Target is improving its supply chain to support new CEO Michael Fiddelke’s turnaround plan, but better logistics performance already led to more stable inventory levels and revenue growth in the first quarter.
The retailer on Wednesday posted its biggest quarterly sales increase in more than three years for the first three months of 2026, with net sales increasing 6.7% to $25.4 billion and comparable store sales growing 5.6% year over year. Quarterly adjusted earnings per share earnings of $1.71 beat expectations, but a 25% decline in net income suggests that increased investment in merchandise assortment, store modernization and marketing is costly at a time of uncertain consumer momentum.
Management stressed that inventory reliability is a top priority after recent periods in which popular merchandise was out of stock, leaving money on the table and frustrating customers.
Target’s (NYSE: TGT) new chief operating officer, Lisa Roath, told analysts on a conference call that improvements in the supply chain will help boost sales and results, noting that out-of-stock products were down compared to a year ago.
“Our future strategy focuses on…product availability, ship-to-home speed, and better leveraging of supply chain spend. In the first quarter, we saw increased inventory productivity with a more than 10% year-over-year increase. We also maintained consistent availability of top items and improved key reliability metrics, even amid higher-than-expected demand.”
The most immediate inventory improvement came in the company’s most popular product categories, such as food, daily necessities and beauty, Roath said. Target is investing in facilities, data analytics and staff to take supply chain management to the next level. “We’re working to use AI to improve our demand forecasting, which helps reduce some of the volatility that can cause some of those inventory issues,” he explained.
On Tuesday, Target announced the hiring of Jeff England to be its next chief supply chain officer to accelerate those trends. England previously held the same role at three other companies, including Walmart. Retailers are increasingly focused on avoiding empty shelves and improving e-commerce fulfillment speed because they result in a better shopper experience, making shoppers more willing to buy from their stores.
With the continued expansion of next-day and same-day delivery service for online customers, stores are an increasingly important part of Target’s supply chain strategy. The retailer says two-thirds of digital sales are made the same day, via drive-thru pickup, in-store pickup or same-day delivery for Target Circle 360 members.