Target Corporation

MINNEAPOLIS , Aug. com/news-features/article/2026/08/q2-2026-earnings Target Corporation (NYSE: TGT ) today announced its second quarter 2026 financial results. 05. Second quarter 2026 results include $994 million of pretax tariff refund benefits within gross margin and operating income. 65 to both GAAP and Adjusted EPS. The attached tables provide reconciliations of non-GAAP to GAAP measures. All earnings per share figures are calculated on a diluted basis. "Second quarter results build on the encouraging momentum we saw in the first quarter, giving us increasing confidence that our strategy is resonating with our guests and strengthening our leadership position in style, design, and value," said Michael Fiddelke, Chief Executive Officer of Target.

"Over the past year, we've reduced prices on more than 10,000 frequently purchased items as part of our commitment to delivering outstanding value every day, while continuing to invest in newness, convenience, and an elevated shopping experience. While there's still meaningful work ahead, we're encouraged by the progress we're making and remain focused on executing with discipline, staying agile in a dynamic operating environment, and investing in our team and capabilities to drive sustainable, profitable growth over the long term." 1 percent increase in non-merchandise sales.

7 percent. 3 billion. 2 percent. 7 percentage points of benefit from tariff refunds. 0 percent, reflecting the comparison over last year's elevated markdowns and purchase order cancellation costs, as well as continued growth in advertising and non-merchandise sales. 3 percent. This increase reflects the impact of higher compensation costs, including additional hours for field teams and higher incentive compensation, as well as planned spending related to capital projects, partially offset by the leverage benefit of strong topline growth. Interest Expense and Taxes The Company's second quarter 2026 net interest expense was $98 million, compared with $116 million last year, reflecting higher interest income in the current year.

2 percent reflecting higher pretax earnings partially offset by additional tax credit benefits in the current year. 4 billion were 27 percent higher than last year, driven primarily by increased investments in store remodels and new stores. 8 percent increase in the dividend per share. The Company did not repurchase any stock in the second quarter. 3 billion of remaining capacity under the repurchase program approved by Target's Board of Directors in August 2021. 3 percent for the trailing twelve months through second quarter 2025. The tables in this release provide additional information about the Company's ROIC calculation.

m. CT today. com/Investors (click on "Q2 2026 Target Corporation Earnings Conference Call" under "Events & Presentations"). A replay of the webcast will be provided when available. The replay number is 1-800-365-2419. Miscellaneous Statements in this release regarding the Company's future financial performance, including its fiscal 2026 full-year guidance and strategic plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company's results to differ materially.

The most important risks and uncertainties are described in Item 1A of the Company's Form 10-K for the fiscal year ended January 31, 2026. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement. S. stores and online. Powered by more than 400,000 team members, Target serves millions of families each week and invests in the communities where they live and work to support growth and opportunity for all. 1 Adjusted EPS, Adjusted selling, general and administrative (SG&A) expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, non-GAAP financial measures, exclude the impact of certain discretely managed items, when applicable.

See the tables of this release for additional information. 2 During the three and six months ended August 1, 2026, we recognized $994 million related to International Emergency Economic Powers Act (IEEPA) tariff refunds ("tariff refunds") received during the second quarter of 2026 as a reduction of Cost of Sales. Note (a) to the Operating Metrics table provides additional information about the impact of tariff refunds. 3 The Company's guidance excludes any potential future tariff refunds. 0833 par value; 454,291,461, 452,840,187, and 454,396,092 shares issued and outstanding as of August 1, 2026, January 31, 2026, and August 2, 2025, respectively.

01 par value; no shares were issued or outstanding during any period presented. TARGET CORPORATION Consolidated Statements of Cash Flows Six Months Ended (millions) (unaudited) August 1, 2026 August 2, 2025 Operating activities Net earnings $ 2,658 $ 1,971 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 1,597 1,558 Share-based compensation expense 154 133 Deferred income taxes 238 112 Noncash (gains) / losses and other, net (4) 1 Changes in operating accounts: Inventory (945) (141) Other assets 22 151 Accounts payable 612 (1,125) Accrued and other liabilities 187 (302) Cash provided by operating activities 4,519 2,358 Investing activities Expenditures for property and equipment (2,404) (1,864) Other 7 11 Cash used in investing activities (2,397) (1,853) Financing activities Additions to long-term debt — 1,984 Reductions of long-term debt (1,070) (1,571) Dividends paid (1,034) (1,019) Repurchase of stock (3) (258) Shares withheld for taxes on share-based compensation (92) (62) Cash used in financing activities (2,199) (926) Net decrease in cash and cash equivalents (77) (421) Cash and cash equivalents at beginning of period 5,488 4,762 Cash and cash equivalents at end of period $ 5,411 $ 4,341 TARGET CORPORATION Operating Results Net Sales Three Months Ended Six Months Ended (millions) (unaudited) August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 Apparel & accessories $ 4,090 $ 4,086 $ 7,937 $ 7,797 Beauty 3,639 3,396 7,037 6,498 Food & beverage 5,991 5,588 12,255 11,490 Hardlines (Fun 101) 3,894 3,522 7,415 6,597 Home furnishings & décor 3,668 3,662 6,906 6,880 Household essentials 4,617 4,422 9,187 8,779 Other merchandise sales 48 43 104 83 Merchandise sales 25,947 24,719 50,841 48,124 Advertising revenue (a) 279 217 525 379 Credit card profit sharing 139 134 269 275 Other 174 141 347 279 Net sales $ 26,539 $ 25,211 $ 51,982 $ 49,057 (a) Primarily represents revenue related to advertising services provided via the Company's Roundel digital advertising business offering.

Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement. 5 Note: Gross margin is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales. (a) For the three and six months ended August 1, 2026, gross margin, Operating income, and Adjusted operating income include a $994 million benefit from tariff refunds received during the second quarter of 2026, which are classified as a reduction of Cost of Sales.

9 percentage points of benefit to Gross margin rate, Operating income margin rate, and Adjusted operating income margin rate for the three and six month periods, respectively. (b) Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate, which are non-GAAP measures, exclude the impact of certain items. Management believes that these measures are useful in providing period-to-period comparisons of the results of our operations. The Reconciliation of Non-GAAP Financial Measures tables provide additional information.

Sales Metrics Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed. Digitally originated sales include all Merchandise Sales initiated through mobile applications and the Company's websites. 3 Total 100 % 100 % 100 % 100 % Note: Merchandise Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Same Day Delivery. Number of Stores and Retail Square Feet Number of Stores Retail Square Feet (a) (unaudited) August 1, 2026 January 31, 2026 August 2, 2025 August 1, 2026 January 31, 2026 August 2, 2025 170,000 or more sq.

ft. 274 273 273 49,045 48,824 48,824 50,000 to 169,999 sq. ft. 1,598 1,576 1,562 200,321 197,274 195,436 49,999 or less sq. ft. 147 146 147 4,460 4,420 4,445 Total 2,019 1,995 1,982 253,826 250,518 248,705 (a) In thousands; reflects total square feet less office, supply chain facility, and vacant space. TARGET CORPORATION Reconciliation of Non-GAAP Financial Measures To provide additional transparency, the Company has disclosed non-GAAP adjusted diluted earnings per share (Adjusted EPS), adjusted SG&A expenses, adjusted SG&A expense rate, adjusted operating income, and adjusted operating income margin rate.

When applicable, these measures exclude certain discretely managed items. Management believes this information is useful in providing period-to-period comparisons of the results of Target's operations. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). The most comparable GAAP measures are diluted earnings per share, SG&A expenses, SG&A expense rate, operating income, and operating income margin rate. Adjusted EPS, Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate should not be considered in isolation or as a substitution for analysis of Target's results as reported in accordance with GAAP.

Other companies may calculate these measures differently, or not provide similar measures, limiting the usefulness of the measures for comparisons with other companies. 5 % Note: Amounts may not foot due to rounding. (a) Includes gains, net of legal fees, related to settlements during the first quarter of 2025 of credit card interchange fee litigation matters in which the Company was a plaintiff. The adjustment removes the favorable impact of the settlement gains from prior-year EPS, SG&A expenses and Operating income. (b) Note (a) to the Operating Metrics tables provides information about the impact of tariff refunds on Operating income and Operating income margin rate.

We have also disclosed after-tax ROIC, which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies. 3 % (a) Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases was owned or accounted for under finance leases.

Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors. 9 percent for the trailing twelve months ended August 1, 2026, and August 2, 2025, respectively. 3 billion, respectively, related to EBIT, and $39 million and $38 million, respectively, related to operating lease interest. (c) Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.

(d) Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period. 6 percentage points. 4 percentage points. 2026 GAAP EPS, SG&A expenses, SG&A expense rate, operating income, and operating (income) margin rate may include the impact of certain discrete items, which may be excluded in calculating Adjusted EPS, Adjusted SG&A expenses, Adjusted SG&A expense rate, Adjusted operating income, and Adjusted operating income margin rate. The guidance does not currently reflect any such discrete items, which are subject to variability and therefore cannot be reconciled without unreasonable efforts.

In the past, these items have included both gains and losses, including certain asset impairments, severance, and other items that are discretely managed. 65, but excludes any potential future refunds.