After spending much of 2025 trying to convince investors that its problems were fixable, Target Corp (NYSE: TGT) has finally produced the kind of quarter that makes you wonder whether the company has moved beyond promises and into the early stages of an actual recovery.
TGT generated $26.54 billion in second-quarter sales, beating the $26.13 billion consensus estimate, while reported EPS of $4.11 crushed expectations of about $2.33. The earnings number came with a major tariff-refund benefit, which we will get to later, but the sales beat was harder to dismiss.
What kept me reading, though, was the reason sales improved in the first place. Comparable sales rose 3.8%, and 3.6% of that growth came from more people walking into Target and shopping there. After a period in which retailers have fought harder for the same stretched consumer, the company is starting to bring shoppers back through the door.
Which is great, especially when we have already seen how different the consumer story can look across retailers, from Home Depot Inc (NYSE: HD) trying to grow through a housing market that has yet to fully recover to Walmart Inc (NYSE: WMT) benefiting from a very different kind of consumer resilience.
Now Target has its own problem to solve too. For years, it was easier to blame inflation, tariffs, consumer pressure, inventory mistakes, or weak discretionary spending for the company’s struggles.
Except these earnings now show shoppers coming back despite all of that. Which means the next big challenge now is whether TGT has given them enough reasons to stay.
The Shoppers Are Coming Back
That 3.6% jump in traffic becomes far more interesting when you follow it through the rest of TGT’s business, because the recovery was not confined to one product category, one shopping channel, or one type of customer.
All six of Target’s core merchandising categories grew from a year earlier. Fun 101 delivered double-digit growth, while Food & Beverage and Beauty each posted high-single-digit gains. Store comparable sales rose 2.7%, digital comparable sales climbed 8.7%, and same-day delivery grew more than 25%. Even TGT’s non-merchandise businesses, including Roundel advertising, Target Circle 360 and the Target+ marketplace, grew more than 20%.
This means Target is not getting dragged forward by one lucky category or a single promotion that temporarily inflated the numbers. The company appears to be regaining relevance across the way people shop today, whether they walk into one of its stores, order online, or use Target’s increasingly valuable services around the core retail business.
That broader participation also gives more weight to the strategy management has spent the last year executing. Target cut prices on more than 10,000 frequently purchased items, while simultaneously pushing harder into new merchandise, style, convenience and store investment. Those moves are beginning to show up in the shopper’s behaviour.
Even better, Target did not only get shoppers to spend more money each time they visited. Comparable traffic rose 3.6%, while the average transaction amount increased just 0.2%… making this quarter look less like inflation pushing the topline higher and more like a retailer rebuilding the habit of shopping at Target.
And once that habit returns, the economics of the turnaround become much more important.
Target Got $1 Billion Back But The Quarter Still Worked Without It
Target’s $4.11 EPS headline comes with an important asterisk: the company received $994 million in tariff refunds, a windfall that added $1.65 per share to the quarter.
The refund was part of a much broader return of money to corporate America, with Fortune reporting that Amazon (NASDAQ: AMZN) received $600 million, while other Fortune 500 companies, including Nike (NYSE: NKE), FedEx (NYSE: FDX) and General Motors (NYSE: GM), have also recovered substantial tariff payments.
Removing nearly $1 billion from Target’s reported profit tells a more useful story. The underlying business still delivered 3.8% comparable-sales growth, 3.6% traffic growth, and gross-margin expansion of roughly 100 basis points even without the refund.
Management also raised its full-year sales outlook to around 5% growth, while the midpoint of its full-year EPS guidance, excluding the tariff benefit, increased by 75 cents from the previous outlook.
Yeah, the $994 million refund made the EPS number look extraordinary, but Target was already showing signs of recovery before the money came back.
Target’s Stock Is Finally Moving Like the Turnaround Is Real
Target’s recovery is beginning to show up in the stock as well. At $156.45, TGT is trading above its 20-day SMA of $149.27, 50-day SMA of $140.14 and 200-day SMA of $118.44, with the widening gap between those averages reflecting how far the shares have climbed from their earlier lows.
The stock recently pushed above $160 before pulling back after earnings, but the broader uptrend remains intact. $149.27, where the 20-day moving average now sits, is the first level worth watching, while a break below it would bring the $140.14 50-day average back into play.
Adding to my positions on Target Corp isn’t irrational since the recovery is finally showing up where it matters. More shoppers are coming back, digital sales are accelerating, growth is broadening across the business, and the underlying earnings outlook improved even after removing the tariff-refund benefit.
For a stock that spent years getting punished because the business was losing momentum, TGT is becoming harder to ignore now that both the customers and the chart are moving in the right direction.
