Target’s Profit Falls 19% as Inflation-Weary Shoppers Signal Tough Holiday Quarter

Target Corp. reported a steep decline in third-quarter earnings and cautioned that the downturn is likely to extend through the all-important holiday season, underscoring the retailer’s difficulty in convincing cautious consumers to spend.

The Minneapolis-based company said net income for the three months ended Nov. 1 fell 19 percent to $689 million, or $1.51 per share, from $854 million, or $1.85 per share, a year earlier. On an adjusted basis, earnings came in at $1.78 per share, slightly above Wall Street’s consensus of $1.71. Revenue slid 1.5 percent to $25.27 billion, just shy of analysts’ expectations of $25.33 billion.

Comparable sales, a key retail metric that tracks results from stores and digital channels open at least a year, declined 2.7 percent. The drop marked the tenth quarter in the past three years that Target has posted flat or negative comparable sales, and it exceeded the 1.9 percent fall recorded in the preceding quarter.

Target’s performance stands in contrast to rival Walmart Inc., which has recorded solid growth despite the same inflationary backdrop. Walmart is scheduled to release its own quarterly results on Thursday. Target shares, already down 43 percent over the past 12 months, edged lower in pre-market trading after Wednesday’s announcement.

Leadership transition amid weak demand

The earnings report arrives as longtime executive Michael Fiddelke prepares to succeed Brian Cornell as chief executive. Fiddelke, a 20-year veteran of the company, faces immediate pressure to restore growth and rebuild the retailer’s reputation for offering affordable yet fashionable products. “We have high but achievable aspirations for Target’s future, and we’re acting urgently,” Fiddelke told reporters.

In October, the company unveiled plans to eliminate about 1,800 corporate roles, roughly 8 percent of its office workforce, to streamline decision-making and speed efforts to reclaim customers. The layoffs accompany an estimated $5 billion capital plan for next year that includes modernizing existing stores and opening new locations across the United States, where Target operates about 1,980 outlets.

Merchandising overhaul and price moves

To entice value-focused shoppers, Target is doubling the number of new items it will stock this season to more than 20,000 and has cut prices on thousands of everyday products in food, beverage and household supplies. Executives said these changes generated modest gains in grocery, beverages and furniture during the quarter, but ongoing softness in discretionary categories such as apparel, electronics and home décor kept overall sales in negative territory.

Fiddelke outlined three immediate priorities: improving product curation and presentation, guaranteeing fuller shelves and cleaner stores, and accelerating investments in technology that support inventory accuracy and omnichannel fulfillment.

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Economic headwinds and external pressures

Persistent inflation continues to pinch household budgets, leaving many consumers with less money for non-essential purchases. The annual inflation rate remained above the Federal Reserve’s 2 percent target throughout the quarter, according to U.S. Bureau of Labor Statistics data. In addition, Target has grappled with sporadic boycotts since scaling back diversity, equity and inclusion initiatives early this year, a move that angered some shoppers and dented store traffic.

Broader macroeconomic challenges, including tariffs on imported goods and an immigration crackdown that retailers say could limit the labor pool, have added to the uncertainty. The company also acknowledged that the recently concluded 43-day federal government shutdown delayed some spending decisions, though the full impact remains unclear.

Fourth-quarter and full-year outlook

Target now expects comparable sales to fall by a low single-digit percentage in the fourth quarter, which encompasses the crucial Thanksgiving-to-Christmas period. For the full fiscal year, the retailer forecasts earnings of $7.00 to $8.00 per share, narrowing the range from its prior estimate of $7.00 to $9.00 and reflecting the ongoing sales slump.

Investors will closely watch whether promotional activity and an expanded assortment of new products can revive traffic during the holidays. Target’s ability to stabilize its core discretionary business, while maintaining recent traction in everyday essentials, will determine how quickly Fiddelke can reposition the company for sustained growth in 2026 and beyond.

Crédito da imagem: Target Corp.