Target stock in red as sales decline due to customers cutting back on spending

Target is grappling with another quarter of falling sales as US shoppers continue to rein in discretionary spending, weighing on the retailer’s financial performance and prompting a cut to its full-year earnings outlook.

Shares of Target were down about 1.8% in premarket trading at $86 following the release of its results, extending a year-to-date decline of more than 34%.

For the fiscal third quarter ended Nov. 1, the retailer reported comparable sales declined 2.7% from a year earlier — a steeper drop than Wall Street’s expectation for a 2.08% fall, according to LSEG data.

Quarterly revenue dipped 1.6% to $25.27 billion, roughly in line with estimates but still lower than last year.

Despite the weaker sales, adjusted earnings per share came in at $1.78, slightly above analysts’ forecasts of $1.72.

Incoming CEO Michael Fiddelke, who will formally assume the top role in February, acknowledged the retailer’s challenges.

“We are relentless in our pursuit of returning to growth and not satisfied with our current results,” he told reporters.

Earnings guidance cut as volatility pressures outlook

Target lowered its fiscal-year earnings guidance to reflect the uncertain consumer environment and the recent slowdown in sales.

The company now expects adjusted earnings to range between $7 and $8 per share, down from the prior estimate of $7 to $9.

GAAP earnings are projected between $7.70 and $8.70 per share, compared with a previous range of $8 to $10.

Fiddelke warned that uneven demand trends could linger into the holiday season and beyond, citing consumer concerns around inflation, a possible federal government shutdown, and a softening labor market.

Target expects fourth-quarter sales to decline by a low single-digit percentage.

“I think we’ve learned over time that in times of volatility it’s best for us to be positioned cautiously,” Fiddelke said, emphasizing a conservative approach for the remainder of the year.

The company has already taken steps to reduce expenses, including cutting 1,800 corporate jobs last month to streamline operations.

Target has also laid off nearly 2,000 employees in recent weeks as part of its broader cost-reduction efforts.

New CEO looks to reset Strategy with technology and store investments

Even before officially stepping into the role, Fiddelke is making moves to reshape Target’s operational strategy.

He has outlined three key priorities: strengthening Target’s merchandising capabilities, improving the guest experience in stores and online, and accelerating technology adoption.

In line with those goals, Target recently introduced an AI-powered gift-finding tool to support the holiday shopping season and announced price reductions on 3,000 everyday essentials.

The retailer also plans to boost capital expenditures to $5 billion in fiscal 2026, a 25% increase from 2025, to renovate more stores and refine merchandising strategies.

Target is also revisiting its e-commerce fulfillment model.

Currently, most online orders are processed in stores, a system that analysts say has contributed to long lines and limited in-store inventory.

Executives plan to shift online fulfillment away from high-traffic locations to stores better equipped to handle digital orders.

In another technological step, Target will launch a new partnership with OpenAI’s ChatGPT, enabling shoppers to browse and purchase Target products directly through the platform.

The feature, set to roll out next week in beta, will allow multi-item purchases, fresh food shopping, and flexible shipping options.

As Target navigates a difficult retail climate, the incoming CEO faces mounting pressure to stabilize performance and chart a path back to growth.

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