📉 Target Misses Q1 Sales Goals
Target has reduced its full-year sales forecast after a weaker-than-expected first quarter. The retail giant reported a 3% drop in quarterly sales, missing Wall Street expectations. Store and online transactions fell 2.4%, while the average customer spending decreased by 1.4%.
📉 Target’s Struggle to Regain Growth
The company has faced several years of slow growth and is working to regain its former reputation as a trend-setting retailer. Once celebrated as “Tarzhay,” Target is trying to win back customers and investor confidence after its stock fell over 37% in the past year.
⚠️ What’s Hurting Target’s Performance?
CEO Brian Cornell pointed to several key challenges:
- Lower consumer spending
- Uncertainty around new tariffs
- Backlash from changes to its Diversity, Equity, and Inclusion (DEI) initiatives
Out of 35 key merchandise categories, Target either maintained or gained market share in only 15, losing ground to competitors in others.
“We’re not happy with that,” said Cornell. “We need to grow market share in at least 60-80% of categories.”
đź“Š Updated Sales and Earnings Outlook
- New forecast: Low single-digit decline in sales (previously expected 1% growth)
- Adjusted EPS (excluding legal gains): $7 to $9 (was $8.80 to $9.80)
🔄 Leadership Changes and Growth Plans
To help improve performance, Target announced:
- A new Enterprise Acceleration Office to boost efficiency and innovation
- Michael Fiddelke, COO, will lead this initiative
- Departure of Amy Tu (Chief Legal Officer) and Christina Hennington (Chief Strategy Officer), who was considered a potential CEO successor
đź’ˇ Q1 2025 Financial Highlights
| Metric | Q1 2025 | Analyst Estimate |
|---|---|---|
| Revenue | $23.85B | $24.27B |
| Adjusted Earnings per Share | $1.30 | $1.61 (expected) |
| Net Income | $1.04B | $942M (2024 Q1) |
| Comparable Sales | -3.8% | – |
| Digital Sales Growth | +4.7% | – |
| Store Sales Decline | -5.7% | – |
📦 Shifting Focus to Best-Selling Categories
Despite the decline, Target reported sales growth in:
- Produce, beverages, and floral
- Women’s swimwear and toddler clothing
- Seasonal events like Valentine’s Day and Easter
Same-day delivery also rose by 36% through Target Circle 360.
đź’° Tariffs and Price Adjustments
Tariffs are creating more cost pressure for Target. The company will:
- Raise prices on selected items
- Negotiate with suppliers
- Shift production outside of China
- Delay or adjust shipments to control costs
Key sourcing change:
- In 2017, 60% of Target’s private-label goods were made in China. Today, it’s 30%, and the goal is to reduce that to 25% by end of 2026.
🛍️ Keeping Prices Low on Key Items
Target plans to maintain affordable pricing on seasonal products ($1, $3, $5 zones). The retailer will expand this area with:
- Mini beauty products
- Trendy snacks and beverages
đź“Ś Final Thoughts
Target faces a challenging retail environment marked by economic uncertainty, pricing pressure, and customer trust issues. While the road to recovery may be tough, the company is investing in leadership changes, tech innovation, and pricing strategy to regain momentum.
