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Target reported first-quarter results on Wednesday, May 21Target (TGT) shares sank 7% Wednesday morning after the retail giant lowered its full-year sales projection following mixed first-quarter results.
The Minneapolis-based retailer reported quarterly adjusted earnings per share (EPS) of $1.30 on revenue that decreased nearly 3% year-over-year to $23.85 billion. Analysts had expected $1.64 and $24.34 billion, respectively, per Visible Alpha. However, Target's GAAP EPS of $2.27, which includes the gains from litigation settlements, topped the $1.64 estimate.
Comparable sales declined by 3.8%, as a larger drop in in-store shopping offset an increase in digital sales. Analysts had projected a 1.68% drop.
"While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth," CEO Brian Cornell said, adding that the retailer is "not satisfied with current performance and know we have opportunities to deliver faster progress on our roadmap for growth."
Cornell told reporters that Target's sales were negatively impacted by a number of factors, including tariffs, worsening consumer sentiment, and pushback to the retailer's backing away from its diversity, equity, and inclusion (DEI) initiatives earlier this year, according to CNBC. The CEO said in Wednesday's earnings call that raising prices would be "the very last resort" in terms of dealing with tariffs.
Target Now Sees Low-Single-Digit FY Sales Decline
The company cut its fiscal 2025 sales forecast and widened its projected profit range. The retailer now expects a low-single-digit sales decrease and EPS of $8.00 to $10.00, with adjusted EPS—excluding the Q1 gains from litigation settlements—projected from $7.00 to $9.00. Last quarter, Target said it expected roughly 1% net sales growth and EPS, both GAAP and adjusted, of $8.80 to $9.80.
Separately Wednesday, Target announced the creation of a "Enterprise Acceleration Office," led by COO Michael Fiddelke. The retailer said the effort is designed to "improve how functions work together to advance key priorities, ranging from simplifying cross-company processes to using technology and data in new ways to power the team."
Including today's decline, shares have lost about a third of their value since the start of the year.
UPDATE—This article has been updated with the latest share price information and additional comments from CEO Brian Cornell.
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