NEW YORK — Target Corp. reported first-quarter 2026 revenue of $25.3 billion, marking a 1.2 percent increase year-over-year. This performance ended a streak of five consecutive quarters without sales growth, exceeding analyst expectations of $25.0 billion. Comparable sales rose 0.8 percent, driven by a 1.9 percent increase in digital sales. Despite beating top-line estimates, Target shares dropped 4.5 percent in early trading, reflecting investor concerns over future profitability.
The primary driver for the stock's decline was the retailer's cautious second-quarter profit forecast. Target projected adjusted earnings per share between $2.00 and $2.20 for the current period, a range below the consensus analyst estimate of $2.45 per share. This outlook suggests ongoing pressure on merchandise margins and a challenging environment for consumer discretionary spending. The company also indicated higher operating costs would weigh on profitability.
Analysts quickly adjusted their models following the report. JPMorgan lowered its price target on Target to $155 from $170, maintaining an Underweight rating. The firm cited persistent promotional activity across the retail sector and elevated labor expenses as key headwinds. Goldman Sachs also reiterated its Neutral rating, noting that Target's core general merchandise categories continue to face headwinds as consumers prioritize essentials.
Category performance showed mixed signals. Essentials, food and beverage, and beauty segments delivered solid growth. Apparel and home goods, typically higher-margin categories, showed modest sequential improvement but still lagged. Electronics sales remained weak, reflecting a broader slowdown in big-ticket discretionary purchases. Inventory levels decreased six percent year-over-year, indicating effective stock management but also a conservative approach to future ordering.
Target's results contrast with peers like Walmart, which recently posted 3.8 percent comparable sales growth in its latest quarter. This divergence highlights a bifurcated consumer landscape, where value-oriented retailers with strong grocery components are outperforming. Target faces continued competition from both traditional rivals and online pure-plays. The company's ability to drive traffic to its higher-margin categories will define its performance in the coming quarters.
