Target Eyes FY26 as Turning Point on Investments in Tech & Remodels

Target Corporation TGT is treating fiscal 2026 as an inflection year, accelerating investment behind its store fleet, digital capabilities and operating model after several years of volatile discretionary demand. Management acknowledged that the company is not yet where it wants to be, but is reorganizing around a more modern retail architecture designed to restore relevance and growth.

Capital spending will rise to roughly $5 billion in fiscal 2026, up from $4 billion this year, with dollars directed toward technology upgrades, category resets, new larger-format stores and an expanded remodel program. Management noted that remodels continue to drive reliable sales lifts, while new stores are outperforming internal expectations. 

Technology modernization is central to the turnaround. Target is deploying machine learning and AI-enabled tools to improve forecasting, in-stocks and personalization, as well as to compress time from trend identification to shelf. Early progress was visible in the fiscal third quarter, as the availability of the company’s top-selling SKUs improved by more than 150 basis points year over year. 

Store presentation will follow suit. Target plans its most significant floor pad transformation in 10 years, with resets in Home, Baby, Beauty and Fun 101. These changes are intended to elevate discretionary storytelling and reassert design-led merchandising, areas that have historically distinguished the brand. 

To support the new model, headquarters staffing has been reduced by roughly 1,800 roles, streamlining decision-making and accelerating the merchant workflow. If executed effectively, TGT’s 2026 investments could restore discretionary momentum and position the company for a more competitive cycle, defined by improved availability, stronger store experience and tighter merchandising discipline.

WMT & BBY Boost Digital Initiatives as TGT Builds Tech Infrastructure

Walmart Inc. WMT advanced its Digital initiatives to deliver more personalized, multi-modal and contextual app experiences in the third quarter of fiscal 2026. Walmart is also using AI to improve software development, where more than 40% of new code is now AI-generated or AI-assisted, and to help associates build skills through OpenAI certifications and ChatGPT Enterprise access. Moreover, Walmart is leveraging a partnership with OpenAI so customers can purchase items directly through ChatGPT, making shopping more seamless and connected across channels.

Best Buy Co., Inc. BBY advanced its digital initiatives in the third quarter of fiscal 2026 by driving app use, expanding personalization and improving online experiences, including enhanced TV shopping and faster delivery options. The company also strengthened its new online marketplace with above 1,000 sellers and 11X more SKUs, while Best Buy continued boosting fulfillment efficiency and return convenience to elevate the omnichannel journey. These enhancements reinforced Best Buy’s position as a leading tech-focused omnichannel retailer.

Target’s Price Performance, Valuation & Estimates

The TGT stock has gained 21.6% in the past three months compared with the industry’s growth of 9.5%.

Target’s forward 12-month price-to-earnings ratio of 14.43 reflects a lower valuation than the industry’s average of 31.94. TGT has a Value Score of C.

The Zacks Consensus Estimate for TGT’s fiscal 2025 earnings implies a year-over-year decline of 17.6%, while the same for fiscal 2026 indicates growth of 5.9%. Earnings estimates for fiscal 2025 and 2026 have been southbound by 1 cent per share and unchanged, respectively, in the past 30 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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