Target (TGT) continues to miss the mark on earnings day.
The results on Wednesday morning aren’t as shockingly bad as the first quarter, but the retailer is still struggling to find its place in the new economic norm of more discerning shoppers.
Target’s second quarter earnings narrowly surpassed consensus forecasts as it wrung out cost savings. The company also maintained the full-year outlook it slashed three months ago.
But headwinds from a pressured US consumer, an influx of tariffs from the Trump administration, market-share loss to rival Walmart (WMT), and operational challenges were apparent.
Target’s comparable sales fell 1.9% from a year ago, led by a 3.2% drop at its stores. Comparable digital sales increased 4.3%. Gross profit margins declined to 29% from 30% a year ago.
“While we’re not pleased with the results, we’re encouraged by the improved performance as we go into the third quarter of the year,” Target chair and CEO Brian Cornell told me by video call.
Target’s stock is down 23% in 2025, compared to Walmart’s 13% gain.
Fixing what ails Target is about to be someone else’s responsibility.
Target is tapping a homegrown talent as its next CEO at one of the most pivotal moments in the company’s 63-year history.
The discounter announced that longtime CEO Cornell’s heavily groomed No. 2, Michael Fiddelke, will take over as CEO on Feb. 1, 2026. Cornell, who has been CEO of Target since August 2014, will slide into the executive chair position for an undetermined period of time. Fiddelke joined Target in 2003 as an intern and rose through the ranks to CFO and then COO.
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Second quarter net sales: -0.9% year over year to $25.2 billion, vs. estimates for $24.53 billion
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Gross profit margin: 29% vs. 30% a year ago, vs. estimates for 28.08%
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Diluted earnings per share: -20.2% year over year to $2.05, vs. estimates for $2.01
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Comparable sales: -1.9% year over year, vs. -3.14% estimate (Last year, comparable sales rose 2%.)
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Inventory rose +2.2% from the year-ago period (estimates: +3.44%).
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The company didn’t repurchase any stock in the quarter; $8.4 billion remains available to repurchase under a prior authorization.
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The number of transactions fell 1.3% in the quarter, and the average transaction amount dropped 0.6%.
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Full-year earnings per share are projected to be $7 to $9 (fiscal year 2024: $8.86), compared to estimates of $7.28. Comparable sales down by a low-single-digit percentage.
