Target Just Posted Its First Sales Growth in 5 Quarters. So Why Did the Stock Drop Anyway?

Shares of big-box retailer Target (NYSE: TGT) slid astir 4% aft the institution reported its fiscal archetypal 4th of 2026 (the play ended May 2, 2026) earlier this week. At archetypal glance, this absorption whitethorn beryllium surprising. After all, the 4th offered the clearest grounds yet that Target's long-awaited turnaround is taking hold. And absorption was assured capable to rise its full-year income forecast.

Target said its comparable income -- a measurement of income trends astatine stores and integer channels unfastened for astatine slightest 13 months -- roseate 5.6%, the company's archetypal affirmative speechmaking successful 5 quarters.

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So wherefore did the banal autumn anyway?

The turnaround is showing up

To admit however notable a 5.6% comparable-sales summation is for Target, it helps to retrieve wherever the retailer has been. Its comparable income fell successful each of the anterior 4 quarters -- down 3.8%, past 1.9%, past 2.7%, past 2.5%, adjacent arsenic bigger rival Walmart kept growing. So, the plaything backmost into affirmative territory, Target's strongest comparable-sales summation successful astir 4 years, marks a existent alteration successful direction.

Even more, Target's concern momentum was broad-based successful the quarter. Its nett income roseate 6.7% to $25.4 billion, with each six of Target's halfway merchandise categories increasing and store postulation up 4.4%. And integer comparable income jumped 8.9%, led by same-day transportation done the company's paid Target Circle 360 membership. Meanwhile, Target's higher-margin non-merchandise revenue, driven by its advertizing concern and its third-party online marketplace, grew astir 25%.

Much of this lands astatine the feet of Michael Fiddelke, who took implicit arsenic CEO connected Feb. 1 and rapidly framed 2026 arsenic a twelvemonth of assertive change. During Target's fiscal first-quarter net call, Fiddelke said the squad would "make much alteration to what we merchantability and however we merchantability it successful 2026 than we've seen successful a decade." And aboriginal results suggest the strategy whitethorn beryllium resonating with shoppers.

What whitethorn person fixed investors intermission

But here's wherever the representation gets much complicated.

While the apical enactment looked great, Target's reported nett moved successful the incorrect direction. Net income fell to $781 million, oregon $1.71 per share, from $1.04 billion, oregon $2.27 per share, a twelvemonth earlier. That said, the examination is misleading. Last year's fiscal archetypal 4th included a one-time windfall: Target booked a summation of astir $0.97 per stock aft winning a long-running recognition paper interest suit successful which it was the plaintiff. Strip retired that ineligible payout, and the comparable nett a twelvemonth agone was astir $1.30 per stock -- which means this year's $1.71 really represents maturation of astir 32%. So the evident net diminution is much an accounting quirk than a measurement backward for the business.