Target Faces Sales Decline but Reaffirms Future Outlook

MINNEAPOLIS, Minnesota – Target reported a decline in sales and store traffic for the fiscal second quarter while reaffirming its outlook on Wednesday. The retailer’s shares fell about 8% in premarket trading following the news.

Newly appointed Chief Operating Officer Michael Fiddelke, who will take over as CEO on February 1, emphasized his commitment to restoring Target’s growth trajectory. Fiddelke noted the importance of reestablishing the retailer’s reputation for stylish merchandise and providing a consistent customer experience.

Analysts had expected weaker performance, yet Target managed to beat Wall Street’s earnings and sales forecasts for the quarter ending August 2. The company anticipates a low single-digit percentage decline in overall sales and adjusted earnings per share for the full year, between $7 to $9.

“We are on the right path but know we need to accelerate our changes,” Fiddelke said on a call with reporters. He has been with Target for 20 years and cited this experience as an asset for navigating the company’s challenges.

Overall, Target’s net income fell to $935 million, down from $1.19 billion, marking a drop in earnings per share from $2.57 to $2.05. Revenue decreased to $25.45 billion compared to last year. Comparable sales, which track sales from stores open at least 13 months, dropped by 1.9% year over year.

Moreover, digital sales rose by 4.3%, and the retailer continues to profit from its advertising business. Analysts observed that customer transactions slipped by 1.3%, with the average customer spend dropping by 0.6%. These trends reflect ongoing issues as the company grapples with shifts in consumer behavior.

Despite challenges in discretionary spending, Fiddelke highlighted objective efforts in product categories, such as new collaborations with Disney and Marvel for children’s home goods. “We’re aware of the competitive landscape and need to adapt,” he said.

In a noteworthy partnership, Target will end its collaboration with Ulta Beauty in August 2026, which initially aimed to increase traffic. While Fiddelke acknowledged assessing existing partnerships, he asserted confidence in the ongoing growth of Target’s beauty category.

Industry analysts have contrasting views on Target’s potential due to the ongoing pressures from tariffs and market competition. As a result, Target faces a crossroads as it navigates its identity amidst heightened competition from major players like Walmart and Amazon.

Looking forward, Target’s management remains focused on strategic changes designed to spur consumer interest and improve sales as they prepare for a challenging retail environment.