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Are Target's Stores Becoming a Bigger E-commerce Growth Engine?

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Key Takeaways

  • Target's digital comparable sales rose 8.7% in Q2 fiscal 2026, driven by over 25% same-day delivery growth.
  • Target fulfilled 97.6% of merchandise sales through stores, with same-day and next-day units up nearly 30%.
  • TGT's shares gained 3.4% in three months, outperforming the industry, while its forward P/E stands at 15.87.

Target Corporation (TGT - Free Report) is leveraging its extensive store network to support e-commerce growth, with physical locations playing a key role in fulfilling digital orders. The company's second-quarter fiscal 2026 performance highlights how its integrated model is enabling faster delivery and convenient shopping options.

Target's digital comparable sales increased 8.7% year over year in the quarter, led by more than 25% growth in same-day delivery and accelerating from 4.3% growth in the prior-year period. Digitally originated sales accounted for 19.6% of merchandise sales, up from 18.9% a year earlier.

Target uses its network of more than 2,000 stores to fulfill orders placed through digital channels. Management emphasized that stores bring inventory closer to customers, enabling faster, more reliable and cost-effective fulfillment. Its network supports shipping from stores, Order Pickup, Drive Up and same-day delivery. During the quarter, 97.6% of merchandise sales were fulfilled through stores, including in-store purchases and digitally originated orders.

Operational execution is also strengthening. Target fulfilled nearly 30% more same-day and next-day units than a year earlier. Inventory reliability reached multiyear highs, with product availability improving across frequently purchased items.

Target continues to invest in its store infrastructure, opening 17 locations during the second quarter while advancing more than 100 remodels. These investments are expanding and enhancing its physical network, which remains central to supporting digital demand and fulfillment efficiency.

How Are Walmart & BJ's Wholesale Advancing E-commerce Growth?

Walmart Inc. (WMT - Free Report) is leveraging its physical footprint to accelerate e-commerce growth through faster fulfillment. In second-quarter fiscal 2027, Walmart's U.S. e-commerce sales grew 24%, with store-fulfilled deliveries increasing more than 40%. Fast delivery sales rose 48%, supported by Walmart's expanding fulfillment infrastructure and local delivery capabilities. Walmart also extended sub-30-minute delivery to 38 U.S. markets, reinforcing the role of stores in delivering speed and convenience. 

BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) is also strengthening its digital business through club-based fulfillment and convenience offerings. In second-quarter fiscal 2026, BJ's Wholesale recorded 30% growth in digitally enabled comparable sales, representing 64% growth on a two-year stacked basis. More than 90% of BJ's Wholesale digital sales were fulfilled in clubs, supported by buy-online-pickup-in-club, curbside pickup and same-day delivery. These services highlight BJ's Wholesale's emphasis on integrating physical clubs with digital shopping.

How Does Target Stack Up Against Its Industry?

Target has seen its shares rally 3.4% over the past three months against the industry’s decline of 0.7%. 
 

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What Does Target’s Current Valuation Suggest?

From a valuation standpoint, Target's forward 12-month price-to-earnings ratio stands at 15.87, lower than the industry’s 28.88. However, the stock is trading above its 12-month median level of 15.11.
 

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What Do Earnings Estimates Signal for Target?

The Zacks Consensus Estimate for Target’s current fiscal-year sales and earnings per share implies year-over-year growth of 5.1% and 38.8%, respectively. For the next fiscal year, the consensus estimate indicates a 3.1% rise in sales but a decline of 9.9% in earnings per share.
 

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Target’s Investment Case

Target's strengthening sales momentum, improving inventory reliability and expanding omnichannel capabilities support a favorable investment outlook. Its store-based fulfillment network, growing digital business and faster delivery services enhance customer convenience, while investments in merchandising, technology and store remodels reinforce competitiveness. Improving underlying profitability and a discounted valuation relative to the industry support Target's investment case. Target currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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