Target Corp (NYSE:TGT) shares rose 3.5% to $117.18 after the retailer beat Wall Street expectations for the fourth quarter, as margins improved despite softer sales.
Adjusted earnings per share came in at $2.44 for its final fisal quarter, up 1% on a year ago and well ahead of the $2.16 that analysts had forecast.
Revenue of $30.45 billion was slightly below consensus, with net sales of $30.5 billion down 1.5% from a year earlier.
Comparable sales fell 2.5%, reflecting a 3.9% drop in store sales, partly offset by a 1.9% rise in digital sales. However, performance improved as the quarter progressed, with sales and traffic accelerating in the final two months.
Gross margin strengthened to 26.6% from 26.2%, helped by lower inventory shrink, reduced supply chain and fulfilment costs, and growth in advertising revenues. Adjusted operating income of $1.5 billion was slightly above last year.
Chief executive Michael Fiddelke said he was “incredibly proud of how our team navigated through a challenging year in 2025” and pointed to a “healthy, positive sales increase in February” as an important milestone.
For 2026, Target expects net sales growth of around 2% and adjusted earnings per share of $7.50 to $8.50, with operating margins set to improve modestly.