Target (TGT) Q4 2025 earnings

MINNEAPOLIS — Aim On Tuesday, it reported another quarter of declines in revenue and customer traffic at its stores, but its shares rose as the retailer beat forecasts and said it was poised to end its sales slump.

The major retailer, which is in the midst of a turnaround effort, said sales and traffic trends improved in the final two months of the holiday quarter. Sales then turned positive year over year in February, the beginning of the current quarter.

Target CEO Michael Fiddelke described the transformation in a press release as “an important milestone on the path to a return to growth this year” and said it “reinforces my confidence in the momentum we have built and the future we are creating together.”

Target expects net sales for the current fiscal year to increase by approximately 2% compared to the prior year, and projects this metric to grow each quarter of the year. The retailer said this year’s net sales growth will reflect a small increase in comparable sales. The company added that its new stores and non-product sales such as advertising and memberships will contribute more than 1 percentage point to growth.

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

Fiddelke, who steps into the company’s top job on Feb. 1, will try to convince Wall Street at an investor meeting Tuesday morning at Target’s headquarters in Minneapolis that the retailer is gaining sales momentum.

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

• earnings per share: US$2.44 vs expected US$2.16
• Revenues: $30.45 billion, expected $30.48 billion

The major retailer missed Wall Street’s fourth-quarter revenue expectations even though analysts predicted weaker sales. Its quarterly revenue fell about 1.5% from $30.92 billion in the same period a year ago.

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

Target’s net income for the three months ended Jan. 31 fell to $1.05 billion, or $2.30 per share, from $1.10 billion, or $2.41 per share, a year earlier. Excluding one-time items, including regulatory settlement gains and business conversion costs, Target’s adjusted earnings per share were $2.44.

Target is trying to put an end to several years of disappointing results caused by company missteps and economic factors. Its annual sales have been almost flat for four years following a significant increase in annual revenue during the Covid pandemic.

The company’s shares were down about 32% over the past three years as of Monday’s close, but are up about 16% so far this year.

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

Some of Target’s customers told CNBC that they shopped elsewhere after noticing changes like sloppier stores and lackluster products or objecting to the company’s social stances, such as rolling back major diversity, equity and inclusion initiatives. The company acknowledged that the backlash to the DEI decision hurt sales and led to a loss of market share to competitors.

Target’s trouble attracting shoppers continued. Comparable sales, an industry measure also called same-store sales that does not take into account short-term factors such as store openings and closings, fell 2.5% year over year in the fourth quarter. This reflected a 3.9% decline in comparable sales 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 these transactions increased 0.4% year over year.

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

He reiterated these important goals in the company’s statement summarizing its fourth-quarter financial results.

“Our team is tightly focused on writing Target’s next chapter of growth based on strengthening our selling authority, delivering a superior and differentiated shopping experience, advancing our use of technology, and continuing to serve and invest in our team and communities,” he said.

Last month, Target also announced it would invest more in its store workforce and cut nearly 500 jobs at distribution centers and regional offices in an effort to address shoppers’ concerns about out-of-stocks, long checkout lines and other store conditions. But the company refused to say it would spend more.

Target is known for selling clothing, homewares, seasonal items and other trend-driven discretionary items that customers buy on impulse, often while browsing the aisles on a “Target run.” But high prices for food, utilities and other necessities triggered by inflation and tariffs have reduced U.S. consumers’ willingness to buy items not on their shopping list.

Target’s results in recent years contrast with retail rivals such as Walmart, Costco and TJ Maxx’s parent company TJX, which have posted stronger sales results, attracted shoppers across income levels and seen growth in categories like clothing and home goods where Target has struggled.

In addition to offering products like food, clothing and household goods, Target is trying to sell more advertising and membership subscriptions to customers. The company’s non-product sales rose more than 25% in the fourth quarter, driven by membership revenue more than doubling from a year ago, double-digit percentage increases in its advertising business, Roundel, and more than 30% growth in its third-party market.

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

Programming note: Target CEO Michael Fiddelke will speak to CNBC around 11 a.m. ET. Watch live on CNBC or CNBC+.