Target (NYSE:TGT) executives used the company’s 2026 financial community meeting in Minneapolis to outline what CEO Michael described as a “new chapter” focused on restoring sustainable growth through sharper differentiation, significant investment, and an intensified emphasis on execution.
Management said sales trends have improved in recent months, with Chief Financial Officer Jim highlighting that after a soft start in November, sales “accelerated meaningfully in December and January,” and then “accelerated further in February,” producing “very healthy top-line growth” in the first month of the new fiscal year.
Strategic focus: “delight,” differentiation, and busy families
Management said it is becoming more targeted in the guests it aims to serve most effectively, referring to a core group as “busy families.” Michael described these shoppers as digitally fluent, seeking simplicity and ease, and valuing style and design without sacrificing practicality. The company believes serving this group well has an “outsized” impact on sales and loyalty.
Target’s growth strategy is organized around four priorities executives said are being advanced in parallel:
- Leading with merchandising authority
- Elevating the guest experience
- Accelerating technology
- Strengthening team and communities
Merchandising changes: home reset, faster style, Fun 101 expansion
Chief Merchant Cara said Target’s performance “over the last few years has not met expectations,” attributing the shortfall to lost “clarity and discipline.” Her plan centers on sharper assortment decisions, greater speed, and stronger execution to rebuild what she called Target’s distinct point of view.
In home, Cara said the category is foundational to the Target brand but acknowledged it is also “a space where we’ve lost our way.” She called the home turnaround a “multi-year journey” with a clear ambition: “the most stylish, design-forward home products at accessible prices.” She said Target expects that by June it will have overhauled 75% of its decorative accessories assortment, and by fall it will have touched more than three-quarters of top-of-bed and more than 80% of kids home. She also pointed to accelerating assortment via third-party marketplace Target Plus in big-ticket categories like furniture, mattresses, and rugs to provide breadth while “limiting our inventory liability.”
As part of its own-brand strategy, Cara said Target is streamlining its home brand portfolio and relaunching Threshold this summer, including dedicated shop-in-shop destinations in 200 stores designed to feel more like specialty environments.
In apparel and accessories, Cara highlighted a “fast” model intended to reduce time-to-market from “over a year” to, in some cases, “a matter of weeks,” citing women’s swim as an example where Target holds the number-one market share position. She also described a new “style series” approach to collaborations, designed to provide a steady cadence of culturally relevant drops.
In hardlines, she reiterated Target’s Fun 101 reorganization and said the company is investing more in fandom categories such as sports, pop culture, and trading cards. She described new “pop gateway” destinations as more permanent, reliable in-store platforms for cultural moments, noting that since setting these gateways in September, Target has “more than doubled traffic in fandom categories.” Cara also said Target is expanding and reimagining Fan Central shop-in-shops to create a more immersive sports experience.
Beauty, food and beverage, wellness, and baby initiatives
Cara said beauty remains a major traffic and margin driver, and outlined a four-part approach: product (including prestige and emerging brands), elevated in-store experience, knowledgeable service, and loyalty. She said Target is piloting an enhanced service model in select stores and integrating category-specific rewards into loyalty. This fall, the company plans to launch Target Beauty Studio in 600 stores, described as an immersive destination pairing “specialty level presentation and service” with Target’s value positioning.
In food and beverage, Cara emphasized Target is “not trying to be an everything grocer,” but rather a distinctive grocery destination where emerging brands, wellness, and own brands intersect. She said newness is being delivered at twice the industry rate, and that last year newness drove $2 billion in food sales. Target is “on track to double the number of unique items” in food over the next three years. Cara also said that in May Target will become “one of the first national retailers” with no certified synthetic colors in any cereal it sells. She added that Good & Gather is on pace to become Target’s first $4 billion own brand.
On wellness, Cara said 70% of guests already shop wellness categories at Target, and that the company is adding thousands of new items and more exclusives. She said wellness categories delivered a 4.6% comp last year and accounted for $2 billion in sales during January resolution season.
In baby, Cara described plans for new in-store destinations with curated discovery zones and “gift beacons,” an expansion of Cloud Island, and a more premium boutique-style experience with partners including UPPAbaby, Bugaboo, Doona, and Stokke. She also said Target is testing a baby concierge service with specialists.
Investment and 2026 outlook: more than $2 billion incremental spend
Executives repeatedly emphasized that the strategy requires investment. Jim said Target plans “incremental investments of more than $2 billion” in 2026, including reinvesting $1 billion into the P&L and increasing capital expenditures by more than $1 billion versus last year.
Jim said the $1 billion P&L step-up includes “hundreds of millions” for additional store labor and training, as well as spending tied to new store openings, remodel projects, major merchandising transitions, and stepped-up brand marketing and technology investments (including AI). He characterized the spending as an “ongoing step-up,” not one-time costs, funded largely through lapping approximately $500 million in one-time tariff and inventory adjustment costs from 2025, plus about $200 million in savings from last year’s headcount reductions and other productivity opportunities.
For 2026, Target guided to net sales growth “around 2%” versus last year, including a small comparable-sales increase. Jim said new stores plus revenue from Roundel and third-party sellers on Target Plus are expected to add more than one percentage point of growth, and the company is planning for top-line growth in every quarter.
On profitability, Target expects adjusted operating margin to be about 20 basis points higher than the 4.6% adjusted margin earned in 2025, with savings expected to fully fund planned investments. The company projected GAAP and adjusted EPS of $7.50 to $8.50 in 2026, with the midpoint implying 5% to 6% growth versus last year’s adjusted EPS. Jim said profit growth is expected to be stronger in the back half due to timing factors, including lapping shrink-related accrual adjustments, higher startup costs from stepped-up CapEx, accelerated depreciation on remodels (most notably in Q1), and more front-loaded SG&A expenses.
Target also outlined capital deployment priorities: investing in the business, supporting the dividend, and repurchasing shares within the limits of its middle-A credit ratings. Jim said capital expenditures are expected to be approximately $5 billion in 2026, with most spending directed to stores, which fulfill more than 97% of sales. Plans include opening more than 30 new stores (nearly all full-sized) and completing more than 130 full-store remodels. Jim noted more than $1 billion of the CapEx plan will support food and beverage—more than double recent years’ investment.
In the Q&A, management said store remodels typically generate 2% to 4% lifts in year one and additional lifts in year two. Michael also addressed execution risk from the breadth of changes, saying the company is “betting on the change” and has additional teams focused on execution due to the level of activity in 2026.
On digital economics, Jim reiterated that the “digital ecosystem” is profitable, supported by productivity improvements and growth in Roundel and Target Plus. Michael added that guests who adopt services like Drive Up tend to spend 20% to 30% more at Target in total, and often spend more in stores as well.
About Target (NYSE:TGT)
Target Corporation (NYSE: TGT) is a U.S.-based general merchandise retailer headquartered in Minneapolis, Minnesota. The company operates a network of full-line and small-format stores across the United States alongside a national e-commerce platform and mobile app. Target’s retail assortment spans apparel, home goods, electronics, groceries and household essentials, plus beauty, baby and pet categories. The firm complements national brands with a portfolio of owned and exclusive labels and partnerships that help differentiate its merchandise assortment.
Target traces its roots to the Dayton Company, founded by George Dayton in 1902; the Target discount chain was launched in 1962 and the parent company later adopted the Target Corporation name.
