Target Corp shares rose 5 percent after the retailer posted a second quarter that finally answered the traffic question that has dogged the stock for two years. Net sales grew 5.3 percent from a year earlier while comparable sales advanced 3.8 percent, driven by a 3.6 percent increase in store visits. The two-year compounded annual growth rate ticked up to 2.1 percent, thirty basis points faster than the prior quarter.
The traffic story
The comparable sales number was broad-based across channels, customer cohorts and all six core merchandising categories. Store comparable sales rose 2.7 percent while digital comparable sales jumped 8.7 percent, led by same-day delivery growing more than 25 percent. Fun 101 posted double-digit growth. Food and Beverage and Beauty each delivered high single-digit gains. The company said it has cut prices on more than ten thousand items over the past year as part of a strategy built on style, design and newness.
The profit breakdown
Earnings per share came in at $4.11 versus $2.05 a year earlier, a headline doubling that requires unpacking. The figure includes tariff refund benefits of $1.65 per share. Stripping those out, both GAAP and adjusted earnings per share rose 20 percent year on year. The company did not separate GAAP from adjusted in the release beyond stating they moved in lockstep.
The tariff windfall
The $1.65 per share refund is a one-time item tied to prior-period duties, not an operating lever. Investors who treat the full $4.11 as run-rate power are reading the wrong line. The 20 percent underlying growth is the durable number, and it arrives on a sales base expanding at roughly half that pace, a margin expansion story that depends on mix and cost discipline holding.
What to watch
Guidance was not updated in the release. The next test is whether the traffic momentum survives the back-to-school and holiday cadence without incremental promotion. Target Circle 360 membership revenue and the Target+ marketplace were cited as contributors but not quantified. Until they are, the earnings quality debate stays open.