Target Faces Pressure Ahead of Earnings Report Amid Consumer Spending Decline

MINNEAPOLIS, Minnesota — Target Corporation is gearing up to report its first-quarter earnings on Wednesday, May 21, amid concerns over declining consumer spending. Analyst Joseph Feldman from Telsey Advisory Group has reiterated an ‘Outperform’ rating for the company, but has adjusted his earnings projections downwards due to expected weaker sales performance.

Feldman lowered his forecast for first-quarter sales to $24.3 billion, a 0.9% drop, and comparable sales are now expected to decline by 1.5%. Previously, he had anticipated a smaller decline of 1.0% in sales, which is now below the FactSet consensus of a 1.2% drop. The revision comes as the analyst cited concerns over rising costs and diminishing consumer spending, particularly within discretionary and general merchandise categories.

Data from Placer.ai indicated a decline in store traffic early in the quarter, although there was a slight recovery later, potentially attributed to the Easter holiday and improved weather. Feldman highlighted Target’s strategic initiatives, including value offerings, loyalty programs, and private label lines in collaboration with brands like Apple, Disney, and Ulta Beauty, which may help offset some of the pressures on sales.

Feldman has also reduced the company’s estimated earnings per share (EPS) for 2025 to $8.80, down from $9.30. For 2026, the EPS estimate decreased from $10.14 to $9.55. The drops come in light of softening consumer demand and a challenged product mix, alongside rising cost pressures.

While Target has been working to diminish its reliance on international suppliers, particularly from China, sourcing approximately 50% of its goods domestically, Feldman noted that impacts from tariffs remain difficult to quantify. The retailer aims to limit its purchasing from China to below 25% by 2026, navigating potential risks through diversified sourcing and vendor negotiations.

As of Friday, Target shares were trading higher by 1.68% at $98.62, reflecting some positive market sentiment ahead of the earnings report.