Target (TGT) Q3 2025 earnings

Aim It reported a decline in quarterly sales on Wednesday and cut its full-year profit guidance as the department store retailer sees volatile spending and shoppers seeking value.

Despite the ongoing challenges, Target stuck to its sales guidance for the all-important holiday season, saying it expects sales to decline by a low-single-digit percentage in the fourth quarter. It said it expects adjusted earnings per share for the year to be between $7 and $8, down from the upper end of the previous range to $7 to $9. Much of the new range will be lower than last year, when adjusted earnings per share were $8.86.

In a call with reporters, new CEO Michael Fiddelke declined to say whether he thinks the company’s sales will turn positive again, but said Target is making progress.

“We are focused every day on making the right investments and the right decisions to get Target back to growth as quickly as possible,” he said.

Fiddelke, Target’s chief operating officer and former chief financial officer, will assume the CEO position on Feb. 1. The company announced in August that it would replace longtime CEO Brian Cornell.

He said Target will increase investment next year to restore its stores and boost sales by increasing capital spending to $5 billion, up 25% from a year ago.

Here’s what Target reported compared to Wall Street expectations for the three months ending Nov. 1, based on a survey of analysts by LSEG:

• earnings per share: Adjusted $1.78, expected $1.72
• Revenues: $25.27 billion, expected $25.32 billion

Target’s sales have been roughly stagnant for four years as it faces stiffer competition and weakens in some areas that have historically set it apart, including its eye-catching products, well-organized stores and friendly and helpful customer service. Some customers boycotted the retailer after Target rolled back its core diversity, equity and inclusion programs, a dynamic it blamed in part for its weak sales results in May.

The company’s shares also lost value. As of Tuesday’s close, Target’s shares were down about 67% since the company’s all-time high in late 2021 and are down about 35% so far this year.

The stock was slightly lower in premarket trading Wednesday.

The day he was named Target’s next CEO, Fiddelke identified three priorities: strengthening Target’s reputation as a retailer with stylish, well-designed products, providing a more consistent shopping experience online and in stores, and using technology to move the business forward.

He said at the time that he wouldn’t wait to start making changes.

Last month, Target announced it would lay off 1,800 corporate employees; this was the largest layoff in a decade. He took steps to improve his products and regain his sense of fashion, including sending his designers to rodeos and ski resorts for inspiration. It also changed its online fulfillment strategy at stores to try to free up its employees time stocking shelves and helping customers.

In his call with reporters about third-quarter results, Fiddelke pointed out a few more moves the company made. He highlighted the Target Trend Brain, a generative AI-powered tool that helps the company’s designers and sellers determine which colors and styles are popular. It also uses synthetic audiences and AI models that simulate how real customers might respond to products or marketing campaigns before launch.

Target on Wednesday announced another way to revitalize business and adapt to new ways people shop. It is launching an experience with OpenAI that allows customers to purchase Target’s app on ChatGPT, it said in a press release. It will launch in beta next week, allowing users to purchase multiple items in a single transaction, shop for groceries, and choose the way they want those purchases, such as curbside pickup.

Over time, Target customers will also be able to request personalized recommendations, the company said in a statement.

But Target’s difficulties attracting customers continued in the last quarter.

Customers made fewer trips to Target’s stores and website and spent less during those visits. Traffic fell 2.2% and the average transaction amount fell 0.5% year over year.

Comparable sales, an industry measure that excludes one-time factors such as store openings and closings, fell 2.7%. Digital sales increased 2.4%, driven by more than 35% growth in same-day deliveries.

It marked the third consecutive quarter of comparable sales, also called same-store sales.

Target’s fiscal third-quarter net income fell nearly 19% to $689, or $1.51 per share, from $854 million, or $1.85 per share, in the same period a year ago. Revenue was down from $25.67 billion in the prior-year quarter. Excluding one-time costs such as severance packages, Target’s adjusted earnings per share were $1.78.

Digital sales increased 2.4% year-on-year, driven by more than 35% growth in same-day deliveries.

Fiddelke told reporters that Target saw “some volatility” in the quarter. Sales in August and October were nearly flat as customers shopped for back to school and Halloween, but September sales were down about 4% year over year.

Merchandising Manager Rick Gomez said consumer behavior was unchanged from the previous quarter, noting that shoppers were “expanding their budgets and prioritizing value, especially spending where it matters most, like food, essentials and beauty.”

Gomez and Fiddelke also acknowledged other challenges unique to the third quarter, such as the pause of the Supplemental Nutrition Assistance Program (SNAP) during the government shutdown.

Target slashed prices on 3,000 food and household products last week to attract the attention and dollars of low-income shoppers. Target also sets the prices on some key holiday items so they feel like bargains, like ornaments starting at $1, candles starting at $5 and blankets starting at $10, Gomez said.

Target is also trying to stand out with more products that customers can’t find elsewhere. Gomez said there are 20,000 new products in the holiday assortment, more than double the number from last year’s holiday season, and more than half of them are available only at Target. In order to attract customers beyond goods, Collaborated with Starbucks Frozen Mint Hot Chocolate frappuccino for a special drink that shoppers won’t find anywhere else.

Target tends to see stronger sales during holidays and seasonal changes. But Gomez said even at this time this year, customers are being selective. For example, around Halloween, Gomez said, shoppers are “trading out” as the company sees candy sales being stronger and decor sales weaker.

Gomez said he expects this pattern to continue through the holiday season.

“We think the consumer will prioritize what’s under the tree over what’s above the tree,” he said.