Target sales fall sharply in 1st quarter and retailer warns they will
slip for all of 2025
[May 21, 2025] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Sales at Target fell more than expected in the first
quarter and the retailer warned they will slip this year as consumers,
worried over the impact of tariffs, pull back on spending.
Sales fell 2.8% to $23.85 billion, which is less than the $24.23 billion
Wall Street expected, according to FactSet, and down from the $24.53
billion the company reported during the same period last year.
Target said Wednesday that it now expects a low-single digit decline in
sales for 2025, and earnings per share, which excludes the gains from
the litigation settlements in the first quarter, to be anywhere from $7
to $9.
For the year, analysts expect earnings per share of $8.34 on sales of
$106.7 billion.
Comparable sales, those from established stores and online channels,
fell 3.8%. That includes a 5.7% drop in store sales and a 4.7% increase
in online sales. That reverses a comparable sales increase in the
previous quarter of 1.5%.
The number of transactions across online and physical stores fell 2.4%,
and transaction amounts dropped 1.4%. Target told reporters on a
conference call Tuesday that it couldn’t reliably estimate the
individual impact of each of the factors that were hurting its business.
Target said it’s setting up a new office to be led by Chief Operating
Officer Michael Fiddelke would focus on making faster decisions to help
accelerate sales growth. Current Chief Strategy and Growth Officer
Christina Hennington will move into a strategic adviser role until
department Target Sept. 7, the company said.
Target is focusing on customers that are nervous about the economy and
high prices, offering 10,000 new items starting at $1 — with the
majority under $20.
“I want to be clear,” Target CEO Brian Cornell told reporters on a call
Tuesday. “We’re not satisfied with these results, so we’re moving with
urgency to navigate through this period of volatility ... We’ve got to
drive traffic back into our stores or visits to our site and make sure
we’re building momentum.”
Target appears to have a lot of work to do. Out of 35 merchandise
categories including discretionary and essentials that the discounter
tracks, it’s gaining or maintaining market share in only 15, the company
said.
Target’s report follows Walmart’s release of strong quarterly sales last
week. The nation’s largest retailer warned that the sting of higher
prices will hit shoppers in June and July when the back-to-school
shopping season goes into high gear. Company executives said that car
seats made in China that currently sell for $350 at Walmart will likely
cost customers another $100, for example.
Target didn’t offer specifics on tariffs’ impact on prices, but said
that it was looking at different ways to absorb their cost.
“We look at competition,” Cornell told reporters. “We make adjustments
literally each and every week, so we’re constantly adjusting pricing.
Some are going up. Some will be reduced. That’s an ongoing effort that
takes place each and every day.”
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The logo for Target is displayed above a trading post on the floor
of the New York Stock Exchange, Tuesday, May 20, 2025. (AP
Photo/Richard Drew)
 President Donald Trump’s threatened
145% import taxes on Chinese goods were reduced to 30% in a deal
announced May 12, with some of the higher tariffs on pause for 90
days.
American shoppers are already pulling back on spending as they grow
uneasy about the economy. Companies including toy manufacturer
Mattel, toolmaker Stanley Black & Decker and consumer products giant
Procter & Gamble have announced higher prices or plans to raise
them.
Target is in a more challenging situation than Walmart.
Groceries account for about 60% of Walmart’s U.S. business,
according to the Arkansas-based company’s most recent annual report.
Target is more reliant on discretionary items like clothing and
accessories because less than a quarter of its sales come from food
and beverages.
Target has reduced the number of its store-label products sourced
from China to 30% now from 60% in 2017. The company is on its way to
reducing that number to 25% by the end of next year, the company
said. Target is shifting sourcing to Guatemala and Honduras and is
looking to sourcing in the U.S., Target said.
Target also faces boycotts over its reversals of some diversity,
equity and inclusion efforts.
Target announced in January that it would phase out a handful of DEI
initiatives, including a program designed to help Black employees
build meaningful careers and promote Black-owned businesses.
Conservative activists and President Donald Trump have sought to
dismantle DEI policies in the federal government and schools.
The pastor of a Georgia megachurch who led a nationwide 40-day
boycott of Target stores in response called last month for that
effort to continu e.
The Rev. Jamal Bryant said in April that the Minneapolis-based
retailer has not met all of the boycott effort’s demands, which
include restoring its commitment to diversity, equity and inclusion
principles and pledging money to Black-owned banks and businesses.
His comments follow a meeting that Cornell had with the Rev. Al
Sharpton, whose civil rights organization has encouraged consumers
to avoid U.S. retailers that scaled backed their DEI initiatives.
Target earned $1.04 billion, or $2.27 per share, for the period
ended May 3. That compared with $942 million, or $2.03 per share, in
the year-ago period.
Target operates nearly 2,000 stores nationwide and employs more than
400,000 people.
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