Target reported a sharper-than-expected decline in comparable sales on Wednesday. The retailer also offered a wide range of profit possibilities for the holiday quarter as it lowers prices and boosts investments to reach budget-conscious U.S. shoppers.
Shares of the Minneapolis-based company slipped slightly in morning trading. The stock has dropped nearly 35% since the start of the year.
This is the first full quarter since longtime Target executive Michael Fiddelke was named CEO in August. He is tasked with stabilizing the business after three consecutive quarters of falling comparable sales. Target said it plans to invest about $1 billion more in 2026 to open new stores, remodel existing locations, and strengthen its digital operations.
During the post-earnings call, Fiddelke, who officially becomes CEO in February, outlined several strategies to revive the company. Target is testing a new operational model in 35 markets that changes how stores handle online orders. Selected locations will manage the picking and packing process, while others will no longer perform that function.
He also highlighted improvements to the shopping experience. In stores, new digital tools are helping teams unload and stock products faster so they can spend more time assisting customers. Online, Target has introduced a generative AI gift finder for the holiday season. The company is also modernizing its inventory forecasting through machine learning, making its top 5,000 items more consistently available.
These changes follow Fiddelke’s decision last month to cut 1,800 corporate roles.
Analyst Michael Baker of D.A. Davidson noted that it is still early to see meaningful results under the incoming CEO. However, he said that Target did take decisive actions during the quarter.
Sales Pressure Continues
Target’s latest results come after the longest U.S. government shutdown in history, which disrupted federal paychecks and food-stamp benefits. High inflation and tariff concerns have also pushed consumers to cut back.
These pressures were reflected in Target’s performance. Comparable sales, including stores open at least 13 months and online channels, fell 2.7% in the third quarter. Analysts had expected a 2.08% decline, according to LSEG. The stock dropped 2.1%.
Other retailers have also felt the impact. Home Depot and Lowe’s lowered their annual forecasts due to a weak housing market. By contrast, discount chain TJX raised its profit outlook. Walmart, reporting results on Thursday, is expected to benefit from shoppers trading down due to its strong focus on low-cost groceries and essentials.
Competing on Lower Prices
Despite the weak third quarter, Target reaffirmed its forecast for low-single-digit sales declines in the fourth quarter. The company lowered the high end of its annual earnings forecast to a range of $7.00 to $8.00 per share, excluding one-time charges.
Baker said this projected holiday-quarter profit range suggests operating margins of 4.2% to 7.7%. He noted the forecast was unusually broad and asked Target to clarify the expected margin levels.
Target executives said the wider EPS range reflects unpredictable trading conditions and a volatile economic backdrop. They also said the forecast includes the impact of recent price cuts.
With many forecasts predicting a softer holiday shopping season, Target is targeting cost-conscious customers. It lowered prices on 3,000 everyday products in November, including groceries and household goods, and launched a lower-cost Thanksgiving meal kit.
For the quarter ended Nov. 1, Target earned $1.78 per share, above analyst expectations of $1.72. Total revenue declined 1.6% to $25.27 billion, slightly below estimates.
