Target Faces Challenges as New CEO Takes Over Amid Declining Sales

AUSTIN, Texas — Target Corp. exceeded Wall Street’s expectations for earnings and sales on Wednesday, but the retailer still reported declines in store traffic and online sales. With substantial challenges ahead, the Minneapolis-based company announced a leadership change as Chief Operating Officer Michael Fiddelke will succeed CEO Brian Cornell on February 1, 2025.

Fiddelke, a 20-year veteran of Target, emphasized his intention to restore the retailer’s growth and modern image. ‘I’m not waiting until February to make changes,’ he stated. He identified three main priorities: enhancing the reputation for unique merchandise, ensuring a consistent customer experience, and leveraging technology more effectively.

Following the earnings report, Target’s stock fell by about 8% in premarket trading, a reflection of investor concern amid stagnant sales growth over the past four years and declining store traffic. Analytics firm Placer.ai indicated that visits to Target stores have dropped almost weekly since late January. The company’s stock has plummeted nearly 60% from its peak in late 2021.

During the three months ending August 2, Target’s comparable sales, which include both in-store and online, declined by 1.9%, with net income decreased to $935 million or $2.05 per share, down from $1.19 billion or $2.57 per share last year. Revenue also fell from $25.45 billion to $24.83 billion year-over-year.

Despite the challenges in its core business, digital sales experienced a noted increase of 4.3% year-over-year. On a positive note, Target’s non-merchandise sales surged by 14.2%, driven largely by its advertising business. Fiddelke acknowledged that while the retailer’s overall performance remains weak, sales trends improved in all key merchandise categories from the first to the second quarter.

Target also faced external challenges, including higher tariffs affecting product costs, as it imports approximately half of its offerings. The company highlighted a new partnership with Ulta Beauty, which has added Ulta shops to nearly a third of its stores. However, this collaboration is set to end in August 2026.

The upcoming financial outlook remains cautious, with Target projecting a low single-digit percentage decline in sales and adjusted earnings between $7 to $9 per share for the full year. Recent trading activity and future guidance hint at ongoing volatility as analysts emphasize the need for clarity in Target’s strategic direction.