By Juveria Tabassum (Reuters) -Target reported a bigger-than-expected drop in comparable sales on Wednesday, as cash-strapped U.S. consumers pulled back spending on apparel and home decor while seeking cheaper everyday essentials. The retailer, which has reported five straight quarters of same-store sales declines, also unveiled plans to invest about $1 billion more in 2026, as […]
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Target quarterly sales drop again, adds $1 billion to investment in stores
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By Juveria Tabassum
(Reuters) -Target reported a bigger-than-expected drop in comparable sales on Wednesday, as cash-strapped U.S. consumers pulled back spending on apparel and home decor while seeking cheaper everyday essentials.
The retailer, which has reported five straight quarters of same-store sales declines, also unveiled plans to invest about $1 billion more in 2026, as part of a turnaround with new stores, remodels and an improvement in its digital business.
Target named longtime executive Michael Fiddelke as its new CEO in August to steer the business back to health after several quarters of weak demand worsened by inventory missteps and understaffed stores.
Last month, Fiddelke, who takes over early next year, cut 1,800 corporate roles in a bid to reduce costs and streamline operations.
“Target is struggling to navigate an unsteady environment for consumer spending and its Q3 performance failed to build on the previous quarter’s incremental progress, underscoring that a real recovery is still a ways away, and incoming CEO Michael Fiddelke will have tough job ahead,” said Emarketer analyst Sky Canaves.
SALES DRAG CONTINUES
A prolonged U.S. government shutdown that delayed federal pay and food-stamp benefits, as well as still-high inflation and tariff worries has forced consumers to retrench.
Total comparable sales – from online channels and stores open for at least 13 months – fell 2.7% in the third quarter, compared with estimates of a 2.08% drop, according to data compiled by LSEG. The company’s shares were down about 2% in premarket trading.
Sales in the household essentials category fell 3.7%, while digital comparable sales rose 2.4%. Digital sales, a bright spot for Target in the past two quarters, missed expectations for a 3.18% growth, according to Visible Alpha.
Target’s shares have lost more than a third of their value this year, hurt by negative comparable sales growth and market share losses to bigger rival Walmart, which has channeled investments into technology to speed up deliveries of grocery and household products.
BANKING ON LOWER PRICES
Despite the sales declines, the company, on Wednesday, reaffirmed its forecast of low-single-digit sales decline for the fourth quarter.
The Minneapolis-based retailer has slashed prices on 3,000 everyday items, including food and household staples, and introduced a cheaper Thanksgiving meal kit to appeal to cost-conscious shoppers.
Target cut the top end of its annual earnings forecast by a dollar to a range of $7.00 to $8.00 per share, excluding severance charges and other one-time items.
Mounting economic pressures have fueled multiple forecasts signaling a subdued holiday shopping season this year. The record U.S. government shutdown has also unsettled consumers just days ahead of the start of the crucial shopping period.
Home improvement chains Home Depot and Lowe’s have also lowered annual expectations this week amid a still-muted housing market and lower spending on home renovation projects. On the other hand, off-price apparel retailer TJX raised its annual profit target.
Retail bellwether Walmart is due to report quarterly results on Thursday.
Target earned $1.78 a share in the third quarter ended November 1, beating analysts’ estimates of $1.72. Profits were boosted by double-digit sales growth in its higher-margin Roundel advertising business.
Total revenue fell 1.6% to $25.27 billion, just shy of estimates.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Sayantani Ghosh and Sriraj Kalluvila)