that once made it distinctive. On a call with reporters, CEO Michael Fiddelke admitted the company still needed to innovate, particularly in weaker segments. “Two strong quarters is not the goal. Sustained, durable top- and bottom-line growth over time is what we’re after,” he said. Target’s Q2 results, released on August 19, nevertheless provided further evidence that its turnaround is gaining traction. Net sales rose 5.3 per cent year-over-year to $26.5 billion, while comparable sales increased 3.8 per cent, ahead of Wall Street’s 2.4 per cent consensus. Digital comparable sales increased 8.7 per cent, with same-day delivery rising more than 25 per cent during the quarter. All six of Target’s core merchandise categories posted YoY gains, led by double-digit growth in its Fun 101 segment and high-single-digit growth in food and beverage and beauty. Target subsequently raised its full-year outlook, forecasting net sales growth of approximately five per cent, one percentage point above its previous guidance. It also lifted its full-year EPS guidance to between $9.90 and $10.90. Despite the better-than-expected results, Target’s stock fell roughly 4 per cent in premarket trading. Signs of a turnaround Neil Saunders, GlobalData’s managing director, told Inside Retail the latest results provided further evidence that Target may be turning a corner. “Last quarter, Target swung back to comparable sales growth after a long run of decline,” Saunders said. “While this was a positive development, it raised a question as to whether this was a flash in the pan, or part of a more sustained recovery.” For Saunders, Target’s 3.8 per cent comparable uplift shows that the company is starting to get the retail fundamentals right, although it does not yet amount to a proper comeback. Growth also remains uneven. Food and beverage sales rose 7.2 per cent, but increased traffic has yet to translate into significant gains in apparel, where sales grew 0.1 per cent, or home, which was up 0.2 per cent. “That both these discretionary categories were positive is pleasing, but the low growth rates underline how much work still needs to be done on editing and curating the assortments and providing the customer with more inspiration. In apparel, for example, the various own brands each need a more distinctive look and feel and there need to be far more on-trend pieces. In home, the clutter needs to be reduced to make space for a more inspirational assortment that focuses more on design and style. To be fair, these are both things that Target is working on, but neither is a simple or immediate fix.” Still, Saunders said the overall picture was becoming more encouraging. “The numbers provide growing confidence that Target’s difficult years are ending. The recovery will not necessarily be even and smooth, but there’s a path forward now in a way that there wasn’t a couple of years back.” Barney Stacher, CEO of consultancy Retail OCD, also saw signs of a recovery, but cautioned against attributing too much significance to the tariff refund. “Target’s comeback plan appears to be taking effect, but the nearly $1 billion tariff refund should not be mistaken for operating momentum,” he said. “It significantly amplified earnings, but that’s historical.” Instead, Stacher pointed to Target’s underlying sales and traffic figures. “The more meaningful indicators are the 3.8 per cent increase in comparable sales, 3.6 per cent growth in traffic and 8.7 per cent increase in digital sales for this quarter. Those numbers tell me that Target is not simply gaining more revenue from existing customers; it’s beginning to win back visits and relevance.” What comes next Frankie Margotta, strategy director at consulting firm Triptk, said Target’s convenience and pricing help it attract a wide range of opportunistic consumers. But its most loyal customers are not necessarily visiting because it is the cheapest or most convenient option. “That means leaning into the emotional and experiential propositions that make Target stand out will be critical: an elevated and distinct sense of style, the ability to discover local and global brands of quality, and a design-forward experience that still maintains the value part of the equation.” Margotta said Target also needs to address its 2025 rollback of DEI programs and policies to improve its brand image and customer retention. “There’s still unrest, particularly among communities that have contributed to Target’s success and brand equity, and those consumers deserve clearer answers,” said Margotta. Stacher, meanwhile, pointed to the improvements already encouraging shoppers to return. “Price cuts, refreshed merchandise, stronger food and essentials offerings, improved store execution and faster same-day fulfillment are giving consumers more reasons to return. Target also appears to be rediscovering the combination that historically differentiated it: accessible value with enough style, discovery and delight to make a trip feel worthwhile.” For Stacher, the challenge is sustaining that progress once the one-time tariff benefit disappears. He argued that price cuts alone won’t do it. Target must continue improving apparel and home, maintain in-stock consistency and ensure that store staffing and fulfillment execution keep pace with digital growth. Technology could also play a role. “Target’s appointment of its first chief AI officer could help, but AI should not become shorthand for cost reduction. The greatest opportunity is to use it to anticipate trends, improve inventory availability, personalize discovery and help employees serve customers more effectively. Target’s comeback will be durable only if technology makes the shopping experience feel more distinctly Target, not merely more efficient.” Further reading: Target plans $2 billion investment following subdued holiday quarter