Target Q3 Sales Fell More Than Expected
By Reuters | 19 Nov, 2025

The mid-market retailer which suffered a 35% drop in its share value this year plans to invest $1 billion in a turnaround effort.

Target reported a bigger-than-expected drop in comparable sales on Wednesday and offered a wide range of profit outcomes for its holiday quarter, as it cuts prices and makes investments to appeal to cash-strapped U.S. consumers. 

Shares of the Minneapolis-based retailer were down slightly in morning trading. The stock has lost nearly 35% of its value so far this year.

The results mark the first full quarter since Target named longtime executive Michael Fiddelke as its new CEO in August to steer the business back to health. The retailer, which has reported three straight quarters of declining comparable sales, said it plans to invest about $1 billion more in 2026 in new stores, remodels and an improvement in its digital business. 

On a post-earnings call, Fiddelke, who takes over the top job in February, laid out other efforts to turn Target around. The company is experimenting with a new operational model across 35 markets that redefines the role of stores in online order fulfillment. Under this approach, only select locations will handle picking and packing of online orders, while other stores will no longer perform that function at all. 

The incoming CEO also highlighted efforts to improve the shopping experience. In stores, digital tools are being introduced to speed up tasks like unloading and stocking, freeing team members to help guests. Online, Target has rolled out a generative AI-powered gift finder during the holiday season. The company is also modernizing inventory forecasting and positioning through machine learning, which made its top 5,000 items more readily available, he said. 

These efforts follow Fiddelke's move to cut 1,800 corporate roles last month.

"It is too early to see meaningful changes in these results from the incoming new CEO Michael Fiddelke, who doesn’t fully take over until the start of next fiscal year. But, during the quarter, we saw some decisive actions from Mr. Fiddelke," D.A. Davidson analyst Michael Baker said. 

SALES DRAG CONTINUES

Target's results come days after the longest U.S. government shutdown in history delayed federal pay and food-stamp benefits, and unsettled consumers. Still-high inflation and tariff worries are other factors that have forced consumers to retrench.

These factors had an impact on Target's results. Total comparable sales - from online channels and stores open for at least 13 months - fell 2.7% in the third quarter, compared with estimates of a 2.08% drop, according to LSEG. Shares were down 2.1%.

It also hit home improvement chains Home Depot and Lowe's, which lowered annual expectations this week amid a still-muted housing market. On the other hand, TJX, which made its name selling branded goods at cheap prices, raised its annual profit target.

Walmart, which reports results on Thursday, is expected to be another beneficiary of the consumer slowdown. Its focus on cheap groceries and household essentials, and investments into technology to deliver those items quickly to customers' doorsteps, have helped it take market share from Target, according to UBS analyst Michael Lasser. 

BANKING ON LOWER PRICES

Despite a weak third quarter, Target on Wednesday reaffirmed its forecast for low-single-digit sales declines for the fourth quarter that encompasses the holiday season. The company cut the top end of its annual earnings forecast by a dollar to a range of $7.00 to $8.00 per share, excluding severance charges and other one-time items. 

Baker of D.A. Davidson said the forecast implied holiday quarter profits between $1.87 and $2.87 per share, equating to operating margins of 4.2% to 7.7%. On the post-earnings call, he noted the range was “pretty wide,” and pressed Target’s management to clarify margin expectations within that outlook.  

In response, Target executives said the wider EPS range was a deliberate move after fluctuating trading conditions in the third quarter and to account for a "continued volatile environment." The forecast also factors in recent price cuts Target has implemented, executives said. 

Mounting economic pressures have led to multiple forecasts signaling a subdued holiday shopping season this year. To appeal to cost-conscious shoppers, Target slashed prices on 3,000 everyday items, including food and household staples in November and introduced a cheaper Thanksgiving meal kit. 

Target earned $1.78 a share in the third quarter ended Nov. 1, beating analysts' estimates of $1.72. Total revenue fell 1.6% to $25.27 billion, just shy of estimates.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Sayantani Ghosh, Sriraj Kalluvila and Nick Zieminski)