Target delivered a sharper, more concentrated recovery in its second quarter: net sales rose 5.3% year over year to $26.5 billion, comparable-store sales increased 3.8% and traffic improved 3.6%, while net earnings more than doubled to nearly $1.9 billion. For marketers, suppliers and retail strategists, the key takeaway is not just that Target is growing again, but which categories are doing the heavy lifting—and which still need fixing.
Where the growth landed
Merchandise sales were up 5% and non-merchandise rose about 20% in the quarter. Target said every core merchandising category posted gains, with the biggest contributions coming from hardlines, beauty and food & beverage. Those category trends helped the retailer raise its full-year net sales guidance to roughly 5%, up from an earlier outlook near 4%.
Beauty’s performance matters beyond the immediate topline: the category will play a central role in Target’s strategy now that its shop-in-shop partnership with Ulta Beauty has ended—here, “shop-in-shop” refers to a store-within-a-store retail arrangement. CEO Michael Fiddelke said Target will introduce its own Beauty Studio concept in Q3, a development that will affect assortment, in-store merchandising and promotional timing for beauty brands.
Apparel and home still need work
Not all categories improved equally. Apparel and home lagged the quarter’s leaders. Fiddelke described home as “a multiyear journey,” noting Target replaced roughly 75% of its decorative accessories assortment; those assortment changes have driven stronger comps but executives acknowledged more corrective work is required in both apparel and home.
Chief Merchandising Officer Cara Sylvester said leadership is not satisfied with the pace of recovery in those areas, even as the company gains clarity on what must change heading into 2027. Analysts have emphasized the same point: apparel and home together account for roughly 30% of Target’s mix, and restoring merchandising authority there is critical to reversing negative traffic trends and supporting sustainable comps.
Investment and format bets
Target increased capital spending by 27% in the quarter, to $1.4 billion, driven largely by store remodels and new openings; the company opened 17 stores during the period. That investment cadence matters for how quickly refreshed store formats and new concepts—like Beauty Studio—can influence shopper behavior and local marketing opportunities.
Higher non-merchandise sales alongside accelerated remodel activity suggests Target is balancing assortment resets with service and experience upgrades to lift foot traffic. How efficiently those investments translate into more consistent performance across apparel and home will shape vendor plans, private-label placement and promotional calendars into the holiday selling period.
What marketers and suppliers should watch
Three practical items to monitor:
- Beauty Studio rollout: Prepare for updated merchandising standards and a store-within-store layout that will affect planograms, sampling, brand placement and timing for promotions.
- Apparel and home resets: Expect continued assortment churn and potential shifts in vendor terms or product specs as Target leans into merchandising authority to accelerate improvements.
- Remodel cadence: The $1.4 billion capex program and ongoing remodels create windows for local marketing buys, updated in-store media and ecommerce-to-store fulfilment adjustments agencies can monetize.
Target’s Q2 shows recovery momentum that’s concentrated rather than broad-based. The next milestones to watch: the public debut and early merchandising rules for Beauty Studio, tangible lift from the apparel and home assortment resets, and the pace at which remodeled stores begin to drive repeat traffic. Those developments will determine whether this quarter’s gains extend into a durable turnaround or remain category-specific spikes.
