TARGET CORP recently released its 10-Q report for the quarter ended May 2, 2026. The company operates a U.S. general merchandise retail business, selling apparel, beauty products, food and beverage, electronics, home goods, household essentials and related categories through its stores and digital channels, including Target.com. It also sells merchandise through design partnerships, shop-in-shop experiences and in-store amenities, and is headquartered in Minneapolis.
For the first quarter of 2026, net sales rose 6.7% to $25.443 billion from $23.846 billion a year earlier. Comparable sales increased 5.6%, with traffic up 4.4% and average transaction amount up 1.1%; new stores also contributed, while non-merchandise sales climbed 24.6%, led by Roundel digital advertising.
Operating income was $1.135 billion, down 22.9% from $1.472 billion in the prior-year quarter. The company said the earlier period included $593 million of pretax net gains on interchange fee settlements; excluding that item, adjusted operating income increased 29.1% from $879 million.
Gross margin rate improved to 29.0% from 28.2%, helped by lower markdown rates, growth in advertising and other revenues, and supply chain and digital fulfillment productivity gains, partly offset by higher product costs. SG&A expenses increased to $5.562 billion from $4.591 billion, and the SG&A rate rose to 21.9% from 19.3%; excluding the prior-year interchange settlement benefit, adjusted SG&A rate was 21.7%, up 0.2 percentage points.
Diluted earnings per share fell to $1.71 from $2.27. Adjusted diluted EPS was also $1.71 in the latest quarter versus $1.30 a year earlier, after removing the prior-year interchange settlement gain.
After-tax ROIC for the trailing 12 months ended May 2, 2026, was 12.4%, down from 15.1% a year earlier. Net interest expense was $117 million, essentially flat with $116 million in the prior-year quarter, while the effective tax rate declined to 24.4% from 25.0%.
Target ended the quarter with 2,002 stores, up from 1,981 a year earlier and 1,995 at the start of the quarter. Retail square footage totaled 251.483 million square feet, compared with 248.664 million a year earlier.
The company said roughly half of its merchandise is sourced from outside the U.S., with China its largest import source. It reported that it had not received tariff refunds as of May 2, 2026, and had not recorded a receivable, though it began receiving refunds after quarter-end. Today the company's shares have moved -1.67% to a price of $126.50. If you want to know more, read the company's complete 10-Q report here.
