Dive Brief:
- Target’s fourth quarter net sales dropped 1.5% year over year to $30.5 billion, per a Tuesday press release. Comparable store sales declined 3.9% while comparable digital sales grew 1.9% for the quarter.
- The retailer reported a decline in apparel and accessories net sales, hardlines, home merchandise and household essentials. However, Target saw increases in net sales for its beauty category, as well as food and beverages.
- For the full fiscal year 2025, Target’s net sales declined 1.7% to $104.8 billion. The company expects net sales to grow about 2% for fiscal year 2026, reflecting a “small increase” in comparable sales and growth in net sales for every quarter, per the release.
Dive Insight:
Target’s turnaround has yet to yield direct top-line gains, though its forward-looking guidance implies leadership thinks the best is yet to come.
Some industry analysts remain cautious about the company’s outlook.
“The larger reinvestment/earnings rebase many, including us, were expecting is not present,” Roth analyst Bill Kirk said in an emailed note Tuesday. “While Target could find tariff and consumer tax refund relief, to date, initiatives have not changed trajectory ... While [adjusted] EBITDA guidance is ahead of consensus expectations, investors will be concerned that Target has set themselves too high a bar, particularly with the earnings acceleration dependent on forward, more difficult visibility periods.”
Target announced a slew of merchandising initiatives leading up to the 2025 holiday season. The retailer debuted an AI-powered holiday gift finder, brought back its “Hot Santa” marketing persona along with new characters, doubled its new merchandise for the season and expanded next-day delivery services.
Despite the festivities, sales lagged compared to the holidays in 2024.
“There is no way to sugarcoat it; Target underperformed over the holiday quarter,” GlobalData Managing Director Neil Saunders said in emailed comments Tuesday. “As poor as the numbers are, Target gets something of a pass this quarter. Not because there are excuses for this performance, but because there has been a change at the top – and with it has come a change in tone.”
Target veteran Michael Fiddelke officially took on the CEO role in February, though his influence on the retailer’s turnaround efforts began after his appointment was announced in August. Since then, the company has announced new investment efforts, as well as layoffs and a C-suite switch-up.
Target also added to its recent C-suite changes by tapping Michelle Mesenburg as its chief brand officer, according to a LinkedIn post from the executive about three days ago. Mesenburg has worked at the company for nearly 20 years, most recently serving as senior vice president of marketing. Target did not respond to Retail Dive’s requests for information on the appointment and the executive is not currently listed on the company’s leadership web page.
Fiddelke remained upbeat about the retailer’s future in a statement Tuesday.
“Target saw a healthy, positive sales increase in February, serving as an important milestone on our path back to growth this year, and reinforcing my confidence in the momentum we're building and the future we're creating together,” the CEO said.
