Target stock trailed the broader markets by a wide margin in recent years, before staging a rebound over the last 12 months. Sales were sluggish as customers were shopping elsewhere, driving the stock lower.
Something changed in the fiscal second quarter of 2027 (ended in July).
Traffic rose, sales grew, and profit came in stronger than expected, backed by a series of smaller, quieter changes that are now adding up.
Target’s (TGT) leadership team laid out the details on the company’s second-quarter 2026 earnings call. Here is what’s working, and why it matters for Target stock going forward.
Target stock gets a lift from traffic growth
In fiscal Q2, Target reported revenue of $26.5 billion, up 5.3% year over year. Comparable sales grew 3.8% due to higher foot traffic and customer spending.
Store traffic climbed 3.6% compared to last year, and digital sales grew 8.7%, led by same-day delivery growth of more than 25%.
CEO Michael Fiddelke called traffic one of the clearest signs that shoppers are responding to the changes Target has been making.
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The biggest single change happened in the food vertical.
- Target reworked the layout of nearly half of its center store grocery assortment, its largest food transition in more than a decade.
- The company added more fresh produce, expanded snacks and global foods, and introduced functional coffee.
- Snack sales are now running more than 15% ahead of last year, with strong demand for protein bars and meat sticks.
Target also reimagined its Fun101 department, which covers toys, electronics, and entertainment.
Space that used to go to TVs and bikes now goes to wearable tech, LEGO sets, and trading cards.
LEGO sales climbed more than 30% compared to last year, and plush toy sales rose more than 20%.
Target’s own $10 headphones, part of its Heyday electronics line, saw sales jump more than 35%.
Much of the appeal comes down to price points at $5, $10, $15, and $20, cheap enough that shoppers do not think twice.
A focus on lower prices and inventory
Value has been Target’s constant message all year.
The company has lowered prices on more than 10,000 items over the past 12 months, and 95% of its school supply assortment is priced at or below last year’s levels heading into Back to School season, the company said.
“Over the past year alone, we’ve lowered prices on more than 10,000 items, reinforcing our commitment to ensuring families can find a unique combination of style, quality, and affordability every time they shop with us,” Fiddelke explained.
CFO Jim Lee said gross margin, excluding a one-time tariff refund benefit, was still about one percentage point higher than last year.
Related: Target pledges price cuts as sales grow
Empty shelves have long been a sore spot for Target shoppers.
COO Lisa Roath said the company’s most frequently purchased items now have the strongest availability in recent years, and overall inventory reliability has reached a multiyear high.
Target is also leaning on a new tool called Proxima, a digital system that tests inventory flow between warehouses and stores before changes go live.
The company says it fulfilled nearly 30% more same-day and next-day online orders this quarter compared to last year.
What comes next for Target stock
Home and apparel sales remain flat, and executives called both categories a multi-year project.
A new Target Beauty Studio format is set to launch in more than 600 stores next month, and larger changes to bedding, bath, and kids’ home are planned for the back half of the year.
Still, the company raised its full-year outlook.
Net sales growth is now expected around 5%, up from its prior forecast, and adjusted earnings per share guidance moved up to a range of $9.90 to $10.90, which includes a one-time tariff refund benefit.
Target is chipping away at the basics that matter most to shoppers: better prices, fuller shelves, faster delivery, and aisles worth walking through. Quietly, it appears to be working.
Valued at a market cap of $77 billion, Target stock has surged over 70% in the last 12 months. Over the last decade, TGT stock has more than tripled, after adjusting for dividends.
The ongoing rally has meant Target stock trades at 17.7x forward earnings, higher than the 10-year average of 15.9x.
Out of the 28 analysts covering Target stock, 12 recommend “Buy,” 14 recommend “Hold,” and two recommend “Sell.” The average TGT stock price target is $166, marginally above the current trading price.
