AI Takeaway
Target's Q2 FY2026 revenue grew 6.7% YoY to $25.4B, but net income fell 24.6% to $781M as a 21.2% surge in SG&A expenses crushed operating margins to 4.5% from 6.2% a year ago.
Revenue
$25.44B
++6.70% YoY
EPS (Basic)
$1.72
-24.56% YoY
Operating Income
$1.14B
-22.89% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue increased 6.7% YoY to $25.44B in Q2 FY2026, up from $23.85B in the prior-year period, indicating solid top-line momentum likely supported by traffic and/or basket size growth.
Source: Source: 10-Q Income Statement
SG&A expenses surged 21.2% YoY to $5.56B from $4.59B, far outpacing revenue growth of 6.7%, which was the primary driver of the 22.9% decline in operating income to $1.14B.
Source: Source: 10-Q Income Statement
Operating margin contracted sharply by approximately 171 basis points to 4.46% from 6.17% in the prior-year quarter, reflecting the disproportionate rise in operating expenses relative to revenue.
Source: Source: 10-Q Income Statement / Key Ratios
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Upgrade to unlockSG&A expenses grew 21.2% YoY to $5.56B, dramatically outpacing revenue growth of 6.7%. If this cost trajectory continues without corresponding revenue acceleration, operating margins could compress further, threatening earnings sustainability.
Source: Source: 10-Q Income Statement
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Upgrade to unlock| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $25.44B | $23.85B | +6.70% |
Cost of Revenue | $18.06B | $17.13B | +5.45% |
Operating Income | $1.14B | $1.47B | -22.89% |
Net Income | $781M | $1.04B | -24.61% |
EPS (Basic) | $1.72 | $2.28 | -24.56% |
EPS (Diluted) | $1.71 | $2.27 | -24.67% |
SG&A Expense | $5.56B | $4.59B | +21.15% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $58.01B | $56.19B | +3.25% |
Current Assets | $18.07B | $17.76B | +1.72% |
Current Liabilities | $19.38B | $18.99B | +2.07% |
Stockholders' Equity | $16.39B | $14.95B | +9.69% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $716M | $275M | +160.36% |
Investing Cash Flow | $-1.03B | $-787M | -31.26% |
Financing Cash Flow | $-1.64B | $-1.36B | -20.10% |
Share Buybacks | $0 | $250M | -100.00% |
D&A | $813M | $787M | +3.30% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 4.5% | 6.2% | -1.71% |
Net Margin | 3.1% | — | — |
ROE | 4.8% | — | — |
ROA | 1.3% | — | — |
Current Ratio | $0.932 | — | — |
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Based on the filing data, Target's diluted EPS came in at $1.71, down 24.7% from $2.27 in Q2 FY2025. Whether this beat or missed Wall Street consensus estimates is not determinable from the filing alone, but the sharp YoY decline in both EPS and net income (which fell 24.6% to $781M) suggests a challenging quarter relative to prior performance.
Target's Q2 FY2026 results showed a 6.7% revenue increase to $25.44B, but profitability was severely pressured by a 21.2% surge in SG&A expenses to $5.56B, causing operating income to fall 22.9% to $1.14B and net income to drop 24.6% to $781M. Operating margin contracted to 4.46% from 6.17% a year ago, and Target suspended share buybacks entirely compared to $250M in repurchases in the prior-year quarter.
Target's profits fell primarily because SG&A expenses jumped 21.2% YoY to $5.56B, growing more than three times faster than revenue growth of 6.7%. This cost surge compressed operating margin by approximately 171 basis points to 4.46%, causing net income to decline 24.6% to $781M despite solid top-line growth.
Target's financial health shows some areas of concern: its current ratio of 0.93 means current liabilities ($19.38B) exceed current assets ($18.07B), and ROE stands at a modest 4.76%. On the positive side, operating cash flow improved significantly to $716M (+160.4% YoY) and stockholders' equity grew 9.7% YoY to $16.4B, suggesting the balance sheet remains intact but near-term liquidity warrants attention.
Yes, Target repurchased $0 in shares during Q2 FY2026, compared to $250M in buybacks during Q2 FY2025, representing a 100% YoY decline. This suspension likely reflects management's decision to preserve capital amid rising operating costs and declining profitability.