Target Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Target Corporation first quarter earnings release conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will invite you to participate in a question and answer session. At the close of prepared remarks, we will open the queue for the Q&A session. At that time, if you have a question, you will need to press star 1 on your telephone. As a reminder, this conference is being recorded Wednesday, May 20, 2026. I would now like to turn the conference over to Mr. John Holbert, Vice President, Investor Relations. Please go ahead, sir.

Good morning, everyone, and thank you for joining us on our first quarter 2026 earnings conference call. On the line with me today are Michael Fidelke, Chief Executive Officer, Kara Sylvester, Chief Merchandising Officer, Lisa Roth, Chief Operating Officer, and Jim Lee, Chief Financial Officer. In a few moments, Michael, Kara, Lisa, and Jim will provide their insights on our first quarter performance and outlook for the rest of the year. Following their remarks, we'll open the phone lines for a question and answer session. This morning, we're joined on this conference call by investors and others who will be listening to our comments via webcast. Following the call, Jim and I will be available to answer your follow-up questions. And finally, as a reminder, any forward-looking statements that we make this morning are subject to risks and uncertainties, including those described in this morning's earnings press release and in our most recently filed 10-K. Also in these remarks, we refer to non-GAAP financial measures, including adjusted earnings per share, adjusted operating income, and adjusted SG&A expenses. Reconciliations of all non-GAAP numbers to the most directly comparable GAAP number are included in this morning's press release, which is posted on our Investor Relations website. With that, I'll turn it over to Michael to kick things off. Michael?

Thanks, John, and good morning, everyone. Just a few months ago, we shared our refreshed strategy and vision for Target at our financial community meeting here in Minneapolis. We outlined the priorities driving every decision we make, all in service of returning to sustainable growth. Because as I've said many times before, that's the only winning path in retail. For Target, that means leading with merchandising authority, elevating the guest experience, accelerating technology, and strengthening our team and communities. Delivering on our aspiration to be the most delightful shopping experience in retail means executing this strategy clearly and consistently. And to bring this strategy to life, I'm excited to be joined by and to introduce some incredible leaders to new roles at this critical juncture for Target. I want to take a moment to welcome both Kara Sylvester, our chief merchandising officer, and Lisa Roth, our chief operating officer, to their first quarterly earnings call. With nearly four decades of retail leadership between them, and based on my experience in working closely with both Kara and Lisa for many of those years, I'm confident in the expertise and leadership they'll bring at a pivotal moment for Target. Tara's led teams across digital, marketing, media, and loyalty and spent the bulk of her career in merchandising. As our sole chief merchandising officer, she's bringing focus and a bias for action to strengthen the way we operate while aligning the team at the critical intersection of merchandising and experience. Lisa has led many functions across the organization, from marketing to merchandising, and most recently, our food business that spans merchandising and end-to-end operations. With this breadth of experience, she is driving clarity while connecting across business functions in support of our strategy. And in a few minutes, Lisa will be sharing more about new leadership in her organization as well, where we've welcomed Jeff England to Team Target, serving as our Chief Global Supply Chain and Logistics Officer. I'm excited for you to hear from both Kara and Lisa today. Today, we're reporting first quarter results that are stronger than expected, early proof points that give us confidence we're on the right path. But to be clear, a single good quarter has never been our goal. Our goal is consistent long-term growth. So while we're very encouraged by our Q1 results, what you'll hear from me and the team today is our focus on continuing the work to reach our full potential as a company. That said, we know that long-term results are built one quarter at a time, so let's spend a minute unpacking our first quarter results and how they inform our thinking for the balance of the year. First quarter net sales grew by 6.7%, reflecting a 5.6% increase in comparable sales. We're encouraged that this top-line growth was broad-based, with growth across both stores and digital channels led by traffic, net sales increases in all six of our core merchandise categories, broad-based strength across guest demographics and cohorts, and momentum around both key seasonal events and everyday moments. Despite this early progress, we know our work is just beginning, as we were lapping softer results in Q1 of 2025. And while we're pleased that this year's Q1 net sales were also 3.7% higher than in Q1 of 2024, That's well below the level of two-year growth we aspire to deliver over time. In categories like fun 101, beauty, and food and beverage, we're seeing mid-single-digit compound growth on a two-year basis. While sales in home and apparel were still below 2024. This is further evidence that while we're building momentum, we're also not yet where we aspire to be over time. We're focused on executing our plans and are encouraged by early guest response. As we look ahead, we also acknowledge that the broader operating environment remains uncertain. You'll hear more detail from Kara, Lisa, and Jim shortly on how we're managing through these considerations while continuing to make progress against our goals. But the punchline is we're planning for the balance of the year clear-eyed on what is needed to execute our plans to continue to make progress against our strategy. Before I hand the call over to Kara, I want to stress a few points. First, we're writing a new chapter for Target. defined by disciplined choices and a clear articulation of our unique role in retail. And on this front, we see encouraging early signs that our plans are resonating with our guests. Second, we will not confuse this progress with potential. Our focus is on delivering consistent growth, not just in 2026, but for decades to come. That means continuing to invest in our business, our team, and the communities in which we operate so we can deliver growth in 2027 and beyond. Third, while we have momentum, we're also being cautious about the near-term operating environment. With consumers weighing multiple headwinds and tailwinds and recent dips in consumer sentiment, we continue to place a premium on flexibility, not wanting to swing too hard too quickly, despite the early signs of momentum we're seeing. As we've shared before, we like our business model when we're needing to chase inventory in the face of stronger than planned sales, much more than when we find ourselves needing to cancel purchase orders or mark down excess inventory. And finally, this team is hungry. With a renewed focus on what is possible and a team of more than 400,000 strong that's solidly aligned behind our priorities, we're confident in our ability to deliver on our strategy and and business plans both this year and over time. With that, I'll pass things over to Kara, who will share a bit more color on our Q1 performance and all that is ahead.