Key facts
- Target raised its annual sales forecast for the third consecutive quarter.
- The company's quarterly profit was boosted by nearly $1 billion in tariff refunds.
- Comparable sales increased by 3.8%, surpassing analyst expectations.
- Target's grocery business grew 7% in the latest quarter, marking its fastest growth in three years.
- The retailer plans to add approximately 600 private-label food and beverage products over the next two years.
Target has once again raised its annual sales and profit forecasts, signaling progress in CEO Michael Fiddelke's turnaround strategy. The retailer's quarterly profit received a significant boost from nearly $1 billion in tariff refunds. Comparable sales rose 3.8%, exceeding expectations, with traffic up 3.6% and digital sales climbing 8.7%. The company's grocery business achieved its fastest growth in three years, up 7%, with snacks growing 15%. This focus on food aims to drive more frequent store visits, with plans to add about 600 private-label food and beverage products over the next two years, expecting over $2 billion in growth.
While the grocery strategy is gaining traction, Target's success ultimately depends on encouraging shoppers to purchase higher-margin discretionary items like apparel and home goods, which saw more modest growth. Off-price retailer TJX also raised its annual profit forecast, benefiting from resilient demand and tariff refunds.
Analysts note that while merchandising changes can provide a temporary lift, Target's grocery enhancements have materially improved the customer experience, with investors seeing early evidence of Fiddelke's turnaround efforts taking hold.