Target finally caught a break.
The chain posted its first positive same-store sales number in five quarters, with sales rising 5.6%.
Revenue beat Wall Street by the widest margin since November 2021.
CEO Michael Fiddelke called it "early progress," but the stock dropped anyway.
What The Numbers Show
Earnings came in at $1.71 a share against $1.46 expected.
Revenue also beat, hitting $25.44 billion against $24.64 billion, with net sales up more than 6%.
All six core product groups grew. The strongest gains came from health and wellness, toys, and baby.
Digital comp sales jumped 8.9%. The driver was same-day delivery through the Target Circle 360 membership.
Total traffic also climbed, up 4.4% across stores and digital.
Target also hiked full-year sales guidance.
The new outlook calls for about 4% growth versus 2025, two points above the prior call.
The chain now expects earnings near the high end of its $7.50 to $8.50 range.
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The Hidden Engine
The most telling number was not in the headline.
Non-product revenue jumped nearly 25%. That bucket includes the Target Circle 360 membership and the Target+ third-party marketplace.
It is the same playbook Amazon and Walmart have used to turn stores into platforms.
Target is quietly building a higher-margin business. That layer sits above the one Wall Street has worried about for two years.
The stores are getting their groove back while the platform side grows four times faster.
Fiddelke said the team will make more changes to what it sells and how it sells in 2026 "than we've seen in a decade."
CFO Jim Lee said capital spending will jump to about $5 billion this year. That is more than $1 billion above last year.
Why The Stock Still Slid
The beat was real, but investors are not fully buying the turnaround story yet.
Net income still fell year over year to $781 million from $1.04 billion.
Gross margin also came in at 29%, beating the 28.7% call but well below where Target was running before the slump.
Tariffs are still in play, with Lee saying the team is "working through the process" of applying for tariff refunds.
The chain also opened seven new stores in Q1, with more than 100 remodel projects in progress.
How Target Stacks Up Against Peers
Walmart and Amazon have spent years moving into the same lanes Target is now leaning into.
Both chains run big membership and marketplace arms. Both have used those tools to lock in shoppers and lift margins.
Target was late to that race. Q1 hints it is catching up.
The 25% jump in non-product revenue is the strongest sign yet. So is the surge in same-day delivery use.
What To Watch
Q2 brings the biggest food and drink overhaul Target has done in more than a decade.
It also brings a new Target Beauty Studio to 600-plus stores and a refresh of nearly 75% of decor accessories.
One quarter of growth does not make a turnaround. Five would, though.
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