MINNEAPOLIS, MN — Target, headquartered in downtown Minneapolis, saw its quarterly profit more than double, and a huge chunk of that gain came from an unusual source: tariff refunds.
The retailer reported $994 million in pre-tax tariff refunds during the quarter, according to its latest earnings release, first reported by The Motley Fool, a windfall that helped push net income up sharply from the same period last year.
Even without that one-time boost, Target's underlying business improved. Net income excluding the tariff refund would have been $1.13 billion, or $2.46 per share, up 20 percent from $2.05 per share a year earlier and ahead of Wall Street's forecast of $2.34 per share.
Overall sales also grew at the Minneapolis-based company. Comparable sales rose 3.8 percent for the quarter, and revenue climbed 5.3 percent to $26.54 billion, beating analyst estimates of $26.14 billion. Store traffic increased 3.6 percent, a sign shoppers are returning after a rough stretch for the retailer following the pandemic.
Gross margin improved from 28 percent to 29 percent even when the tariff refund is excluded, helped by fewer markdowns and lower costs tied to canceled purchase orders.
Target also raised its outlook for the rest of the year, pushing full-year sales growth guidance from 4 percent to 5 percent and lifting its adjusted earnings per share forecast to a range of $8.25 to $8.75, up from $7.50 to $8.50.
New CEO Michael Fiddelke has been credited with reinvigorating the company through initiatives like Fun 101, an overhaul of toy, electronics and game departments that has driven double-digit sales growth in those categories.
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