Target Q1 Sales Drop, Lowers 2025 Outlook Amid Weaker Consumer Spending
Target’s sales and earnings fell short of Wall Street estimates as shoppers pull back. The retailer cites economic headwinds and aims to accelerate long-term strategies.
Target Corp (NYSE : TGT) reported first-quarter earnings on Wednesday that fell short of analyst expectations and lowered its full-year guidance, sending shares down 1.5% in premarket trading.
Sales fell 2.8% to $23.85 billion , coming in below Wall Street’s forecast of $24.23 billion, according to FactSet. That figure also marks a decline from the $24.53 billion reported during the same period last year.
Comparable sales dropped 3.8% in the first quarter, driven by a 5.7% decline in comparable store sales, partially offset by a 4.7% increase in digital sales.
The company described the results as a reflection of a “highly challenging environment.”
“Target’s strategy, scale and long-term perspective enable us to stay resilient in difficult times and keep investing in the future. We are not satisfied with recent performance, and we’re focused on accelerating our strategy to drive long-term profitable growth and deliver the assortment, experience and value consumers expect from Target,” said Brian Cornell, chair and CEO.
For fiscal 2025, Target now expects a low-single digit decline in sales, and GAAP earnings per share (EPS) between $8.00 and $10.00. Adjusted EPS, excluding gains from litigation settlements in Q1, is projected to be approximately $7.00 to $9.00.
Despite the softer-than-expected sales, the company earned $1.04 billion, or $2.27 per share, for the period ended May 3, up from $942 million, or $2.03 per share, a year earlier.
Target operates nearly 2,000 stores nationwide and employs over 400,000 people.
The retailer noted signs of momentum in key segments, including continued growth in digital. Same-day services rose 5%, with Target Circle 360-powered delivery up 36%. Drive Up service also grew, now accounting for nearly half of total digital sales. Its advertising arm Roundel and third-party marketplace Target Plus each posted double-digit net sales growth.
Target’s report comes shortly after Walmart posted strong quarterly sales. However, Walmart also cautioned that higher prices are likely to impact consumers more deeply in June and July during the back-to-school shopping season.
American consumers are already curbing spending amid growing economic unease. Companies like Mattel, Stanley Black & Decker, and Procter & Gamble have either raised prices or announced plans to do so, according to AP.
Compared to Walmart, Target faces a more challenging retail climate, as it works to stabilize performance and invest for long-term growth.
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