Target is set to report second-quarter fiscal 2026 earnings on Wednesday that analysts expect to fall short of Wall Street consensus, as tariff-related cost pressures weaken discretionary demand. Investors will focus on comparable sales and full-year guidance.

The results follow a difficult period for Target, which has lagged rivals Walmart and Costco in attracting value-focused consumers. Retail research analysts have pointed to sluggish sales in home goods and apparel, discretionary categories where shoppers have pulled back as tariffs push up prices across imported merchandise.

The report lands one day after Home Depot posted stronger-than-expected quarterly results driven by professional customers. Target's exposure to general merchandise makes it more vulnerable to the cautious spending environment that US retail sales data showed earlier this month, when discretionary purchases weakened.

Market watchers will scrutinise whether Target's management, led by chief executive Brian Cornell, maintains or trims its full-year outlook. Any downward revision to guidance or comparable sales would likely weigh on the shares, which have underperformed the broader S&P 500 retail index this year.

Analysts at Morgan Stanley and Oppenheimer have flagged margin pressure from tariffs and elevated markdowns as key risks. The company's commentary on inventory management and pricing strategy is expected to shape sentiment heading into the crucial autumn shopping season.