Target (TGT) Q4 2025 Earnings

MINNEAPOLIS – Aim on Tuesday reported another quarter of declining revenue and customer traffic at its stores, even as the company touted higher sales in some of its key merchandise categories.

The big box retailer, which is in the midst of a turnaround effort, said sales and traffic trends increased in the final two months of the Christmas quarter. Sales then turned positive year-over-year in February, which is the beginning of the current quarter.

In a news release, Target CEO Michael Fiddelke called that inflection “an important milestone on our path back to growth this year” and said it reinforces “my confidence in the momentum we are building and the future we are creating together.”

For the current fiscal year, Target expects net sales to increase approximately 2% compared to the prior year and anticipates that metric will grow in each quarter of the year. That net sales growth for the year would reflect a small increase in comparable sales, the retailer said. The company added that its new stores and non-merchandise sales, such as advertising and membership, would contribute more than 1 percentage point of growth.

Target said it expects full-year adjusted earnings per share to range between $7.50 and $8.50. Its adjusted earnings per share for the most recent full year were $7.57.

Fiddelke, who took over the company’s top job on Feb. 1, will try to persuade Wall Street that the retailer is on track to end its sales slump at an investor meeting Tuesday morning at its Minneapolis headquarters.

Here’s what the company reported for the fiscal fourth quarter compared to Wall Street estimates, according to a survey of LSEG analysts:

• Earnings per share: $2.44 adjusted vs. $2.16 expected
• Revenue: $30.45 billion vs. $30.48 billion expected

The big-box retailer missed Wall Street’s revenue expectations for the fourth quarter, even though analysts were already anticipating weaker sales. Its quarterly revenue fell about 1.5% from $30.92 billion in the same period a year earlier.

For four consecutive quarters, customer traffic at the company’s stores and website has declined.

Target’s net income for the three months ended Jan. 31 fell to $1.05 billion, or $2.30 per share, compared with $1.1 billion, or $2.41 per share, a year earlier. Excluding one-time expenses, including legal settlement gains and business transformation costs, Target’s adjusted earnings per share were $2.44.

Target is trying to end several years of disappointing results driven by a combination of company missteps and economic factors. Its annual sales have remained broadly stable for four years, after a significant increase in annual revenue during the Covid pandemic.

Shares have fallen nearly 32% over the past three years, through Monday’s close, although they are up nearly 16% so far this year. The company’s shares closed Monday at $113.17, bringing its market capitalization to $51.24 billion.

As it tries to turn around its business, Target cut 1,800 corporate jobs in October, marking its first major layoff in a decade.

Some of Target’s customers told CNBC they are shopping elsewhere after noticing changes such as sloppier stores and mediocre merchandise, or objecting to the company’s social stances, such as its backtracking on important diversity, equity and inclusion initiatives. The company acknowledged that the backlash to its DEI decision had hurt sales and led to market share losses to competitors.

Target’s challenge in attracting shoppers has persisted. Comparable sales, an industry metric that excludes short-term factors such as store openings and closings and is also called same-store sales, declined 2.5% year over year in the fourth quarter. That reflected a 3.9% comparable sales decline at Target stores and a 1.9% increase on Target’s website and app.

Transactions at Target’s stores and website fell 2.9% year over year. The average amount customers spent during those transactions grew 0.4% year over year.

In an interview with CNBC in the fall at Target headquarters, Fiddelke said he would prioritize rebuilding the company’s reputation for style and design, improving the customer experience and using technology to improve its performance.

He echoed those key goals in the company’s statement outlining fiscal fourth-quarter results.

“Our team is firmly focused on writing Target’s next chapter of growth, based on strengthening our merchandising authority, providing an elevated and differentiated shopping experience, advancing our use of technology and continuing to serve and invest in our team and our communities,” he said.

Last month, Target also announced it would invest more in store labor and eliminate another 500 positions at distribution centers and regional offices to try to address shoppers’ concerns about out-of-stocks, long checkout lines and other store conditions. However, the company declined to say much more than it would spend.

Target is known for selling clothing, home goods, seasonal items, and other trend-driven discretionary merchandise that customers often buy on impulse when browsing the aisles on a “run to Target.” However, higher prices for food, utilities and other necessities, driven by inflation and tariffs, have decreased American consumers’ willingness to buy items not on the shopping list.

Target’s results in recent years have been at odds with those of retail rivals such as Walmart, Costco and TJ Maxx parent TJX, which have posted stronger sales results, attracted shoppers of all incomes and seen growth in categories such as clothing and home goods, areas where Target has struggled.

In addition to offering products like groceries, clothing and home goods, Target is trying to sell more advertising and membership subscriptions to customers. The company’s non-merchandise sales rose more than 25% in the fourth quarter, driven by membership revenue that doubled from a year ago, double-digit percentage gains in its Roundel ad business and more than 30% growth in its third-party marketplace.

Same-day deliveries through Target 360 Plus grew more than 30% year over year. The subscription service costs $99 per year or $10.99 monthly.