Target's Turnaround Upside Lies in Its Margins -- Market Talk

Dow Jones04-15

0915 ET - Target's recovery is being misread as simply a traffic story, when in reality the real upside lies in margins, Jefferies analysts say in a research note. The retailer's mix has skewed more heavily toward food and essentials in recent years, while discretionary categories such as apparel and home have underperformed, the analysts say. The company is now focused on improving discretionary categories that carry meaningfully higher margins. If successful, the move could drive margin expansion without requiring aggressive traffic assumptions, the analysts say. The action, coupled with improved markdown discipline and operating leverage in a fixed‑cost model, can drive EPS growth well ahead of revenue, they say. (connor.hart@wsj.com)

(END) Dow Jones Newswires

April 15, 2026 09:15 ET (13:15 GMT)

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If successful, the move could drive margin expansion without requiring aggressive traffic assumptions, the analysts say. The action, coupled with improved markdown discipline and operating leverage in a fixed‑cost model, can drive EPS growth well ahead of revenue, they say. 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The retailer's mix has skewed more heavily toward food and essentials in recent years, while discretionary categories such as apparel and home have underperformed, the analysts say. The company is now focused on improving discretionary categories that carry meaningfully higher margins. If successful, the move could drive margin expansion without requiring aggressive traffic assumptions, the analysts say. The action, coupled with improved markdown discipline and operating leverage in a fixed‑cost model, can drive EPS growth well ahead of revenue, they say. 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