Target Corporation ( TGT ) stock fell Wednesday despite the retailer reporting first-quarter results that topped Wall Street estimates and raising its full-year sales outlook, as investors focused on management’s warning of tougher year-over-year comparisons in the quarters ahead.

Quarterly Earnings Beat Expectations

The retailer reported first-quarter adjusted earnings of $1.71 per share, beating analyst estimates of $1.46. Sales rose 6.7% year over year to $25.44 billion, ahead of the Street consensus of $24.64 billion.

Comparable sales increased 5.6% in the quarter, supported by broad-based growth across merchandise categories and sales channels. Comparable traffic rose 4.4% from the prior-year period.

Target ( TGT ) said net sales increased across all six core merchandising categories. Digital comparable sales climbed 8.9%, driven by more than 27% growth in same-day delivery through Target Circle 360.

Non-merchandise revenue increased nearly 25%, aided by higher Roundel advertising revenue, Target Circle 360 membership revenue and growth in the Target+ marketplace.

CEO Commentary And Margin Expansion

“As we look ahead, we’re focused on staying disciplined and flexible in an uncertain operating environment and continuing to invest boldly in our team, capabilities, and an elevated guest experience to unlock our full potential over time,” CEO Michael Fiddelke said.

First-quarter adjusted operating margin improved to 4.5% from 3.7% a year earlier, while gross margin expanded to 29% from 28.2%.

Capital expenditures totaled $1 billion during the quarter, up 31% from last year, primarily due to investments in new stores and remodels. The company ended the quarter with $3.53 billion in cash and equivalents.

Inventory Trends And Brand Partnerships

During the earnings call, management said inventory availability improved year over year, particularly in food, essentials and beauty. Executives also highlighted strong customer response to limited-time partnerships, including Roller Rabbit, Pokémon and BTS launches.

Full-Year Outlook And Investor Concerns

The company said it remains focused on long-term growth and plans to continue investing in its business, workforce and local communities to support expansion beyond 2026.

Management added that it is remaining flexible in the current operating environment as consumers weigh multiple headwinds and tailwinds and consumer sentiment softens.

“While we have momentum, we’re also being cautious about the near-term operating environment,” the company said, adding that it does not want “to swing too hard too quickly, despite the early signs of momentum we’re seeing.”

CFO Jim Lee said, “While consumers have proven to be resilient so far, sentiment has been declining recently.” He also warned that sales comparisons will become more challenging through the remainder of fiscal 2026 after benefiting from easier comparisons in the first quarter.

Target ( TGT ) affirmed fiscal 2026 adjusted earnings guidance of $7.50 to $8.50 per share, compared with analyst estimates of $8.14 per share.

The retailer also raised its fiscal 2026 sales outlook to a range of $108.45 billion to $109.50 billion from its prior forecast of $106.88 billion. The updated outlook is above the analyst consensus estimate of $107.22 billion.

Target Stock Reaction

TGT Price Action: Target ( TGT ) shares were down 4.55% at $121.45 at the time of publication on Wednesday, according to Benzinga Pro data.

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