Target reported stronger second-quarter sales and earnings, but a large tariff-refund benefit accounted for a material share of the quarter’s profit increase. The retailer said net sales rose 5.3% to $26.539 billion in the quarter ended Aug. 1, 2026, while comparable sales increased 3.8%.
The company reported GAAP and Adjusted diluted earnings per share of $4.11, compared with $2.05 in the prior-year quarter. Target said its results included $994 million in pretax tariff-refund benefits, which contributed $752 million to net earnings and $1.65 to both GAAP and Adjusted EPS.
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Sales growth was broad-based, Target says
Target attributed its sales increase to broad growth across channels, demographics and merchandise categories. Comparable traffic rose 3.6%, while comparable store sales rose 2.7% and comparable digital sales rose 8.7%. The company said same-day delivery grew more than 25% and that all six of its core merchandise categories recorded year-over-year net-sales growth.
Net sales included a 5.0% increase in merchandise sales and a 20.1% increase in non-merchandise sales, according to the release. Target cited growth in Roundel advertising revenue, Target Circle 360 membership revenue and the Target+ marketplace as contributors to the latter category.
Tariff refunds made a measurable difference
The tariff-refund benefit is essential context for the earnings headline. Target said the $994 million pretax benefit was recorded in gross margin and operating income as a reduction of cost of sales. It said the refunds added 3.7 percentage points to the quarterly gross-margin rate and operating-margin rate.
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Excluding the tariff refunds, Target said GAAP and Adjusted EPS increased 20% year over year. That comparison is based on the company’s presentation of the quarter and should not be read as a separate audited metric. The reported EPS figure includes the refund benefit; readers evaluating underlying operating performance should keep the two measures distinct.
What the retailer expects for 2026
After the first half, Target raised its expected full-year net-sales growth rate to around 5%, one percentage point above its prior guidance range. It also updated its GAAP and Adjusted EPS outlook to $9.90 to $10.90, a range that includes the second-quarter tariff-refund benefit of approximately $1.65 per share.
Target’s guidance excludes potential future tariff refunds. Like all corporate outlooks, it is forward-looking and subject to changes in consumer demand, costs, trade policy and other factors. The company said it has lowered prices on more than 10,000 frequently purchased items over the past year while continuing to invest in stores, digital convenience and its broader retail experience.
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Benzinga’s earnings-call coverage is included for market context. Reported financial figures in this article are from Target’s earnings release.
