Target Corporation (NYSE: TGT) shares plunged after the retailer missed Wall Street’s earnings and revenue estimates for the first quarter of 2025, intensifying concerns over consumer demand and ongoing operational challenges.
The company reported adjusted earnings per share of $1.30, falling well short of the $1.65 consensus forecast and marking a steep 35.9% decline from $2.03 a year ago. Revenue dropped 2.8% year-over-year to $23.85 billion, missing analyst expectations of $24.35 billion.
Comparable sales declined 3.8%, driven by weaker in-store traffic and a reduction in average ticket size, though digital sales offered a rare bright spot with a 4.7% increase. Target’s gross margin rate also slipped to 28.2%, down from 28.8% last year, reflecting pressure from tariffs and shifting consumer preferences.
The retailer’s performance was further impacted by consumer backlash over changes to its diversity, equity, and inclusion (DEI) programs and persistent concerns about inflation and tariffs imposed during the Trump administration.
Following the disappointing results, Target slashed its full-year outlook. The company now expects a low single-digit decline in sales for fiscal 2025 and adjusted earnings per share between $7.00 and $9.00, a notable downgrade from its previous guidance of $8.80 to $9.80. CEO Brian Cornell acknowledged the challenges, stating that while digital growth and certain categories like women’s swimwear showed resilience, the overall performance fell short of expectations.
Investors reacted swiftly, sending Target’s stock down over 7% in premarket trading, with shares hovering near their 52-week low. The stock has lost more than 27% year-to-date, underperforming both the broader market and key competitors like Walmart, which recently reported stronger sales growth.
Target’s leadership is responding by launching an “Enterprise Acceleration Office” to streamline operations and drive innovation, but analysts remain cautious. With consumer sentiment fragile and competitive pressures mounting, the retailer faces a critical period ahead as it seeks to regain momentum and restore investor confidence.
