Target's $5 Billion Capex Plan Puts Stores and Technology in Focus
Target Corporation TGT is increasing capital investments to strengthen its store network, supply chain and technology capabilities. The retailer expects capital expenditures of approximately $5 billion in fiscal 2026, with spending directed toward strategic priorities that include new stores, full-store remodels and technology upgrades. Through the first half, Target deployed about $2.4 billion in capital expenditures, up nearly 30% from a year ago.
Store investments remain central to the plan. Target opened 17 new stores in the second quarter, bringing the first-half total count to 24. It also had more than 100 full-store remodels underway, moving toward roughly 130 for the year. Management views these investments as important not only for improving the in-store experience but also for supporting fulfillment, as stores handle more than 95% of the company’s sales.
In tandem with store capital, Target is accelerating its digital and technology capabilities. The company is modernizing its technology foundation to personalize experiences across stores and digital channels, strengthen its retail media business, and help merchants identify and respond to emerging trends faster. Target has partnered with OpenAI, Google Gemini and other leading platforms as it explores the future of agentic commerce. Management said digital traffic sourced from external AI platforms is growing more than 3.5 times the industry rate versus a year ago.
On the operational side, Target is investing in Proxima, a digital twin of its middle-mile inventory positioning system. The tool lets teams test and iterate inventory-flow plans before implementation, assess potential downstream effects and make inventory decisions with greater confidence. Target also said it fulfilled nearly 30% more same-day and next-day units in the second quarter than a year earlier, underscoring how technology, inventory reliability and network investments are being used together to improve speed and execution.
By balancing physical store expansion with investments in digital and supply-chain infrastructure, Target’s capital expenditure plan is strengthening its operating network to support faster fulfillment, greater inventory reliability and improved service across guest touchpoints.
WMT & DG Step Up Capex Across Stores, Supply Chain and Tech
Walmart Inc. WMT is also leaning heavily into capital investment, raising its fiscal 2027 capital expenditure outlook to about 4% of net sales from roughly 3.5% earlier. Walmart said higher spending is supporting its omnichannel growth strategy, with investments across automation, technology, fulfillment capacity and its physical network. Walmart expects these investments to improve inventory flow, speed, in-stock levels and fulfillment economics, reinforcing Walmart’s broader push toward faster, tech-enabled retail operations.
Dollar General Corporation DG expects fiscal 2026 capital expenditures of $1.4-$1.5 billion, with management directing spending toward store growth, remodels, supply-chain projects and technology. Through the 26 weeks ended July 31, 2026, Dollar General spent about $758 million, including $414 million on existing-store upgrades and remodels, $168 million on distribution and transportation projects, and $31 million on information systems and technology. Dollar General also plans about 4,730 real-estate projects during the year.
How Does Target Stack Up Against Its Industry?
Target has seen its shares rally 23.7% over the past three months against the industry’s 2.4% decline.
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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 15.99, lower than the industry’s 27.16. However, the stock is trading above its 12-month median level of 14.87.
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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 37.8%, respectively. For the next fiscal year, the consensus estimate indicates a 3.1% rise in sales but a decline of 9.5% in earnings per share.
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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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This article originally published on Zacks Investment Research (zacks.com).
