Target lowered its full-year sales forecast on Wednesday after first-quarter results fell short of expectations, reflecting continued weakness in discretionary spending and consumer unease over tariffs.
Executives also acknowledged the lingering impact of backlash to the company’s retreat from parts of its diversity, equity and inclusion (DEI) strategy.
Revenue for the quarter came in at $23.85 billion, missing Wall Street’s estimate of $24.27 billion, according to LSEG data.
Comparable sales declined 3.8%, including a 5.7% drop in store traffic. Digital sales, however, rose 4.7%.
Transactions across Target’s stores and online platform fell 2.4%, and the average spend per customer dipped 1.4%.
Slower growth and share losses prompt strategic reset
Speaking with reporters, CEO Brian Cornell admitted the retailer “fell short” in the quarter and acknowledged that Target is losing ground in key categories.
Of the 35 merchandise categories the company tracks, it gained or held share in just 15.
“We’re not happy with that,” Cornell said. “We’ve got to be growing [market] share in 60, 70, 80% of those categories. That’s our focus over the balance of the year.”
Target now expects a low-single-digit decline in full-year sales, reversing its earlier guidance for approximately 1% growth.
It also narrowed its adjusted earnings forecast to between $7 and $9 per share, down from the prior range of $8.80 to $9.80.
Leadership shakeup and operational restructuring
As part of its turnaround efforts, Target announced a new “Enterprise Acceleration Office” aimed at streamlining operations, enhancing technology use, and speeding up growth.
Chief Operating Officer Michael Fiddelke will lead the new office.
Two senior leaders, Chief Legal and Compliance Officer Amy Tu and Chief Strategy and Growth Officer Christina Hennington, are leaving the company.
Hennington had been considered a potential successor to Cornell.
Ongoing pricing pressure and tariff strategy
Tariff-related costs are adding complexity to Target’s pricing strategy. While rivals like Walmart have confirmed they’ll raise prices, and Home Depot has said it will hold steady, Target’s response has been more measured.
Chief Commercial Officer Rick Gomez said some price increases are expected, though the company is working to mitigate impacts by negotiating with suppliers, adjusting sourcing countries, and tweaking order schedules.
“We’re constantly adjusting pricing,” Cornell said. “Some are going up, some will be reduced, but that’s an ongoing effort that takes place each and every day.”
Target has notably reduced its reliance on China for private label manufacturing, moving from 60% in 2017 to 30% today, with plans to lower that to 25% by the end of 2025.
Bright spots amid challenges
Despite the broader sales slowdown, executives highlighted areas of growth. Target Circle 360 same-day delivery usage jumped 36% in Q1, and the company saw positive sales in categories such as produce, floral, beverages, women’s swimwear, and toddler clothing. Seasonal events like Valentine’s Day and Easter also drove traffic gains.
Target’s bargain area, offering $1, $3, and $5 items, remains a priority, with plans to add mini beauty products and trendy food and beverage selections.
Gomez confirmed that pricing in that section would be preserved despite broader inflation and tariff pressures.
Earnings snapshot
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Adjusted EPS: $1.30 (unclear comparison to $1.61 consensus estimate)
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Net income: $1.04 billion, or $2.27 per share, up from $942 million, or $2.03 per share, a year ago
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Comparable sales: –3.8% YoY
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Stock movement: Shares fell over 3% in premarket trading Wednesday
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As Target works to recover its “Tarzhay” reputation and reverse declining customer loyalty, investors will be watching closely to see whether its operational overhaul and pricing strategy can deliver results in the second half of the year.
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