Target’s woes continue.
The underperforming retailer has struggled with tariff-fueled anxiety among shoppers and protests in response to its retreat from diversity policies. On Wednesday, it again fell short of expectations for quarterly sales and slashed its full-year financial forecast. Target now expects a “low-single digit decline” in sales this year, down from a projection a few months ago of a small gain.
The gloomy forecast set Target apart from some of its competitors that have in recent days maintained their outlooks, even while warning of the risks and uncertainty generated by President Trump’s tariffs.
Comparable sales at Target last quarter, which ended May 3, fell 3.8 percent from a year earlier, reflecting both lower foot traffic and less spent per visit. The retailer’s stock fell roughly 7 percent in premarket trading as investors digested the weaker-than-expected report.
“We’re not satisfied with this performance,” Brian Cornell, Target’s chief executive, said on a call with analysts. The report was the latest evidence that the retailer’s effort to rebound from a difficult 2024 — a year marked by inconsistent sales growth and a tumbling stock price — has yet to materialize.
A “highly challenging environment” dragged down Target’s financial results, it said; retailers across the board are navigating tariff-fueled cost increases and dampened consumer sentiment.
Price increases in response to tariffs have taken center stage as major U.S. retailers report their latest earnings. When Walmart said last week that it would raise prices for some products because of tariffs, the company faced swift public backlash from Mr. Trump, who called on social media for the company to “EAT THE TARIFFS.” Mattel, the toy company, faced similar ire earlier this month.
That has put retailers like Home Depot and Target, which both reported quarterly earnings this week, in a tricky position, with investors expecting the companies to detail their pricing plans and executives weighing potential backlash from Washington. Home Depot went out of its way on Tuesday to emphasize that its prices would “generally” hold steady.
Target executives on Wednesday pointed to several strategies the company is employing to minimize the impact of tariffs. The plans include working with vendors and suppliers to keep prices low, changing inventory, adjusting the timing for some orders, diversifying its sources of production and “where necessary, adjusting prices,” said Rick Gomez, Target’s chief commercial officer.
“Price is the very last resort,” Mr. Cornell said on a call with analysts.
Home Depot echoed a similar position on pricing, adding on a call with analysts Tuesday it could gain market share from rivals. “We don’t see broad-based price increases for our customers at all going forward,” said Billy Bastek, head of merchandising for the home improvement retailer.
The comments came after Walmart’s warning last week that Mr. Trump’s tariffs would push the company to start raising prices soon.
Target relies more heavily on discretionary items like electronics than some of its competitors — for example, Walmart’s well-trafficked grocery aisles — noted Steven Shemesh, a retail analyst at RBC Capital Markets. That poses a challenge for Target, given that many discretionary goods are imported and might be less popular as shoppers focus on buying essential items, he said.
Both Walmart and Home Depot reaffirmed their full-year financial forecasts, despite the likelihood that tariffs would raise costs for certain products. That put Target in a difficult spot heading into its earnings report, Mr. Shemesh said.
“If you’re Target and you don’t reaffirm, you by default look worse than Walmart,” he added. On Wednesday, Lowe’s, the home improvement retailer, reaffirmed its full-year guidance, too.
As part of its turnaround push, Target said it would create a new “acceleration office,” aimed at streamlining operations and speeding up decisions. “In today’s environment, we need to become more agile and move with greater speed,” said Michael Fiddelke, Target’s chief operating officer, who is set to lead the office.
On top of tariffs and shaky consumer confidence, Target is also dealing with the fallout from its retreat from diversity practices. Customers denounced Target’s decision in January to pull back on these policies, noting that the retailer had long been viewed as a friendly environment that sold and highlighted merchandise from many minority communities. Several groups have called on shoppers to boycott Target, and foot traffic to its stores fell 2.4 percent last quarter, after growing in the previous three quarters.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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