Target CEO on Q1 earnings blowout: We saw broad-based consumer strength

Somehow, Target (TGT) defied US consumer trends in the first quarter.

Gas price spikes across the country have hammered shoppers’ wallets and driven inflation higher. Consumer sentiment has plunged, while interest rate cut expectations have dropped.

One would have thought Target — with its well-documented operating struggles in 2025 — would have reported a horrid first quarter.

Instead, it reported a $0.28 earnings beat on Wednesday. Sales increased in all merchandise departments, led by beauty, hardlines, and food. Store traffic increased.

The company even jacked up its full-year sales outlook and said it expects sales to increase in each quarter of the year.

“No doubt there's a lot to pay attention to there [with consumers], because the consumer's got headwinds and some tailwinds, and so we're paying a ton of attention to how consumers are finding value on our site and on our shelves, and some of the changes that we've made are with that in mind. Now, for us, it will always be about being sharp on price,” Target CEO Michael Fiddelke told Yahoo Finance.

Read more: Best credit cards for shopping at Target (May 2026)

Fiddelke added that the retailer saw “broad-based” strength in its consumers, across geographies, merchandise categories, and gas demographics.

The quarter is likely to come as a major surprise to the Street, which has stayed cautious on Target in recent quarters, including into this earnings report.

“Target performs best in bullish consumer backdrops given the trip starts on the general merchandise side of the store, and we are concerned that muted two-year performance, a decelerating consumer backdrop post-stimulus, and near-term harder comparisons in 2Q on [Nintendo] Switch 2/Fun 101 merchandising initiatives could cause comps to turn negative,” JPMorgan analyst Christopher Horvers said in a note ahead of the results.

First quarter earnings analysis

• Net sales: +6.7% year over year to $25.4 billion, vs. estimates for $24.1 billion

• Gross profit margin: 29% vs. 28.2% a year ago, vs. estimates for 26.98%

• Diluted earnings per share: +32% year over year to $1.71, vs. estimates for $1.43

• Comparable sales: +5.6% year over year, vs. +1.85% estimate (Last year comparable sales -3.8%.)

  • Digital comparable sales: +8.9%

What else caught our attention

• Inventory fell 5.3% from the year-ago period.

• The company didn’t repurchase any of its stock in the first quarter.

• The number of transactions rose 4.4% in the quarter, and the average transaction amount gained 1.1%.

• Full-year sales increase of around 4%, up from 2% previously.

• Full-year earnings per share are now projected to be at the “high end” of a prior range of $7.50 to $8.50 (fiscal year 2025: $7.57), compared with estimates of $8.08.