Target's Expanding Digital Network Poised to Boost Profit Growth

Target Corporation TGT is accelerating its digital momentum, reporting a 4.3% year-over-year increase in comparable digital sales for the second quarter of fiscal 2025. The company’s same-day delivery services, driven by the expanding Target Circle 360 program, surged more than 25%, highlighting consumers’ growing appetite for convenience and faster delivery options.

At the center of this success is Target’s “stores as fulfillment hubs” model, which uses its vast store network to fulfill the majority of online orders. This efficient approach lowers shipping costs, speeds up deliveries and supports a digital business which is now generating more than $20 billion in annual revenues. By blending physical and online operations, Target continues to demonstrate the strategic strength of its omnichannel infrastructure.

The retailer is also benefiting from the expansion of higher-margin digital initiatives such as Roundel, Target Plus and Target’s membership offerings, all of which achieved double-digit growth during the fiscal second quarter. These programs are turning digital channels into a meaningful contributor to profitability rather than merely driving sales volume.

To further boost efficiency, Target rolled out more than 10,000 AI licenses in the fiscal second quarter to enhance forecasting, automate manual processes and improve inventory replenishment. These innovations led to the company’s best on-shelf availability in years and more reliable digital fulfillment performance.

Product innovation has played its part as well. The launch of the Nintendo Switch 2 generated a strong consumer response, positioning Target among the top retailers in sales and market share. Entering the holiday season, Target’s omnichannel strategy is poised to deliver both scale and sustained profitability.

WMT and BBY Strengthen Digital Strategies as TGT Embraces AI

Walmart Inc. WMT is rapidly advancing its digital operations through robust e-commerce growth, AI-driven innovations and faster fulfillment. In the second quarter of 2026, global e-commerce sales increased 25% year over year, with Walmart U.S. posting a 26% rise and nearly one-third of store deliveries arriving within three hours. AI tools, such as Sparky, boost personalization, while revenues from marketplace, advertising and memberships continue to expand Walmart’s digital ecosystem.

Best Buy Co., Inc. BBY is strengthening its digital ecosystem with the launch of a new online marketplace, tripling the product assortment in categories like mobile accessories and gaming. The platform uses AI-powered search to enhance product discovery and personalization. Combined with seamless store integration, seller support and growing advertising capabilities, Best Buy is positioning itself as a leading digital-first retailer.

Target’s Price Performance, Valuation & Estimates

Target stock has lost 34.1% year to date against the industry’s growth of 1.9%.

Its forward 12-month price-to-earnings ratio of 11.25 reflects a lower valuation than the industry’s average of 29.49. TGT carries a Value Score of A. 

The Zacks Consensus Estimate for TGT’s fiscal 2025 earnings implies a year-over-year decline of 15.8%, while the same for fiscal 2026 indicates growth of 8.9%. Earnings estimates for fiscal 2025 and 2026 have been southbound by 3 cents and 2 cents per share in the past seven days.

Target currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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