Will Target report positive comparable sales growth in Q1 FY2026?

Q1 FY2025 comp of -3.8% provides the easiest lapping comparison in the recent streak, which mechanically lowers the bar for positive comps. However, the non-monotonic trajectory (Q1 -3.8% to Q2 -1.9% to Q3 -2.7%) shows improvement is not consistent, and the committee confirmed 'primarily structural with cyclical overlay' at E2-E3 confidence. Digital growth deceleration from +5% to +2.4% across Q1-Q3 FY2025 reduces the tailwind that could offset store comp weakness. Some category wins (toys +10%, trading cards +70%) and same-day delivery +36% growth show pockets of traction, but these are insufficient to overcome the blended structural headwinds absent a broader inflection.

The Walmart comparison is the most damning evidence: Walmart posted positive comps during the exact period Target ran 4+ consecutive negative quarters, confirming at E2-E3 confidence that Target's decline is company-specific competitive erosion, not macro. If the root cause is structural share loss to Walmart and Amazon, lapping a weaker base does not fix the underlying competitive dynamic. Store comps at approximately -4% with digital only +2.4% in Q3 FY2025 means the physical retail experience is deteriorating faster than digital can compensate. Consumer sentiment at 3-year low and tariff escalation risk in Q1 FY2026 add incremental headwinds to an already structural problem.

While the committee classified the decline as primarily structural, the counter-analog of Best Buy's 2012 turnaround under similar conditions (CONTESTED position, new strategic direction) demonstrates that retailer recovery is possible when investments hit. Target's $5B CapEx for store remodels, $2B Enterprise Acceleration Office cost savings, and early category wins in FUN 101 hardlines (toys +10%, trading cards +70%) represent genuine turnaround inputs. The -3.8% Q1 FY2025 base is exceptionally easy -- Target's Q1 FY2026 absolute sales only need to match Q1 FY2024 levels minus ~3.8% decline-on-decline. Same-day delivery growing +36% shows execution capability. The unresolved cyclical vs structural debate means the structural thesis could be overweighted.

The core tension is structural decline confirmed by 3 lenses versus the mechanically easiest comparison quarter. The comp trajectory was non-monotonic (-3.8% to -1.9% to -2.7%), meaning the Q2 improvement reversed in Q3, undermining confidence in a consistent recovery trend. Even with the easiest base, Target needs the structural competitive erosion to stabilize or reverse -- and Walmart's positive comps during the same period demonstrate Target is losing share specifically, not facing industry-wide headwinds. The $2B cost program and $5B CapEx address operational efficiency and store experience but may not generate comps within 1-2 quarters of implementation.

To achieve positive comps, Target needs absolute Q1 FY2026 sales to exceed the already-depressed Q1 FY2025 level. With store comps at -4% and digital decelerating from +5% to +2.4% across FY2025, the blended trajectory is worsening, not improving. The $2B cost savings target helps margins but does not directly drive traffic or transaction volume. Tariff escalation risk could force price increases that accelerate traffic loss to Walmart and Amazon. Consumer sentiment at a 3-year low is an additional demand headwind. The committee's bidirectional narrative finding -- turnaround narrative outpacing evidence -- suggests the market is more optimistic than the fundamentals warrant.

The -3.8% Q1 FY2025 base is genuinely the easiest comparison in the streak, and some leading indicators suggest pockets of traction: same-day delivery +36%, FUN 101 hardlines rebranding success (toys +10%, trading cards +70%), and $5B CapEx targeting store experience improvements. The Q4 FY2025 results on March 3, 2026 will provide critical interim data, and if they show further improvement, the Q1 FY2026 inflection becomes more plausible. However, the structural finding at E2-E3 confidence and Walmart's positive comps during Target's decline keep this below 50%. The committee's unresolved cyclical vs structural debate is material -- if even partially cyclical, the lapping effect could tip Q1 positive.

Easiest comp base at -3.8% is offset by committee's structural decline finding at E2-E3 confidence. Walmart positive comps during same period confirm Target-specific weakness. Non-monotonic trajectory (improvement then reversal) and consumer sentiment at 3-year low suggest insufficient momentum for positive inflection despite the easy comparison.

Four consecutive negative comp quarters with a Q3 reversal after Q2 improvement signals the decline has not stabilized. Store comps at -4% are deeply negative and digital growth decelerating. Tariff escalation risk and competitive share loss to Walmart make positive comps against even the easiest base unlikely. The committee noted turnaround narrative outpaces evidentiary support.

The easiest comparison base (-3.8%) combined with early category wins in FUN 101 hardlines and strong same-day delivery growth (+36%) provide some path to positive comps. The $5B CapEx investment in store remodels could begin showing results. However, structural competitive erosion to Walmart and slowing digital trajectory keep this below even odds.