In the critical holiday quarter, Minneapolis-based Target experienced a decline in sales and profits as consumer spending slowed, compounded by the looming impact of tariffs and rising costs. Despite these challenges, the retailer surpassed many expectations, leading to a slight increase in its stock price prior to Tuesday’s market opening.
Target’s CEO, Brian Cornell, highlighted the company’s ability to attract more customers and achieve better-than-anticipated sales and profitability during this key period. The retailer reported a net income of $1.1 billion, or $2.41 per share, which exceeded Wall Street’s forecast of $2.26, according to FactSet. However, this figure represents a decrease from last year’s profit of $1.38 billion, attributed to having one fewer week of sales in the latest quarter.
Revenue dropped to $30.91 billion from $31.9 billion, yet still outperformed projections. The current economic climate has led to a decrease in discretionary spending among American consumers, creating uncertainty for retailers moving forward.
Target also faces potential repercussions from President Trump’s recently implemented tariffs against Canada and Mexico, which are expected to negatively affect market conditions both domestically and internationally. In a retaliatory move, China announced additional tariffs of up to 15% on various U.S. agricultural products, further complicating the business landscape for U.S. retailers.
With grocery prices on the rise, consumers are cutting back on non-essential spending, an area where Target is particularly vulnerable due to its reliance on discretionary items like clothing and electronics. Looking ahead, Target has projected flat sales for 2025, with earnings per share anticipated to range between $8.80 and $9.80, falling short of Wall Street’s expectation of $9.29.
In the most recent quarter, comparable sales from stores and digital channels that have been operating for at least a year increased by 1.5%, a positive turn compared to the 0.3% growth seen in the previous quarter.
