Target predicts another tough year, as in-store sales declines drag results for its latest quarter

Target saw in-store sales decline during its fourth quarter, dragging financial results for the holiday season.

While digital sales surged 8.7% for the November through January period, the 0.5% brick-and-mortar revenue decline meant overall sales were up only 1.5%.

And stressed consumers could mean another tough year for the Minneapolis-based retailer, which predicted little growth for the 2025 fiscal year.

Fourth-quarter profits were down 20% to $1.1 billion, although the year-ago quarter saw an extra week.

Target did not break out what the comparable earnings would be for the quarter, but it said the profit margin thinned because of greater costs for digital fulfillment, supply chain challenges and deep discounting.

Diluted earnings per share were down 19.3% to $2.41, which was above analysts diminished expectations of $2.25.

“As we look ahead, our continued investments in digital capabilities, stores and supply chain — combined with a focus on newness, value, speed and reliability — will further differentiate our one-of-a-kind physical and digital shopping experience,” said CEO Brian Cornell in the earnings report.

The results were released before Target’s annual Investors Day, when it will lay out its latest plan to jumpstart growth and also came as President Donald Trump imposed 25% tariffs on Canadian and Mexican goods and increased tariffs on goods from China.

The holiday quarter, which ended Feb. 1, was buoyed by sales of apparel, toys and sporting goods. But the quarterly profit slipped from 26.6% in 2023 to 26.2%. Higher costs tied to digital fulfillment, supply chain expenses and promotional markdowns weighed on profitability.

Target, like Walmart, was cautious on its guidance for the coming year because of global economic uncertainty. Company officials forecast flat comparable sales and overall revenue growth of about 1%.

Officials continued to see people spending for special events. Like on Black Friday and Cyber Monday, Target saw record performance around Valentine’s Day, said Chief Financial Officer Jim Lee.

However, the rest of the month was slow as a stressed consumer continues to navigate sticky inflation and the specter of higher prices as President Donald Trump increases tariffs on China, as well as imposing new ones on Mexico and Canada.

“Looking ahead, we expect to see a moderation in this trend as apparel sales respond to warmer weather around the country, and consumers turn to Target for upcoming seasonal moments such as the Easter holiday,” Lee said

While Target remains optimistic about its omnichannel investments and cost-saving initiatives — which have generated over $2 billion in efficiencies over the past two years — analysts say the retailer faces headwinds as it balances promotions, inflationary pressures and competition in a tightening consumer market.

For the full year, Target reported a modest 0.1% increase in comparable sales, with net sales down 0.8% to $106.6 billion. Adjusting for the extra week in the fourth quarter, Target executives said annual sales were slightly higher. Adjusted earnings were $8.86, compared with $8.94 in fiscal year 2023, leaving the Minneapolis-based retailer at the high end of analysts' predictions.