THE APEX TIMES
Target reports Q1 momentum as comparable sales rise 5.6% on traffic rebound
Comparable sales increased 5.6% in Target’s first quarter as customer traffic grew 4.4%, lifting both store and digital growth across all six core merchandising categories.
Target’s recovery narrative picked up speed in its latest quarter, with the retailer reporting that comparable sales rose 5.6% as shoppers returned more frequently. For the first quarter of fiscal 2026, Target said net sales grew 6.7% to $25.4 billion, while GAAP and Adjusted earnings per share were $1.71. The results came alongside a notable operating split, where adjusted profitability improved even as GAAP operating income declined versus the prior year.
Target tied the comp increase directly to traffic, reporting comparable traffic growth of 4.4% compared with the first quarter of fiscal 2025. Average transaction amount also moved higher, increasing 1.1%, and the company said comparable store sales rose 4.7% while comparable digital sales grew 8.9%. In Target’s reporting, “traffic” refers to the number of shopping transactions relative to last year, while “average transaction amount” reflects how much shoppers spent per visit.
On the digital side, Target said growth was led by same-day delivery, a fulfillment option that delivers orders shortly after purchase. Target reported that same-day delivery powered by Target Circle 360 grew more than 27%, and it attributed the broader digital acceleration to both stores and online channels. Target Circle 360 is the company’s membership program designed to provide benefits such as perks for frequent shoppers, including services that can improve the experience and encourage loyalty.
Target also highlighted strength outside its core product categories. Non-merchandise sales grew nearly 25%, driven by advertising revenue and subscription-like items and marketplaces. The company pointed to Roundel, its digital advertising business, plus Target Circle 360 membership revenue and Target+ (its marketplace offering), as contributors to the sharp non-merchandise expansion.
The quarter’s merchandise story was also broad. Target said net sales were higher in all six of its core merchandising categories: apparel and accessories, beauty, food and beverage, hardlines (including Fun 101), home furnishings and décor, and household essentials. In the company’s net sales table for the quarter, food and beverage was the largest category at $6.263 billion, followed by household essentials at $4.570 billion and apparel and accessories at $3.846 billion.
Executives framed the momentum as early validation of a “new chapter” strategy, with Target emphasizing product transitions and in-store reinvention aimed at driving repeat visits. In its Q1 update, the company said a major food and beverage transition in more than a decade is expected to accelerate newness in the category by 50%. Target also described plans for a Target Beauty Studio launch this fall in more than 600 stores and a multi-year home reinvention that begins with an overhaul of nearly 75% of decorative accessories.
Target updated its full-year outlook while indicating caution on the broader environment. The company said it is planning for net sales growth in a range around 4% and expects full-year GAAP and Adjusted EPS near the high end of its $7.50 to $8.50 guidance range. Capex also remained elevated, with first-quarter capital expenditures of $1.0 billion, up 31% year over year, driven primarily by investments in new stores and store remodels. Still, the release showed that GAAP operating income fell versus the prior year, and the company did not provide additional granular breakdowns of how each category contributed to comparable sales beyond confirming category-wide net sales growth. What to watch next is whether traffic gains persist and whether Target can translate the comp momentum into sustained margin improvement through the remainder of fiscal 2026.
Why It Matters
- A traffic-led rebound suggests Target is improving frequency, not just pushing higher spending per visit.
- Broad category strength can reduce the risk that results depend on one product segment.
- Non-merchandise growth tied to advertising and services highlights Target’s ability to diversify revenue streams alongside merchandise.
- Ongoing investments in remodels and store expansion will be important to track as the company tries to convert volume momentum into stronger profitability.
Sources
Key Facts
- Target reported first-quarter net sales up 6.7% to $25.4 billion.
- Comparable sales rose 5.6%, driven by comparable traffic growth of 4.4% and a 1.1% increase in average transaction amount.
- Comparable store sales increased 4.7% and comparable digital sales increased 8.9%.
- Digital sales growth was led by more than 27% growth in same-day delivery powered by Target Circle 360.
- Non-merchandise sales grew nearly 25%, supported by Roundel advertising revenue, Target Circle 360 membership revenue, and Target+ marketplace.
- Target said net sales increased in all six core merchandising categories, including food and beverage, beauty, apparel and accessories, and household essentials.
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