Target online sales grow in Q2 while retailer sees nearly $1B benefit from tariff refunds
Abbas Haleem|
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In Q2, Target fulfilled about 30% more same- and next-day units year over year. The retailer, which uses its physical stores to fulfill 95% of sales, opened 17 new stores during the quarter and 24 so far this year.
Target online sales outpaced total growth, which it achieved for the second straight quarter in its fiscal Q2 2026 ended Aug. 1.
Target’s back-to-back quarterly sales growth follows five consecutive declines. Additionally, Target saw year-over-year declines in quarterly sales during eight of its last 14 quarters, going back to its fiscal Q1 2023.
In its fiscal Q2 2026, Target net sales increased 5.3% year over year. They rose to about $26.54 billion from $25.21 billion. Meanwhile, comparable sales, which include Target’s ecommerce business, increased 3.8% year over year.
The retailer noted that net sales in all six of what it considers its core merchandising categories grew year over year. It specified that its Fun 101 category, which includes toys, games, electronics, and more, grew double digits year over year. Meanwhile, its Food & Beverage and Beauty categories grew in the high single-digit range.
Non-merchandise sales also grew 20% at Target in Q2. That included revenue Target generated through its retail media network, Roundel, its Circle 360 membership and the Target+ marketplace.
“We’re continuing to modernize our tech foundation while investing in new industry-leading capabilities that allow us to personalize experiences across Stores and Digital channels,” CEO Michael Fiddelke said during Target’s Q2 earnings call.
Target is No. 5 in the Top 1000 Database. The market research tool tracks North America’s largest online retailers, ranking them by annual ecommerce sales and more.
Target is also No. 54 in Digital Commerce 360’s all-new AI Rankings. That set of rankings is available in the Top 1000 Pro with AI Database.
Chief merchandising officer Cara Sylvester said half of Target’s sales came from seven priority areas where the retailer is “placing disproportionate investments.” She said Target believes those areas have an “outsized importance with busy families.” They include:
building a leading beauty destination
expanding Target’s role in health and wellness
being food forward
celebrating baby and kid life
leading in women’s style
inspiring the love of home
building culture-driven categories
Target’s collaboration with Pokémon, which included exclusive products, generated “incredible social engagement” across platforms, Sylvester said. As an exclusive collaboration, it introduced thousands of new guests to Target, according to Sylvester, who did not specify the amount.
She noted that Target has added AI-powered wish lists and more personalized content to the home screen on its app. Since then, consumers have created over 50% more wish lists than the year before. Additionally, the number of items consumers add to those wish lists has more than doubled year over year. Meanwhile, conversion on back-to-school pages has increased nearly 20%.
Chief financial officer James Lee shared that Target’s Q2 profit and loss statement included a $994 million pretax benefit from IEEPA tariff refunds. The amount “accounts for the significant majority” of tariff refunds Target has applied to date, he noted. Target recorded that benefit as a reduction toward cost of sales.
“We continue to look first to find other means to reduce the impact of tariffs, including changes to country of origin, collaborating with vendors to find offsets and adjusting our assortment,” Lee said. “Those tactics have helped us to reduce tariff pressure.”
Target online sales in Q2 2026
In its fiscal Q2 2026, Target online sales grew 8.7% year over year. Target attributed that to 25% growth in same-day delivery during Q2.
In Q2, Target fulfilled about 30% more same- and next-day units year over year. Chief operating officer Lisa Roath said Target opened 17 new stores in the quarter and 24 new full-size stores so far in 2026. That directly ties into ecommerce, she explained, because Target stores serve as fulfillment hubs for more than 95% of its sales.
Stores bring inventory closer to consumers while “enabling faster, more reliable and more cost-effective fulfillment,” according to Roath.
Target has also developed a supply chain tool called Proxima. It creates a digital twin of the retailer’s middle-mile inventory position system. That allows the retailer to test and iterate on inventory flow plans before going live, Roath explained. Using Proxima, she said, Target has seen “meaningful gains in delivery speed.”
Gross merchandise volume (GMV) on the Target+ marketplace grew more than 40% year over year. Revenue from Target Circle 360 memberships increased 40%. Meanwhile, Roundel’s gross billings increased nearly 20%.
A week prior to its earnings call, Target announced that it has appointed its first-ever chief AI officer, Chandhu Nair. On the earnings call, Fiddelke said Nair will “accelerate how we harness the power of AI to create better guest experiences and unlock new capabilities across our business.”
“Earlier this year, we became one of only a small number of retailers to partner initially with OpenAI, Google Gemini, and other leading platforms to shape the future of agentic commerce,” Fiddelke said. “And while still small in total today, as more consumers begin to explore the benefits of agentic shopping, Target’s digital traffic sourced from external AI platforms is growing more than 3.5x the industry as compared to a year ago.”