Target’s comeback quarter: New merchandise, more shoppers and a $994M tariff refund

NEW YORK (AP) — Target reported its second straight quarter of comparable sales gains on Wednesday, saying a merchandising overhaul under the retailer's new CEO is attracting more customers and boosting sales throughout its stores.

Comparable sales — those coming from stores and digital channels operating for at least 12 months —rose 3.8% in the second quarter. The company also upgraded its annual profit and sales outlook, citing the solid performance during the first half of the year.

Target is emerging from more than a year of weak or declining comparable sales. A 5.6% jump in the first quarter reversed a 3.8% decline in 2025. The second-quarter bump followed 1.9% drop a year ago.

Target CEO Michael Fiddelke, a 20-year company veteran who became chief executive in February, said the latest quarter was “an important step forward in the plan we laid out earlier this year to open a new chapter of growth for Target.”

Target also reported an increase in the number of customers going to its stores and shopping on its website from May through July.

“We’re encouraged by the progress made so far, and we’re also clear-eyed about the important work still ahead,” Fiddelke said.

In March, Fiddelke unveiled a $6 billion plan to reverse Target’s sales slump and to reclaim the retailer’s reputation as a place to go for affordable yet stylish apparel and home goods.

More than half of Target’s back-to-school merchandise is new, the company said.

That includes a limited-time collection of teen and tween clothes, school supplies and accessories in pastel colors and floral prints from the women’s lifestyle brand LoveShack Fancy. Target also collaborated with Hollister on a dorm decor collection.

Target recruited fashion designer and TV personality Isaac Mizrahi this summer to fill the newly created role of creative director at large. Mizrahi has been brought in to mentor Target designers, advise on product design and innovation, and forge new partnerships.

It is Mizrahi second partnership with Target. He became the first major fashion designer to collaborate with the retailer in 2002 for a successful run.

Fiddelke is also remodeling Target stores and improving staffing. The company has more than 100 full-scale remodels underway, with a goal of reaching 130 this year, Fiddelke said Tuesday.

During the second quarter, comparable store sales increased 2.7%, while increasing same-day deliveries pushed digital comparable sales to grow by 8.7%, Target reported.

Target is one of the first big retailers to report second-quarter financial results, which could give industry analysts and economists another read on whether ongoing price pressures from the conflict in Iran impacted consumer behavior.

The Commerce Department released a report Friday showing weak retail sales in July. The University of Michigan’s consumer sentiment index, also released Friday, showed greater pessimism about the economy this month, likely driven by stubbornly high prices.

Retail analysts also are waiting to hear if tariff refunds from the U.S. government are boosting retailers’ quarterly results and whether companies are using the refunds to lower prices for shoppers.

Asked about Target’s tariff refunds Tuesday, Chief Financial Officer Jim Lee told reporters that the company continues to invest in lowering prices. Lee said Target reduced the prices of more than 10,000 items over the past year and “there’s more to come even as we’re facing headwinds overall.”

Target said net sales increased in all six of its main merchandising categories, led by double-digit growth in what the company calls Fun 101 — a division that includes consumer electronics, toys, trading cards, sports paraphernalia, books and gaming items.

Target reported earnings of $1.87 billion, or $4.11 per share, for the three months ended Aug. 1, compared with $935 million, or $2.05 per share, in the year-ago period. The quarter included a benefit from the tariff refunds of $994 million, which contributed $1.65 in earning per share, Target said.

Net sales rose 5.3% to $26.54 billion for the period.

Analysts were expecting $2.34 per share on sales of $26.15 million for the quarter, according to FactSet.

Target now expects sales to increase 5%, up from its earlier predictions for a 4% gain. It also expects per share results for the full year to be up in the range of $9.90 to $10.90. Analysts expect $8.52 per share for the year, according to FactSet.

In May, Target reiterated its guidance from March for earnings per share to be near the high end of $7.50 to $8.50.

The cereal aisle is seen at a Target store, Thursday, Aug. 13, 2026, in Woodbury, Minn. (AP Photo/Ellen Schmidt)

An employee passes the back-to-school section at a Target store, Thursday, Aug. 13, 2026, in Woodbury, Minn. (AP Photo/Ellen Schmidt)

Children's clothing including uniforms are on display in a Target store, Thursday, Aug. 13, 2026, in Woodbury, Minn. (AP Photo/Ellen Schmidt)

A shopper enters a Target store, Thursday, Aug. 13, 2026, in Woodbury, Minn. (AP Photo/Ellen Schmidt)

BERLIN (AP) — A Ukrainian man was arrested Wednesday in Croatia in connection with the 2022 undersea explosions that damaged the Nord Stream gas pipelines between Russia and Germany, Germany’s federal prosecutor said.

Ukrainian national Vladimir Z., whose last name was not given in line with German privacy rules, was arrested in Pula, Croatia, by local police acting on a European arrest warrant.

“Vladimir Z. is a trained scuba diver who was part of a group of individuals who planted explosives on the ‘Nord Stream 1’ and ‘Nord Stream 2’ gas pipelines near the (Danish) island of Bornholm in September 2022,” prosecutors said.

He was “strongly suspected of jointly causing explosions, anti-constitutional sabotage, and destruction of buildings and structures,” they added.

Undersea explosions on Sept. 26, 2022, damaged the pipelines, which had been built to carry Russian natural gas to Germany under the Baltic Sea. The damage added to tensions over the war in Ukraine as European countries moved to wean themselves off Russian energy sources after the Kremlin’s full-scale invasion of Ukraine.

Prosecutors have said the plot was intended to permanently disrupt gas deliveries via the pipelines and prevent Russia from using natural gas revenues to finance its military operations.

The statement said the suspect would be brought before the investigating judge at Germany’s federal court of justice after being extradited from Croatia.

Last month, German federal prosecutors filed charges against a former Ukrainian army officer also in connection with the same explosions.

The suspect, identified only as Serhii K., faces charges of causing an explosion, damaging property, disrupting public service and being an “accomplice to war crimes” by attacking civilian objects.

Serhii K. was detained in August 2025 in an Italian village, where officers raided a bungalow where he was staying with his family. Police said he surrendered without resistance. He was extradited to Germany in November.

Serhii K., Vladimir Z., and others allegedly used a yacht that set off from the German port of Rostock. The yacht had been rented from a German company using forged IDs and intermediaries.

The explosions ruptured the Nord Stream 1 pipeline, which was Russia’s main natural gas supply route to Germany until Moscow cut off supplies in August 2022. They also damaged Nord Stream 2, which never entered service because Germany suspended its certification process shortly before Russia’s invasion.

Russia has accused the U.S. of staging the explosions, a charge Washington has denied. The pipelines were long a target of criticism by the U.S. and some of its allies, which warned that they increased dependence on Russian gas.

FILE - In this picture provided by Swedish Coast Guard, a leak from Nord Stream 2 is seen, on Sept. 28, 2022. (Swedish Coast Guard via AP, File)