The news: Target topped estimates in Q1 2026, as comparable traffic rose 4.4% and comp sales grew 5.6%, in the first signs that new CEO Michael Fiddelke’s turnaround strategy is gaining traction with consumers.

The numbers:

• Earnings per share were $1.71, down 24.5% YoY, but ahead of the $1.46 expected.
• Net sales grew 6.7% to $25.44 billion, topping the $24.66 billion forecast.
• Merchandise sales rose 6.4%, and nonmerchandise revenues—including its Roundel retail media network, Target Circle 360 membership, and the Target+ marketplace—rose 24.6%.
• Comparable sales rose 5.6%, driven by 4.7% same-store sales growth and 8.9% digital growth.
• Adjusted operating margin improved to 4.5%, up from 3.7% a year earlier.

The stronger results prompted Target to raise full-year guidance. It now expects net sales growth of around 4%, up from its prior outlook, and EPS near the high end of its $7.50 to $8.50 range, compared with the $8.14 analysts expected.

Why is this happening? The retailer has emphasized strong merchandising, which is core to Target’s DNA. Chief merchandising officer Cara Sylvester said the company aims to win by being “bold, distinctive, and affordable,” and recent moves reflect that focus.

• Target in March launched a Baby Boutique concept in nearly 200 stores, allowing parents to test premium brands like UPPAbaby and Bugaboo, along with a Baby Concierge service to offer parents personalized, one-on-one guidance.
• Limited-time collaborations with brands like Roller Rabbit, Parke, and Pokémon are driving online buzz and record sales.
• Target is undertaking its largest grocery reset in over a decade, adding roughly 3,000 items in Q1 alone—particularly in high-growth areas like protein, functional beverages, and better-for-you snacks; sales from those items grew more than 50% versus the prior assortment.
• The retailer is also leaning into value, seeing strong demand for toys priced under $20, including items at $5 and $10.

Beyond merchandising, Target is investing roughly $5 billion to remodel 130 stores and open 30 new locations, with a focus on expanding essentials and groceries while strengthening its one-stop-shop positioning.

Implications for Target and other retailers: Despite the strong quarter and raised guidance, management emphasized that the turnaround is in its early stages. Like its peers, Target faces a challenging near-term environment that will require continued agility.

With consumers feeling stretched as the cost of groceries and other essentials rises, sustaining momentum will depend on Target’s ability to reclaim its value positioning while continuing to execute on merchandising. That balance is critical as shoppers grow more selective about where and how they spend.

If Target can consistently deliver on both value and differentiation, it has an opportunity to win share in a consolidating market. But any missteps—on price, assortment, or execution—could quickly stall progress as consumers remain cautious and quick to switch.

Go further: Read more about Target and other key retailers’ results in our Live Earnings Report: Retail & Ecommerce Tracker Q1 2026.