Target Stock Slips As Q1 Earnings Miss Estimates, FY2025 Outlook Cut Amid Slowing Sales

Target Corporation TGT shares are trading lower on Wednesday after the company reported first-quarter results.

Target registered adjusted earnings per share of $1.30, missing analysts’ consensus estimate of $1.64. Quarterly sales of $23.85 billion (down 2.8% year over year) missed the Street view of $24.32 billion.

“While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth, led by a 36 percent increase in same-day delivery through Target Circle 360, and our strongest designer collaboration in more than a decade, kate spade for Target,” said Brian Cornell, chair and chief executive officer of Target Corporation. 

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Comparable sales decreased 3.8% in the first quarter, reflecting a comparable store sales decline of 5.7% and comparable digital sales growth of 4.7%.

The quarterly gross margin rate was 28.2%, lower than 28.8% in the year-ago period, due to the net impact of merchandising activities, including higher markdown rates, digital fulfillment and supply chain costs.

Target’s operating income gained 13.6% year over year to $1.472 billion.

Operating margin was 6.2 percent in 2025, compared with 5.3 percent in 2024.  Excluding the litigation settlement gains, the operating income margin rate was 3.7 percent in the quarter under review.  

The company said it has established an acceleration office led by Michael Fiddelke to enable faster decisions and execution of its core strategic initiatives in support of a return to growth.

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As of the end of the quarter, Target had approximately $8.4 billion of remaining capacity under the repurchase program approved by the company’s board of directors in August 2021.

The company exited the quarter with cash and equivalents worth $2.887 billion. Inventory totaled $13.048 billion.

Target’s long-term debt and other borrowings expanded to $14.334 billion, compared with $13.487 billion a year ago.

In a separate release, the company said that Christina Hennington, chief strategy and growth officer, will depart Target and move into a strategic advisor role through Sept. 7, 2025. Jim Lee, chief financial officer, will take on leadership of Target’s enterprise strategy and partnerships.

Outlook: Target lowered its FY2025 adjusted EPS guidance from $8.80–$9.80 to $7.00–$9.00 versus the $8.48 estimate and saw a sales decline in the low single digits.

Target also revised its FY2025 GAAP EPS guidance from $8.80–$9.80 to $8.00–$10.00.

Price Action: TGT shares are trading lower by 2.58% to $95.59 at last check Wednesday.

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