Target reported second-quarter financial results Wednesday that topped Wall Street expectations, showing encouraging improvement in store traffic and digital sales. However, the retailer maintained its cautious full-year outlook as it navigates a challenging consumer environment and begins to outline its strategy following the recently announced end of its partnership with Ulta Beauty.
For the quarter, Target posted an adjusted Earnings Per Share (EPS) of $2.05 on net sales of $25.2 billion. While sales were down 0.9% compared to the same period last year, the results signal a potential turnaround from a weaker first quarter.
A Look at the Q2 Numbers
Target’s leadership pointed to several “green shoots” in the report, suggesting that its core business is stabilizing.
- Adjusted EPS: $2.05 (vs. $2.57 in Q2 2024)
- Net Sales: $25.2 billion (-0.9% year-over-year)
- Comparable Sales: -1.9% (a meaningful improvement from Q1)
- Digital Sales Growth: +4.3%, powered by strong growth in its same-day delivery services.
Outgoing CEO Brian Cornell noted the “encouraging signs of recovery” and “disciplined cost management” but acknowledged the company is still operating in a “challenging retail environment.”
The Future of Beauty at Target After Ulta
This earnings report is the first since Target and Ulta Beauty announced last week that they will end their shop-in-shop partnership in August 2026. The deal, which began in 2021, was a key part of Target’s strategy to attract shoppers with a high-end beauty offering.
The end of the partnership raises significant questions about Target’s future in the critical, high-margin beauty category. In its Q2 results, Target’s Beauty category sales were roughly flat year-over-year at $3.4 billion, highlighting the challenge ahead.
In a statement last week, Target said it remains committed to “curating a differentiated beauty assortment” and delivering the experience its shoppers expect. The company will now need to build out that strategy independently to compete with rivals and retain the prestige beauty customers it gained through the Ulta partnership.
Cautious Outlook and New Leadership
Despite the better-than-expected quarter, Target did not raise its full-year guidance. The company still expects a low-single-digit decline in sales for 2025, with an adjusted EPS between $7.00 and $9.00.
This cautious forecast, combined with the impending Ulta split, sets a challenging stage for incoming CEO Michael Fiddelke, whose appointment was also announced today. A key part of his mandate will be to drive new growth and define Target’s next chapter in beauty and beyond.
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