Target Lifts Fiscal 2026 Margin Outlook Above 2025 Level

โดย Zacks Investment Research·

Summary · why it matters

Target Corporation now expects its underlying operating profitability for fiscal 2026 to finish above last year's level, guiding to a full-year operating income margin rate, excluding tariff refunds, around 50 basis points above the 2025 adjusted operating margin rate of 4.6%, an upgrade from its earlier guidance of more than 20 basis points above the year-ago level. Including the approximately 90-basis-point benefit from second-quarter tariff refunds, Target foresees a fiscal 2026 operating margin rate in a range around 6%. The company booked $994 million in pretax tariff refunds during the quarter, which lifted its second-quarter operating margin rate to 9.6% from 5.2% a year earlier; tariff refunds added 3.7 percentage points to that quarterly margin, but even without the benefit the operating margin rate was approximately 70 basis points higher year over year. Gross margin also strengthened, with the second-quarter gross margin rate expanding about 100 basis points from the prior-year rate of 29% excluding tariff refunds, helped by a comparison against last year's elevated markdowns and purchase-order cancellation costs and by continued growth in advertising and other non-merchandise revenues. The improvement came despite expense pressure, as Target's SG&A rate rose about 30 basis points to 21.6% on higher compensation costs and planned spending tied to capital projects.

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