Netanyahu says Israel and Hamas will enter ceasefire's second phase soon

TEL AVIV, Israel (AP) — Israeli Prime Minister Benjamin Netanyahu said Sunday that Israel and Hamas are “very shortly expected to move into the second phase of the ceasefire,” after Hamas returns the remains of the last hostage held in Gaza.

Netanyahu spoke during a news conference with visiting German Chancellor Friedrich Merz and stressed that the second phase, which addresses the disarming of Hamas and the withdrawal of Israeli troops from Gaza, could begin as soon as the end of the month.

Hamas has yet to hand over the remains of Ran Gvili, a 24-year-old police officer who was killed in the Hamas-led Oct. 7, 2023, attack that sparked the war. His body was taken to Gaza.

The ceasefire's second stage also includes the deployment of an international force to secure Gaza and forming a temporary Palestinian government to run day-to-day affairs under the supervision of an international board led by U.S. President Donald Trump.

A senior Hamas official on Sunday told The Associated Press the group is ready to discuss “freezing or storing or laying down” its weapons as part of the ceasefire in a possible approach to one of the most difficult issues ahead.

Netanyahu said few people believed the ceasefire’s first stage could be achieved, and the second phase is just as challenging.

“As I mentioned to the chancellor, there’s a third phase, and that is to deradicalize Gaza, something that also people believed was impossible. But it was done in Germany, it was done in Japan, it was done in the Gulf States. It can be done in Gaza, too, but of course Hamas has to be dismantled,” he said.

The return of Gvili’s remains — and Israel's return of 15 bodies of Palestinians in exchange — would complete the first phase of Trump’s 20-point ceasefire plan.

Hamas says it has not been able to reach all remains because they are buried under rubble left by Israel’s two-year offensive in Gaza. Israel has accused the militants of stalling and threatened to resume military operations or withhold humanitarian aid if all remains are not returned.

A group of families of hostages said in a statement that “we cannot advance to the next phase before Ran Gvili returns home.”

Meanwhile, Israeli military Chief of Staff Lt. Gen. Eyal Zamir on Sunday called the so-called Yellow Line that divides the Israeli-controlled majority of Gaza from the rest of the territory a “new border.”

“We have operational control over extensive parts of the Gaza Strip and we will remain on those defense lines," Zamir said. "The Yellow Line is a new border line, serving as a forward defensive line for our communities and a line of operational activity."

Merz said Germany, one of Israel’s closest allies, is assisting with the implementation of the second phase by sending officers and diplomats to a U.S.-led civilian and military coordination center in southern Israel, and by sending humanitarian aid to Gaza.

The chancellor also said Germany still believes that a two-state-solution is the best possible option but that “the German federal government remains of the opinion that recognition of a Palestinian state can only come at the end of such a process, not at the beginning.”

The U.S.-drafted plan for Gaza leaves the door open to Palestinian independence. Netanyahu has long asserted that creating a Palestinian state would reward Hamas and eventually lead to an even larger Hamas-run state on Israel’s borders.

Netanyahu also said that while he would like to visit Germany, he hasn’t planned a diplomatic trip because he is concerned about an arrest warrant issued by the International Criminal Court, the U.N.'s top war crimes court, last year in connection with the war in Gaza.

Merz said there are currently no plans for a visit but he may invite Netanyahu in the future. He added that he is not aware of future sanctions against Israel from the European Union nor any plans to renew German bans on military exports to Israel.

Germany had a temporary ban on exporting military equipment to Israel, which was lifted after the ceasefire began on Oct. 10.

The Israeli military said it killed a militant who approached its troops across the Yellow Line.

Gaza’s Health Ministry says Israeli forces have killed more than 370 Palestinians since the start of the ceasefire, and that the bodies of six people killed in attacks had been brought to local hospitals over the past 24 hours.

In the original Hamas-led attack in 2023, the militants killed around 1,200 people and took more than 250 others hostage. Almost all the hostages or their remains have been returned in ceasefires or other deals.

Israel’s offensive in Gaza has killed at least 70,360 Palestinians, according to Gaza’s Health Ministry, which operates under the Hamas-run government. The ministry does not differentiate between civilians and combatants, but says that nearly half the dead have been women and children. The ministry is part of Gaza’s Hamas government and its numbers are considered reliable by the U.N. and other international bodies.

Grieshaber reported from Berlin.

Find more of AP’s Israel-Hamas coverage at https://apnews.com/hub/israel-hamas-war

Israeli Prime Minister Benjamin Netanyahu adjusts the headphones during a joint press conference with German Chancellor Friedrich Merz in Jerusalem Sunday, Dec. 7, 2025. (AP Photo/Ariel Schalit, Pool)

FILE - Bassem Naim, an official in Hamas' political wing, speaks in Istanbul, Turkey, Thursday, Dec. 5, 2024. (AP Photo/Francisco Seco, File)

A child peeks out from behind tarps at a displacement camp in Jabalia, in the northern Gaza Strip, Sunday, Dec. 7, 2025. (AP Photo/Jehad Alshrafi)

Palestinians walk through the destruction left by the Israeli air and ground offensive in Jabaliya, northern Gaza Strip, Saturday, Dec. 6, 2025. (AP Photo/Abdel Kareem Hana)

Israeli Prime Minister Benjamin Netanyahu speaks to the media during a joint press conference with German Chancellor Friedrich Merz in Jerusalem Sunday, Dec. 7, 2025. (AP Photo/Ariel Schalit, Pool)

German Chancellor Friedrich Merz, left, stands by Dani Dayan Dani Dayan, chairman of the Yad Vashem Holocaust Memorial Museum, at the museum's Hall of Names in Jerusalem, Sunday, Dec. 7, 2025. (John Wessels, Pool Photo via AP)

Israeli Prime Minister Benjamin Netanyahu, left, and German Chancellor Friedrich Merz leave the podium following a joint press conference in Jerusalem Sunday, Dec. 7, 2025. (AP Photo/Ariel Schalit, Pool)

German Chancellor Friedrich Merz lays a wreath at the Hall of Remembrance during his visit to the Yad Vashem Holocaust Memorial Museum in Jerusalem, Sunday, Dec. 7, 2025. (John Wessels, Pool Photo via AP)

German Chancellor Friedrich Merz, left, stands by Dani Dayan Dani Dayan, chairman of the Yad Vashem Holocaust Memorial Museum, at the museum's Hall of Names, in Jerusalem, Sunday, Dec. 7, 2025. (John Wessels, Pool Photo via AP)

German Chancellor Friedrich Merz, right, makes a statement next to Dani Dayan, chairman of the Yad Vashem Holocaust Memorial Museum in Jerusalem, Sunday, Dec. 7, 2025. (John Wessels, Pool Photo via AP)

MINNEAPOLIS (AP) — Target is investing another $2 billion in its business this year to spruce up and remodel stores among other projects as it tries to turn around a persistent sales malaise and reclaim its authority on style.

The investment, announced Tuesday at its annual investor meeting in at its headquarters in Minneapolis, comes as the discounter reported another quarter of declining sales and profits amid its struggles to regain its footing with customers who are going elsewhere for fashion, home and other needs.

Tuesday's report offered some hope for the business. The company delivered a solid annual profit outlook that was better than Wall Street had been projecting. It also said it believes net sales will grow every quarter this year.

Target said comparable-store sales rose to start the current quarter.

“This is a new chapter, and it's all about growth,” said CEO Michael Fiddelke, a 20-year company veteran who succeeded longtime CEO Brian Cornell last month.

Fiddelke and other executives detailed plans to turn around Target as investors have been hungry for a return to Target’s former dominance in affordable chic for which it earned it the nickname “Tarzhay” in years past.

Target said that its stores will get the biggest refresh this year than they have had in roughly a decade. The company will invest hundreds of millions of dollars for additional store labor and training. And it plans to open 30 new stores and aims to remodel 130 of its existing stores.

In particular, Target is launching a new beauty area called Target Beauty Studio in 600 stores this fall, which will offer upscale beauty products and beauty services. The new area will partly replace its shops with Ulta, which is ending its partnership in August, the company said.

Fiddelke takes over with Target’s hometown of Minneapolis a front line of sorts in President Donald Trump’s campaign to curb illegal immigration. Some of the company’s stores have become a flashpoint in a pushback against U.S. Immigration and Customs Enforcement. The company has faced pressure to take a public stand against the immigration crackdown.

Even before the immigration clashes, Target had been facing protests and boycotts over the company’s decision to roll back its diversity, equity and inclusion initiatives. Critics believe it's a betrayal of Target’s philanthropic commitment to fighting racial disparities and promoting progressive values in liberal Minneapolis and beyond.

That is outside of a volatile economic and political environment that has been intensified by an aggressive trade campaign under Trump. The White House is now seeking a global tariff of 15%, after the U.S. Supreme Court struck down many of the far-reaching taxes on imports that he had imposed over the last year.

While the pace of inflation has cooled, consumer prices have soared about 25% over the past five years. U.S. companies are facing a hazy outlook with American households hurting, and the Trump administration is trying to work around the Supreme Court ruling to keep his duties in place.

And Target customers have soured on what they see as untended and messy stores with lackluster merchandise.

As the company’s nearly 2,000 store locations have become shipping hubs for online operations, customers say the in-store shopping experience has suffered with staff fulfilling digital orders rather than tending to store aisles.

Target is also facing stiffer competition from Walmart, which has stepped up its focus on fashion and other goods. As many Americans trade down because of inflation, Walmart has gained market share, particularly among households with annual income above $100,000.

Fiddelke has already reshuffled the leadership team at Target, boosted spending on in-store store staffing and made cuts at distribution facilities and regional offices, according to a memo sent to employees in February.

Target said it's focusing merchandise category by category and infusing its assortment with new differentiated items to set itself from its competitors. For example, in the home area, 75% of the company's home decorative assortment will be new.

The company is also reworking its store label brands such as its home goods brand called Threshold. It announced a merchandise collaboration with Roller Rabbit, a brand known for its 1960s-inspired silhouettes and colorful playful prints. The collection of clothing, pajamas and accessories is expected to make its debut at Target this month for a limited time.

The company said it's adding more fashion drops this year and using an artificial intelligence tool to better spot trends. In some examples, it's cutting the time frame from a design concept to store shelves to a matter of weeks from over a year, according to Cara Sylvester, Target’s chief merchandising officer.

And in food, the company is hoping to drive more trips by expanding its fresh produce while also offering innovative items. This year, it plans to increase the amount of newness across the assortment by nearly 50%, it said.

The company earned $2.30 per share, or $1.05 billion, for the three-month period ended Jan. 31. That compares with $2.41 per share, or $1.10 billion, during the year-ago period. Adjusted earnings per share for the most recent quarter was $2.44.

Sales fell 1.5% to $30.45 billion during the latest period. For the full year, sales fell nearly 2% to $104.78 billion.

Analysts were expecting $2.16 per share on sales of $30.46 billion, according to a survey by FactSet.

Comparable sales — sales at established stores and online channels — fell 2.5%, followed by a 2.7% dip in the fiscal third quarter. The latest figure marks 11 quarters out of the past 13 that Target has posted either declines or flattish growth for this measure.

Tuesday’s report offered some hopeful signs for the business. Target said that sales and customer traffic accelerated in the final two months of the quarter. And it saw sales growth in food and beverage, beauty and toys for the latest quarter.

Target said that it expects net sales for the year to increase by 2%, which would mean it expects sales to reach $106.88 billion. That’s a bit above analysts’ expectations of $106.7 billion. Target also anticipates earnings per share to be in the range of $7.50 to $8.50. Analysts are expecting $7.30 per share for the year, according to analysts polled by FactSet.

Products sit on display at a Target store, Monday, March 2, 2026, in Edina, Minn. (AP Photo/Anne D'Innocenzio)

Products sit on display at a Target store, Monday, March 2, 2026, in Edina, Minn. (AP Photo/Anne D'Innocenzio)

FILE - The Target logo displayed on a sign outside a store, Nov. 18, 2025, in Salem, N.H. (AP Photo/Charles Krupa, File)

Products sit on display at a Target store, Monday, March 2, 2026, in Edina, Minn. (AP Photo/Anne D'Innocenzio)