Target Navigates Sales Slump, CEO Fiddelke Signals Turnaround in Early 2026
Minneapolis – Target Corporation (NYSE: TGT) on Tuesday reported a fourth consecutive quarter of declining revenue and store traffic, yet shares rose as adjusted earnings surpassed Wall Street estimates. New CEO Michael Fiddelke expressed optimism about a potential end to the sales slump, citing positive trends in February 2026.
Q4 2025 Earnings Report: Key Highlights
Target’s fiscal fourth-quarter results, released Tuesday, revealed a revenue decrease of approximately 1.5% year-over-year, reaching $30.45 billion. While slightly below the $30.48 billion expected by analysts, according to LSEG, the company’s adjusted earnings per share (EPS) of $2.44 exceeded expectations of $2.16.
- Adjusted EPS: $2.44 vs. $2.16 expected
- Revenue: $30.45 billion vs. $30.48 billion expected
- Comparable Sales: Decreased 2.5% year-over-year
- Store Traffic: Down 3.9%
- Website/App Traffic: Up 1.9%
Fiddelke’s Turnaround Plan Gains Momentum
Michael Fiddelke, who assumed the CEO role on February 1, 2026, highlighted a shift in sales trends during the investor meeting. Sales turned positive in February, the beginning of the current quarter, offering a glimmer of hope after a period of stagnation. Fiddelke cautioned that one month of growth doesn’t establish a trend, but expressed confidence in the company’s trajectory toward growth.
“We are out of the gates strong this year,” Fiddelke told CNBC on Tuesday. He emphasized a focus on “incredible product and [an] incredible experience” as key priorities for the turnaround.
Financial Outlook for Fiscal Year 2026
Target anticipates net sales to increase by approximately 2% in fiscal year 2026, with growth projected in each quarter. The company expects full-year adjusted EPS to range from $7.50 to $8.50, consistent with the $7.57 reported for the most recent full year. Capital expenditures are planned to reach approximately $5 billion, an increase of over $1 billion from the previous fiscal year, allocated to supply chain improvements, technology investments, and store enhancements. Target plans to open over 30 new stores and remodel more than 130 existing locations this year.
Addressing Challenges and Investing in the Customer Experience
Target has faced headwinds in recent years, including company missteps and broader economic factors. Annual sales have remained relatively flat for four years following a surge during the COVID-19 pandemic. The company implemented a workforce reduction of 1,800 corporate jobs in October 2025, its largest layoff in a decade.
The retailer is responding to customer feedback regarding store conditions and merchandise quality by increasing investment in store staffing and cutting approximately 500 roles at distribution centers and regional offices. This move aims to address concerns about out-of-stock items and long checkout lines.
Growth in Non-Merchandise Sales
Target is diversifying its revenue streams through increased advertising and membership sales. Non-merchandise sales increased by more than 25% in the fourth quarter, driven by a doubling of membership revenue, double-digit growth in its Roundel advertising business, and over 30% growth in its third-party marketplace. Same-day delivery services through Target Circle 360 also experienced growth exceeding 30% year-over-year.
Competitive Landscape and Economic Factors
Target’s performance contrasts with competitors like Walmart, Costco, and TJX, which have demonstrated stronger sales results. The company acknowledges that inflationary pressures and tariffs continue to impact consumer spending, particularly on discretionary items. Fiddelke stated he did not anticipate any “remarkably different” shopper behavior and deferred comment on the potential impact of President Trump’s new 10% global tariff, stating, “we’ll find out together what the next year holds on the tariff front.”