.1 million, and Weyco Group Inc. has received $18.6 million of its $19.3 million in claims. Consumer lawsuits filed against companies such as Costco and Nike seek to distribute refunds to shoppers who paid higher prices, but the U.S. Customs and Border Protection is only processing refunds for registered importers of record, and retailers do not necessarily know which customers bought which items.
Moderna Surges on Cancer Vaccine Data, Treasury Boosts Buybacks
Moderna shares jumped 95% in pre-market trading after its intismeran vaccine met primary goals in Phase 3 testing for preventing cancer in melanoma patients whose tumors had been surgically removed, while partner Merck rose 7%. The U.S. Treasury said it will double liquidity support buyback operations on longer-end securities from $2 billion to $4 billion per operation, sending bond yields lower and market indexes higher. Target reported beats on both top and bottom lines with earnings of $2.46 per share on revenues of $26.54 billion, but shares fell 1% despite raised guidance. Lowe's posted mixed results with earnings of $4.40 per share beating estimates by 4.27% while revenues of $25.96 billion missed consensus by 0.68%. TJX Companies beat estimates with earnings of $1.22 per share on revenues of $15.18 billion but shares dropped 3.3% on a weaker outlook, and Estee Lauder surged 12% after fiscal fourth-quarter earnings of $0.39 per share on revenues of $3.63 billion beat expectations.
Moderna, Merck surge on cancer vaccine trial success
Moderna and Merck shares surged after their personalized cancer vaccine showed positive results in a late-stage trial, with Moderna skyrocketing 120% and Merck jumping 10%. Pilgrim's Pride rallied 15% after JBS, which owns more than 80% of the chicken producer, bid to acquire the remaining stock. Gold miners jumped after the Treasury Department announced sharply higher government debt repurchases, sending yields lower and boosting gold, with the VanEck Gold Miners ETF up 9% and Coeur and Hecla each gaining more than 13%. Marvell Technology rose more than 7% after giving Google permission to buy a $12 billion stake as part of a custom chip development deal. Coinbase surged 11% as bitcoin popped more than 5% to about $68,000, while Lowe's gained over 3% despite cutting its full-year outlook to the bottom end of prior guidance. Target added 5% after beating second-quarter revenue expectations and hiking full-year guidance, helped by a $752 million tariff refund boost. La-Z-Boy tanked 16% after fiscal first-quarter adjusted earnings fell 9% and current-quarter revenue guidance missed FactSet consensus, while Mercury Systems slid more than 6% on mixed results. Estee Lauder rose more than 16% after fiscal fourth-quarter adjusted earnings and revenue beat estimates.
Moderna shares jumped as much as 50% in premarket trading after the drugmaker and Merck said their experimental melanoma drug combination outperformed Keytruda alone in a Phase 3 trial. The INTerpath-001 study tested intismeran autogene, an investigational individualized mRNA-based neoantigen therapy, in combination with Merck's Keytruda in patients with completely resected stage IIB-IV melanoma, meeting its primary endpoint of recurrence-free survival and a key secondary endpoint measuring distant metastasis-free survival. Target stock fell 4.0% despite the retailer raising its annual sales forecast, with investors focusing on the impact of tariffs and the company's underlying profit outlook; comparable sales for the quarter ended Aug. 1 rose 3.8%, beating expectations for 2.5% growth, and tariff refunds provided a nearly $1 billion boost during the quarter. Honeywell Aerospace shares rose 2.8% after Morgan Stanley upgraded the newly independent aerospace company to Overweight from Equalweight and set a $205 price target, while Lowe's shares fell 2.6% after the home improvement retailer reported second-quarter results that beat expectations on earnings but missed badly on revenue. Estée Lauder rose 6.3% in premarket trading ahead of its fiscal fourth-quarter and full-year results, and Rising Dragon Acquisition Corp. surged 223.3% to $18.91 in premarket trading with no clear catalyst identified.
Ulta Beauty Reshapes Distribution with Target Exit and Nutrire Deal
Ulta Beauty is reshaping its distribution and assortment mix as Target confirmed the end of its shop-in-shop arrangement with Ulta, to be replaced by Target's own Beauty Studio concept in roughly 600 locations, while Nutrire announced an exclusive US partnership with Ulta bringing the hair wellness brand first to Ulta.com and then to about 250 stores. The loss of Target's Ulta shop-in-shops removes a convenient traffic source and a historically high margin revenue stream, while the addition of exclusive emerging brands such as Nutrire fits directly into Ulta's push to widen its wellness and emerging brand assortment to draw younger, highly engaged shoppers. Ulta Beauty's narrative projects $14.9 billion revenue and $1.4 billion earnings by 2029, requiring 5.4% yearly revenue growth and about a $0.2 billion earnings increase from $1.2 billion today. Some of the most optimistic analysts, who were assuming revenue could reach about US$15,100,000,000 and earnings US$1,500,000,000 by 2029, see cost optimization and better in store execution as powerful offsets to risks like intensifying competition, yet recent moves such as losing Target shop in shops and adding Nutrire exclusivity could either reinforce or challenge those views.
Target Poised to Beat Q2 Earnings Estimates, Zacks Model Shows
Target Corporation is likely to beat earnings estimates when it reports second-quarter fiscal 2026 results on Aug. 19, according to Zacks Investment Research. The Zacks model gives Target a positive Earnings ESP of +4.59% and a Zacks Rank #2, a combination that historically increases the odds of an earnings beat. The consensus estimate for second-quarter revenues is $26.10 billion, up 3.5% year over year, while the earnings estimate has risen to $2.26 per share, implying a 10.2% jump. Target has a trailing four-quarter average earnings surprise of 8.2%, including a 21.3% beat last quarter. The stock has rallied 18.7% this year, outperforming the industry's 2.2% decline, and trades at a forward P/E of 17.34, below the industry average of 31.18.
Mike O'Rourke of JonesTrading warned on CNBC that the market is flying on one AI engine, with NVIDIA defensible at 45 times earnings but Palantir dangerously stretched at 246 times earnings. Target's transaction count declined 2.9% in Q4 and comparable store sales dropped 3.9%, while Ford is already absorbing roughly $2 billion in commodity headwinds and $1 billion in tariff impacts. Lee Baker noted bond markets signal danger while equities ignore it, with the 10-year Treasury at 4.63% near a 12-month high and the VIX near historic lows. O'Rourke said AI itself is fantastic but the valuations of these stocks are a bubble, and any deceleration in hyperscaler capex could compress multiples fast.
Target Hires First Chief AI Officer to Boost Growth
Target has hired Chandhu Nair as its first-ever Chief AI Officer to develop a cohesive artificial intelligence strategy aimed at boosting growth and improving operational efficiency. Nair will be responsible for tying together Target's AI initiatives to enhance the shopping experience and manage inventory more efficiently. The retailer has already invested in generative AI tools including Target Trend Brain and an AI chat assistant for holiday shoppers. The move comes as Target pursues a multi-year turnaround strategy involving up to $5 billion in modernization investments, with first-quarter net sales up 6.7% year over year.
Target's stock has surged 59% this year on turnaround hopes under new CEO Michael Fiddelke, but the rally faces a key test when the retailer reports second quarter earnings later this week. Analysts expect comparable sales to rise 2.3% and earnings of $2.29 per share, compared with a 1.5% sales decline and $2.05 earnings a year earlier. Deutsche Bank analyst Krisztina Katai said investor expectations are very elevated and the more important debate is whether improving store and merchandising execution supports confidence in growth durability in fiscal 2027 and beyond. Jefferies analyst Corey Tarlowe noted Target has expanded wellness offerings, added 3,000 beauty products across 60 new brands, reset 75% of home decorative accessories, accelerated food and beverage innovation, and introduced a back-to-school assortment that is more than 50% new. Katai added that with shares up 59% year to date, much of the turnaround progress is reflected in the stock, and the durability of recent traffic and sales gains is the most important takeaway from the quarter.
Goldman Sachs warns of consumer spending slowdown as tax refund boost fades
Goldman Sachs economists warn that US consumer spending growth is set to slow sharply in the second half of the year as the temporary boost from higher-than-planned tax refunds fades. Economist Jan Hatzius wrote in a note that second quarter sales at consumer companies rose 5.9% year over year among the median S&P 500 consumer discretionary company and 3.9% for the median consumer staples company, powered by the tax refund surge. Hatzius expects real consumer spending growth to slow to 1-1.5% in the second half as real cash flow stagnates, despite consumer spending accelerating to a 3.2% annualized pace in the second quarter from 0.5% in the first quarter. The thesis will be tested this week with earnings and outlooks from Home Depot, Lowe's, Walmart, and Target, with Walmart most in focus given its third quarter outlook.
Meta social media addiction trial and retail earnings ahead
Opening arguments in the Meta social media addiction trial are scheduled for Tuesday, with a bipartisan group of state attorneys general alleging the company designed features like infinite scrolling and push notifications to keep young users engaged while misleading users about app safety. Meta calls the allegations unsubstantiated and says potential damages could reach as much as 1.4 trillion, with the trial expected to last about seven weeks and CEO Mark Zuckerberg potentially testifying. Later in the week, Walmart and Target report second quarter results, with Walmart's value focus seen as resilient and Target getting a boost from food and health while analysts look for more momentum in discretionary categories. Home Depot and Lowe's earnings will offer a fresh look at the home improvement consumer, with analysts expecting improvement in same store sales driven by professional contractors but caution on big ticket projects possibly weighing on results.
Walmart Set to Report Q2 Earnings Amid Valuation Concerns
Walmart is scheduled to report its fiscal second-quarter results on Thursday, August 20th, with analysts expecting earnings of $0.73 per share on revenues of $186.3 billion, representing year-over-year increases of 7.4% and 5.03%, respectively. The company's shares have struggled recently, trading 11.6% below their May 20th level despite beating consensus estimates in the prior quarter, as management reiterated guidance amid elevated fuel costs and a difficult operating environment. Walmart currently trades at 37.6 times forward 12-month earnings estimates, only modestly below its 10-year high of 45.4 times set in February 2026, and its premium valuation relative to Target has expanded significantly. Same-store sales for U.S. locations excluding fuel are expected to rise 3.57%, compared with a 4.1% gain in the preceding quarter and a 4.6% gain a year earlier. The broader retail sector has seen 18 of 31 S&P 500 retailers report second-quarter results so far, with total earnings up 12% on 15.4% higher revenues, while the overall S&P 500 has posted 41.5% earnings growth on 14.7% revenue gains from 456 companies that have reported.
Target has named Chandhu Nair its first-ever chief AI officer and senior vice president, joining from Lowe's where he was senior vice president of stores, data, AI and innovation. Nair will coordinate AI adoption across merchandising, operations, and inventory management, while Target also promoted Purvi Shah to senior vice president of user experience to integrate AI technology with customer design. In other moves, Kontoor Brands promoted Joseph Alkire to president and chief financial officer with global responsibility for Helly Hansen and Wrangler brands, and Canada Goose appointed Massimo Piombini to its board of directors. Sanrio promoted Jill Koch as chief brand officer for the U.S. and the Americas, Funko named Kristin Hamilton as chief commercial officer effective Aug. 24, and Epicor announced Vaibhav Vohra will become chief executive officer effective Oct. 1, succeeding Steve Murphy.
Children's shoe prices rise 3.2% in first half, fastest pace in 34 years
Children's shoe prices rose by 3.2% in the first half of the year, putting full-year prices on pace to increase at the fastest pace in 34 years aside from the pandemic years of 2021 and 2022, according to the Footwear Distributors and Retailers Association. The increase is straining family budgets as kids head back to school, with parents and kids spending more time looking for deals or buying fewer pairs, according to analysts and retailers. From January through June, children's footwear sales slipped by 3%, with pairs sold dropping by 9% and average sale price rising by 7%, according to Circana. Retailers including Target and JCPenney are offering back-to-school deals, and secondhand retailers like Goodwill and ThredUp report more interest from customers wanting to buy gently worn back-to-school shoes.
Target's Stock Rallies 24% as Comps and Margins Improve, Prompting Analyst to Reverse Bearish Stance
Target's stock has risen 24% over the past five months, defying an earlier prediction that it would stay flat, as comparable sales growth turned positive and margins are expected to improve. The retailer reported a 5.6% increase in comps for the first quarter of fiscal 2026, driven by a 4.4% rise in store traffic and strong performance in food, health, wellness, and beauty categories. Target raised its full-year revenue growth guidance to 4% and expects its adjusted operating margin to improve by more than 20 basis points after dipping to 4.6% in fiscal 2025. The stock trades at 18 times forward earnings with a 3.1% dividend yield, and the company has raised its payout for 55 consecutive years. The author now views Target as a buying opportunity under new CEO Michael Fiddelke.
Zacks Highlights TJX, Ross Stores, Target and Dollar Tree as Top Discount Retail Picks
Zacks Equity Research identifies The TJX Companies, Ross Stores, Target and Dollar Tree as standout stocks in the Retail-Discount Stores industry, which holds a Zacks Industry Rank of 33, placing it in the top 13% of over 250 industries. The industry has risen 17.6% over the past year, outperforming the broader Retail-Wholesale sector's 2.6% gain but trailing the S&P 500's 19.9% advance. TJX Companies is expected to grow sales by 5.9% and EPS by 9.3% in the current fiscal year, while Ross Stores is projected to increase sales by 10.2% and EPS by 17.1%. Target's consensus estimates call for sales growth of 3.7% and EPS growth of 9.9%, and Dollar Tree is forecast to lift sales by 6.5% and EPS by 21.7%.
Discount retailers lift consumer staples in July as alcohol, tobacco lag
The Consumer Staples Select Sector SPDR Fund rose 2.6% in July, as gains in discount retailers offset declines in alcoholic beverage and tobacco stocks. Target and Dollar General each rose about 10%, while Coca-Cola gained 7%, Molson Coors added 6.7%, and Philip Morris advanced 5.7%. Constellation Brands fell 6.3% to become the sector's worst performer, followed by Altria down 5.6%, Keurig Dr Pepper down 4%, and Procter & Gamble and Walmart each down 2%. Analyst Justin Purohit said Target's rally was driven by company-specific execution, while Dollar General's strength reflected consumers trading down amid inflation pressures, and he flagged discount retailers including Dollar Tree, TJX Companies, Ross Stores, and Burlington Stores as best positioned if inflation remains sticky.
Supreme Court Ruling Against Trump Tariffs Could Trigger $175 Billion in Refunds for Import-Heavy Retailers
A Supreme Court ruling that President Trump's broad tariffs under the International Emergency Economic Powers Act exceeded congressional authority could lead to as much as $175 billion in tariff refunds for U.S. businesses, according to economists at the Penn Wharton Budget Model. Import-heavy retailers like Walmart, Costco, and Target, which import billions of dollars in merchandise annually, could see stronger cash flow, improved profit margins, or funds for share repurchases and debt reduction. The refunds would apply only to tariffs collected under the unlawful program and to companies that actually paid those duties, with businesses that absorbed higher costs themselves likely benefiting more than those that shifted production or passed costs to consumers. The ruling does not affect tariffs imposed under other trade authorities such as Section 301 and Section 232, and additional legal proceedings and appeals could delay any payouts, making this a potential medium-term catalyst rather than an immediate earnings boost.