Target lifts 2026 outlook, betting on food supply chain expansion and loyalty-led sales

Target is leaning harder into a turnaround narrative built on growth, service improvements, and targeted customer promotions after a first quarter that beat expectations and prompted an updated full-year guidance range. The retailer’s latest quarterly results arrived alongside a major logistics investment and a loyalty-driven shopping event timed for back-to-school and summer spending.

In its first quarter ended May 2, Target reported net sales of $25.4 billion, up 6.7% from the prior year. Comparable sales rose 5.6%, supported by 4.4% comparable traffic growth, which measures how often shoppers visited stores and digital channels that have been operating for at least a year. Digital comparable sales climbed 8.9%, with Target saying same-day delivery grew by more than 27% and was powered by Target Circle 360, its paid membership tier that bundles perks such as faster fulfillment and exclusive access.

Target’s advertising and marketplace businesses also added momentum. Non-merchandise sales grew nearly 25%, driven by Roundel ad revenue, Target’s in-house advertising platform, and by membership revenue tied to Target Circle 360, along with growth in Target+, its marketplace. On the earnings side, Target reported GAAP and adjusted earnings per share of $1.71, with adjusted EPS at $1.30. The company also highlighted improved gross margin and said the improvement reflected better productivity in supply chain facilities, growth in advertising and other non-merchandise revenue, and lower markdown rates, though higher product costs partially offset those gains.

Alongside the quarterly results, Target raised its expectations for fiscal 2026. The retailer now projects net sales growth in a range around 4% versus a prior range that was about two percentage points lower. Target also said full-year operating income margin should be more than 20 basis points higher than the 4.6% adjusted operating income margin rate it posted in 2025. It further guided GAAP and adjusted EPS to be near the high end of its prior $7.50 to $8.50 range.

The operational backdrop for Target’s confidence includes a new food distribution center designed to improve freshness and inventory availability. In Thornton, Colorado, Target recently launched its newest and largest temperature-controlled food facility. The company said it will employ over 380 team members, support replenishment for 129 stores across 11 states, and help stores receive products up to two days faster than before. Target also said the facility can reduce lead time by one to two days, referring to the time between receiving goods from vendors and getting them to store shelves.

Target described the Thornton center as more than new capacity, calling it the first in its network with consolidation capabilities. In practical terms, consolidation means the center can combine multiple vendor shipments into fuller outbound trucks bound for other Target facilities, aiming to reduce transportation volume and streamline downstream deliveries. Target said the Thornton center is its ninth food distribution center overall and the fourth opened in three years, reflecting how much the company’s growth plans depend on expanding and stabilizing its grocery and food-and-beverage assortment.

To put customer-facing spending behind the strategy, Target also announced details for its Target Circle Deal Days. The four-day sale runs June 23 to June 26, with Target Circle members able to access discounts of up to 45% across thousands of items spanning categories such as apparel, beauty, home, toys, and seasonal essentials. Current Target Circle 360 members get early access starting June 22, and Target said members can receive a free Starbucks coffeehouse treat in-store on June 23 at more than 1,800 Target locations with Starbucks in them.

What Target did not fully quantify is how quickly these initiatives translate into financial outcomes beyond the company’s broad margin and sales guidance. In the same first-quarter update, Target reported first-quarter capital expenditures of $1.0 billion, up 31% year over year, indicating sustained investment. The retailer also noted that trailing-twelve-month after-tax return on invested capital fell to 12.4% from 15.1% a year earlier, which underscores that benefits from new assets may take time to show up in returns. Target’s disclosures also did not break out a specific dollar contribution from the Thornton distribution center to gross margin, operating income, or inventory shrink.

Investors and analysts will likely focus on whether the raised net sales outlook holds as the company scales its food logistics footprint and whether loyalty-linked fulfillment improvements keep attracting customers online and for same-day delivery. Upcoming checkpoints include Target’s results over the rest of the year, especially following the June Deal Days window, as well as any further commentary on how consolidation-enabled supply chain changes affect in-stock reliability and product freshness at stores served by the Thornton hub.