TARGET AND WALMART Q4 EARNINGS CALL COMPARISON
What Target and Walmart Q4 Earnings Tell Every CPG Brand About Retail Media in 2026
Target and Walmart just reported Q4 earnings on the same week. Here is what both calls reveal about retail media strategy, loyalty, and where CPG brands should be investing in 2026.
Target and Walmart Reported Q4 Earnings the Same Week. The Contrast Is Worth Paying Attention To.
Walmart reported record revenue, accelerating retail media growth, and AI-driven basket lift with measurable proof points. Target reported a candid turnaround plan backed by more than $2 billion in new investment, early signs of momentum, and a leadership team that acknowledged clearly where the business has fallen short.
Two of the most important retailers in American CPG. Same consumer environment. Very different scorecards.
For brands managing retail media budgets across both platforms, these calls carry real strategic implications. This post breaks down the key themes from both earnings calls, where they align, where they diverge, and what it means for how brands should be thinking about Roundel, Walmart Connect, and omnichannel retail media investment in 2026.
Most retail media conversations focus on platform features. The earnings calls tell you something more important: what the retailer is prioritizing, where the money is flowing, and which capabilities are actually scaling.
Walmart’s Q4 FY2026 call covered the period ending January 2026. Target’s Q4 2025 call, framed as a 2026 Financial Community Meeting, was held March 3, 2026, and functioned as both an earnings recap and a forward-looking strategy presentation.
Reading both together gives you a rare, side-by-side view of how the two most important non-Amazon retail media networks are positioned heading into the rest of 2026.
Key Takeaways at a Glance
- Walmart Connect grew 41% in Q4. Global advertising reached $6.4 billion for the full year, up 46%. Advertising and membership now represent nearly one-third of Walmart’s total operating profit.
- Target’s Roundel was cited as a future gross margin tailwind and a contributor to incremental non-comp growth, but no specific revenue figures were disclosed.
- Both retailers are betting heavily on stores as the foundation of digital fulfillment. Same-day services are growing fast and driving higher total spend per customer at both chains.
- Target is in a genuine operational reset. Walmart is optimizing a machine that is already performing.
- For CPG brands, the retail media investment calculus is different at each retailer, and that difference is getting wider.
Where Target and Walmart Are Aligned
Are Stores Still the Most Important Asset in Retail?
Yes. Both companies made this case explicitly, and it is worth noting how similar the logic is even though the two retailers are in very different places financially.
Walmart described its 5,200-plus U.S. locations as forward-deployed inventory hubs central to its delivery speed advantage. The company can reach 95% of America in under three hours. CEO John Furner and incoming Walmart U.S. President Dave Gagina both described the store network not as a legacy cost but as a fulfillment infrastructure that is increasingly difficult to replicate.
Target CFO Jim Lee stated directly that stores fulfill more than 97% of Target’s sales, and CEO Michael Fiddelke said something that should land with brands: “Store investment is supply chain investment for us.” Target plans to open more than 30 new full-sized stores in 2026 and complete more than 130 full-store remodels, with store investments receiving the majority of Target’s $5 billion CapEx commitment this year.
The underlying logic at both retailers is identical. Physical proximity to the customer is a moat. The store is also the digital fulfillment hub. You cannot separate the two.
For brands: Retail media investment that drives in-store velocity still matters. Both platforms are built on store-level performance data, and campaigns that connect digital targeting to in-store outcomes will remain the most defensible investments at both chains.
Is Same-Day Delivery a Loyalty Driver or a Margin Risk?
Both retailers answered this question clearly, and the answer is the same. Same-day services are loyalty multipliers, not margin drains.
Walmart reported that fast delivery, defined as delivery in under three hours, grew more than 60% year over year. 35% of store-fulfilled orders are now delivered in under three hours.
Target reported same-day delivery up more than 30% last year, with same-day services generating more than $14 billion in sales and accounting for two-thirds of total digital sales. Fiddelke shared a specific data point that matters for how brands think about omnichannel: Drive Up users spend 20-30% more at Target in total, and their in-store spending actually increases, not decreases.
The same dynamic almost certainly holds at Walmart. The retailers who invested early in same-day infrastructure are now seeing it pay off in loyalty depth, basket size, and visit frequency simultaneously.
For brands: If your Target or Walmart retail media strategy is not integrated with same-day services, you are missing a significant part of the attribution story. Customers using Drive Up, pickup, and same-day delivery are your highest-value shoppers. Your media should be finding them.
How Are Target Circle and Walmart+ Performing as Retail Media Foundations?
Both programs showed meaningful growth, and both are increasingly central to how each retailer monetizes data.
Walmart reported Walmart+ membership income growing at a double-digit rate, with the program generating strong sign-ups and high usage of express delivery benefits. At Sam’s Club, membership income grew more than 6%. Combined with advertising, membership fees represented nearly one-third of Walmart’s total operating profit in Q4.
Target reported Target Circle members spend 3x more on average than non-members. Target Circle 360 members spend 7x more. The program doubled in size last year. Cara Sylvester described the AI-driven personalization engine powered by Target Circle as generating billions of dollars in incremental sales.
Both loyalty programs are evolving from discount vehicles into data infrastructure. The first-party data generated by loyalty engagement is what makes Roundel and Walmart Connect work at the campaign level. Brands that understand this connection and structure their Circle and Connect investments accordingly will outperform those that treat them as separate budget lines.
For brands: Your retail media investment is only as good as the loyalty data behind the targeting. At Target, that means understanding how your brand shows up in Circle offers and how that connects to Roundel campaign performance. At Walmart, it means understanding how Walmart+ member behavior patterns compare to non-member audiences and planning accordingly.
What Role Is AI Playing in Retail Commerce Right Now?
Both retailers discussed AI investment prominently, but the maturity and proof points are at different stages.
Walmart has a named, measurable product in Sparky, its AI shopping assistant. The company reported that roughly half of all U.S. app users engaged with Sparky in Q4, and customers who used Sparky showed average order values approximately 35% higher than non-Sparky customers. Gagina described the shift as moving from traditional keyword search to intent-driven commerce.
Walmart is also building AI-powered commerce partnerships with OpenAI and Alphabet under its AgenTic Commerce framework, which connects AI-generated basket recommendations to physical fulfillment through its store network and delivery infrastructure.
Target described its AI-driven personalization engine as generating billions in incremental sales through targeted offers and rewards delivered through Target Circle. Fiddelke also referenced investments in conversational search and the company’s early positioning in shoppable experiences on generative AI platforms. The framing was strategic and forward-looking rather than results-oriented.
For brands: Walmart’s Sparky is already reshaping how products get discovered on the platform. When an AI agent builds a basket on behalf of a shopper, the brands that are optimized for search relevance, in-stock availability, and strong content are the ones that get included. This is not a future concern. It is a current one.
Where Target and Walmart Diverge
What Do the Financial Results Actually Tell Us?
The gap here is significant and worth stating plainly.
Walmart crossed $700 billion in annual revenue for the first time. Q4 revenue grew 4.9% in constant currency. Adjusted operating income grew 10.5%, more than twice the rate of sales growth. All three segments grew profits faster than sales. Ecommerce grew 27% in the U.S. and exceeded $150 billion globally for the full year. Free cash flow reached $42 billion with 18% year-over-year growth. The company authorized a $30 billion share repurchase program, described as the largest in its history.
Target guided for net sales growth of approximately 2% in 2026, including a small comparable sales increase. Operating margin was 4.6% in 2025 and is expected to increase by approximately 20 basis points in 2026. EPS guidance of $7.50 to $8.50 represents roughly 5-6% growth from a pressured base. Sales trends improved meaningfully in December, January, and February, which was highlighted as encouraging early momentum.
These are not comparable trajectories. Walmart is scaling from strength. Target is rebuilding from a period of underperformance.
How Are Roundel and Walmart Connect Different Right Now?
This is the most important divergence for retail media professionals and brand managers to understand.
Walmart Connect grew 41% in Q4. For the full year, global advertising reached $6.4 billion, up 46%. The Vizio acquisition added a connected TV layer with triple-digit advertising growth in its first year. Advertising and membership income together now represent nearly one-third of Walmart’s total operating profit. Walmart’s CFO acknowledged that even at this scale, the company’s advertising revenue as a percentage of GMV remains below best-in-class competitors, implying substantial runway ahead.
Roundel was referenced in Target’s call as a contributor to gross margin expansion and a source of incremental non-comp revenue growth expected to add more than one percentage point of total sales growth in 2026. No specific revenue figure or growth rate was disclosed. CFO Jim Lee named Roundel explicitly as a positive tailwind. The framing positions Roundel as a scaling, margin-accretive business, but one that has not yet reached the financial disclosure threshold Walmart Connect achieved.
For brands, the practical implication is this. Walmart Connect is a scaled, data-rich platform where investment decisions can be made with increasing precision and where advertising spend has a direct and measurable connection to one of the largest retail media profit pools outside of Amazon. Roundel remains a high-value, relationship-driven platform where DIGITS’ managed service model and Target Circle expertise continue to create significant advantages for brands willing to invest in execution quality.
Neither platform should be underweighted. They serve different roles, reach overlapping but distinct audiences, and have different cost structures and attribution models.
What Is Target’s Merchandising Reset and Why Does It Matter for Brands?
This was the central narrative of Target’s entire call, and it has real implications for brands managing assortment and activation at Target.
Sylvester laid out a category-by-category transformation touching home, apparel, food and beverage, beauty, wellness, and baby. The scale is significant. Target plans assortment changes across all 2,000 stores in 2026, the most merchandise change in a decade according to Fiddelke. Key initiatives include the relaunch of the Threshold home brand with shop-in-shop destinations in 200 stores, Target Beauty Studio launching in 600 stores in the fall, a new style series in apparel with regular culturally driven drops, and more than $1 billion in food and beverage CapEx, more than double recent years.
The food and beverage callout is particularly relevant. Target is the fifth largest digital grocer in the U.S. and reported that newness drove $2 billion in food sales last year. Non-alcoholic beverages delivered a 6.5% comp last year. Target plans to double the number of unique food items in its assortment over the next three years. The company said 40% of guests are actively looking for something new when they shop food at Target.
For emerging brands and CPG brands in growth categories, this is a meaningful signal. Target is actively creating space for newness in food and beverage, and the retailer is backing that intention with capital and category strategy.
For brands: If you have been waiting for Target to recommit to emerging food and beverage brands, this call suggests the investment and intention are now aligned. The question is whether your brand is positioned to capitalize on that opening. Retail media investment that demonstrates velocity and drives Circle engagement will matter in those merchant conversations.
How Is Each Retailer Thinking About Consumer Health?
Walmart was direct about the bifurcation in its customer base. Households earning $100,000 or more drove the majority of share gains, a pattern consistent across several recent quarters. Lower-income households below $50,000 are stretched, with some managing spending paycheck to paycheck. Even so, both segments are increasingly prioritizing convenience alongside price.
The fact that Walmart is gaining share with higher-income consumers by winning on fashion, marketplace assortment, and delivery speed is a notable shift in how analysts and brands should think about who is shopping at Walmart.
Target described its target guest as “busy families” who value style, design, and ease and who are digitally fluent and brand-aware. The challenge is that this guest has options. The turnaround thesis is that when Target executes its differentiated assortment and experience with discipline, this guest comes back and spends more across more categories. The early data from February suggests that thesis may be working.
Action Steps for CPG Brands in 2026
1. Do not treat Walmart Connect as optional. At 41% growth and nearly one-third of Walmart’s operating profit coming from advertising and membership, Walmart Connect is no longer an emerging channel. It is a core media buy for any brand with meaningful Walmart distribution. Brands that are still in test-and-learn mode need to accelerate.
2. Understand the Roundel opportunity in the context of Target’s reset. Target is actively investing in assortment newness, in-store experience, and digital discovery. That investment creates conditions for stronger Roundel performance. Brands that are active in Target Circle and running well-structured Roundel campaigns when traffic returns will benefit disproportionately.
3. Map your retail media investment to same-day service audiences. Both retailers have identified same-day users as their highest-value, highest-spend shoppers. These audiences are accessible through Roundel and Walmart Connect targeting. If your media plan is not prioritizing them, you are not reaching your best customers.
4. Take Target’s food and beverage CapEx signal seriously. More than $1 billion in food and beverage infrastructure investment means the category is getting more space, more focus, and more merchant attention. Brands in food, beverage, and wellness that can demonstrate velocity and loyalty data will be in a better position to earn and keep shelf space.
5. Build your AI readiness now. Walmart’s Sparky is already influencing discovery. Target’s conversational search investments will follow. Brands with strong content, accurate inventory data, and clear value propositions will fare better as AI agents begin playing a larger role in basket building. This is not a 2027 problem.
Frequently Asked Questions
What is Walmart Connect and how does it compare to Roundel? Walmart Connect is Walmart’s digital advertising platform that allows brands and suppliers to target Walmart shoppers using first-party purchase data. Roundel is Target’s equivalent platform. Both use closed-loop attribution connecting ad exposure to verified purchase. Walmart Connect reported 41% growth in Q4 FY2026 and is part of a global advertising business that reached $6.4 billion for the full year. Roundel is cited by Target as a growing, margin-accretive revenue stream, though specific figures are not publicly disclosed. DIGITS manages active campaigns on both platforms.
Is Target Circle 360 worth the investment for driving brand performance? Target Circle 360 members spend 7x more at Target on average than non-members, and the program doubled in size last year. These are your highest-frequency, highest-basket shoppers. Brands that integrate Target Circle offers with Roundel campaigns see stronger closed-loop attribution and better campaign performance. For most brands with meaningful Target distribution, Circle engagement is foundational to retail media performance, not optional.
How should brands think about tariff risk when planning retail media budgets? Both Walmart and Target addressed tariff uncertainty in their calls. Walmart cited tariff comparisons as a Q1 headwind but expressed confidence in managing through volatility. Target described the 2025 tariff impact as largely non-recurring and noted healthy underlying margins entering 2026. For brands, the practical implication is to plan retail media investment against retailer strategies that prioritize value and volume, not against tariff scenarios that neither brand nor retailer can control with precision.
What does Target’s $2 billion investment mean for brands selling at Target? It means Target is making its most significant operational and assortment investment in years. More payroll in stores means better execution. More CapEx on new stores and remodels means better presentation. More food and beverage investment means more shelf space and more merchant focus on growth categories. For brands, this is the environment to increase investment in Target retail media, not retreat from it.
Is Walmart Connect more effective than Roundel? Effectiveness depends on your brand, category, customer, and campaign objective. Walmart Connect offers greater scale and a rapidly maturing ad technology stack. Roundel offers precision targeting within a highly loyal, style-conscious guest base with strong affinity in beauty, food and beverage, and home. The strongest retail media programs use both platforms in a coordinated way with distinct objectives, not as interchangeable buys.
The Bottom Line
Walmart and Target are on different trajectories right now. That gap will not close immediately, and brands should plan accordingly.
Walmart Connect is a scaled, high-growth retail media platform with a clear path to continued expansion. The AI commerce infrastructure Walmart is building will reshape how brands compete for discovery on the platform over the next two to three years. Brands that are not investing with intention and expertise in Walmart Connect today are already behind.
Target is in an investment year. The assortment reset, store experience upgrades, and loyalty expansion are real commitments backed by real capital. The early momentum is encouraging. For brands with strong Target distribution, this is not a moment to pull back. It is a moment to position for the recovery.
The retailers that win in retail media over the next three years will not be the ones with the biggest ad budgets. They will be the ones with the clearest understanding of how each platform works, where the data is strongest, and how to connect media investment to merchant relationships and shopper behavior simultaneously.
That is the work we do every day at DIGITS.
Citations and References
- Walmart Q4 FY2026 Earnings Call Transcript, February 19, 2026
- Target Q4 2025 Earnings Call / 2026 Financial Community Meeting Transcript, March 3, 2026
About DIGITS Agency
DIGITS is an omnichannel retail media agency specializing in Target, regional grocers, and alcohol retail media. As a Target Managed Services partner and Roundel Media Studio Certified agency, DIGITS helps CPG brands navigate retail media with strategic planning, hands-on campaign management, and proprietary analytics. Learn more at www.digitsagency.com.
Dave Glaza, Founder & CEO of DIGITS, remains committed to bringing digital capabilities to physical stores!
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