Target Corporation has cut its full-year outlook following a subdued first quarter marked by weaker-than-expected sales, tariff-related cost pressures, and dampened consumer sentiment.
The US-based retailer posted a 2.8% drop in net sales to $23.85 billion for the quarter ended May 3. Comparable sales fell 3.8%, with in-store transactions down and average ticket size shrinking. Discretionary categories underperformed, while food and beverage was the only segment to show growth, up 0.8%. Digital sales rose 4.7% but couldn’t offset overall declines.
Target attributed its performance to a challenging economic environment, ongoing consumer uncertainty, and tariff concerns, prompting a revised forecast: it now expects a low-single-digit decline in full-year net sales and adjusted earnings per share between $7 and $9, down from its prior range of $8.80 to $9.80.
Despite the missed earnings, net income climbed 10% to $1.04 billion due to a one-off $593 million legal settlement gain. Adjusted EPS came in at $1.30, below analyst expectations.
Tariffs remain a significant concern. Although half of Target’s products are US-sourced, the company continues to diversify its private-label supply chain away from China, aiming to reduce exposure to less than 25% by 2026. Target employs various mitigation strategies, including renegotiating with suppliers, shifting production, and adjusting pricing as a last resort.
To speed up transformation, Target has launched an Enterprise Acceleration Office and appointed COO Michael Fiddelke to lead cross-functional initiatives to streamline operations and enhance long-term growth. The office is part of a broader strategy to add $15 billion in revenue by 2030.
In leadership changes, the company announced the planned departure of Chief Strategy Officer Christina Hennington and Chief Legal Officer Amy Tu.
Target’s stock fell over 5% following the earnings release, reflecting investor concern over macroeconomic uncertainty and the retailer’s ability to maintain competitiveness amid external headwinds.