Target's same-store sales have declined for three consecutive quarters, lowering its full-year guidance, and the stock price has fallen back to 2019 levels

Target announced its earnings report before the market opened on Wednesday. Although its third-quarter performance exceeded analysts' expectations, the company lowered its full-year profit forecast, suggesting that its business revitalization plan will take longer, as it faces pressure from falling commodity prices and weak demand in core categories.

According to the earnings report, Target's same-store sales fell 2.7% year-over-year in the third quarter, marking the third consecutive quarter of decline for this metric. The average analyst expectation compiled by FactSet was for a 2.1% decline in same-store sales, indicating that actual performance fell short of expectations.

The company stated that the weak performance was primarily due to a 3.8% decline in comparable store sales, with transaction counts (i.e., foot traffic) down 2.2% and the average transaction amount down 0.5%. Meanwhile, comparable digital sales grew by 2.4%, with same-day delivery services surging by 35%, and digital sales accounted for 19.3% of total sales, up from 18.5% in the same period last year. Total net sales decreased by 1.5% to $25.27 billion, below the FactSet consensus estimate of $25.33 billion.

Target's stock price fell 5% in pre-market trading, approaching the six-year low closing price of $85.53 set on October 10.

At the same time, net profit dropped by 21.3% to $859 million; excluding non-recurring items, adjusted earnings per share fell by 3.9% to $1.78, but exceeded the FactSet expectation of $1.71.

Looking ahead, the company continues to expect a low single-digit percentage decline in sales for the fourth quarter but has lowered its full-year adjusted earnings per share guidance from $7 to $9 down to $7 to $8.

As a result, Target's stock price fell by as much as 5% in pre-market trading on Wednesday, with the decline narrowing after the market opened. The current stock price is at its lowest point since mid-2019. As of Tuesday, Target's stock price has cumulatively fallen by 34.5% in 2025, while competitor Walmart has risen by 12.2% during the same period, and the S&P 500 index has increased by 12.5%.

Incoming CEO: Unsatisfied with Current Performance

Target announced in August that Chief Operating Officer Michael Fiddelke will succeed Brian Cornell as CEO on February 1, 2026. In the same month, Target and specialty retailer Ulta Beauty announced that they would end their "Ulta Beauty at Target" shop-in-shop collaboration when their agreement expires in August 2026.

Fiddelke stated,

"We are never complacent in our efforts to restore growth, and we are not satisfied with our current performance." Fidelke joined Target in 2003 as a summer intern. He committed to strengthening the company's focus on style and categories while improving the shopping experience and utilizing technology more effectively. He stated that the company's business performance this quarter has been "volatile," leading to an adjustment in expectations. He added that it is currently difficult to pinpoint the specific reasons for weak demand.

The incoming CEO told analysts that the company would not wait for macroeconomic improvement but would continue to push for store reforms to enhance performance.

Target plans to increase capital expenditures to $5 billion next year—a 25% increase—aimed at renovating stores, opening new locations, and enhancing product and shopping experiences. This includes ensuring friendlier service and better product inventory.

The outgoing CEO, Brian Cornell, will continue to serve as executive chairman of the board. He stated that the current focus is on supporting the management team in driving operational reforms. Although the company's performance has not yet reached its potential, the direction is correct.

Establishing a Partnership with OpenAI

On the other hand, the company is leveraging artificial intelligence to enhance operations, such as identifying trends and improving customer service through AI. Target announced it will collaborate with OpenAI to allow customers to use ChatGPT on its platform, keeping pace with competitor Walmart.

Target stated that customers will be able to shop through ChatGPT and receive personalized recommendations and other services.

Target reported that "shrinkage" (inventory loss due to theft, damage, etc.) has returned to pre-pandemic levels. In the retail industry, theft is decreasing as businesses strengthen cooperation with law enforcement, more effectively track inventory, and lock up certain products.

The company undertook its first major restructuring in a decade last month, cutting 1,800 positions to reduce complexity and improve management efficiency.

Inflation Impact, Consumers Reduce Spending

Over the past three years, weak demand has steadily eroded Target's financial performance. Consumers affected by inflation have reduced spending on non-essential items such as apparel and home goods, which account for a significant portion of Target's sales.

Ahead of the earnings report released on Wednesday, Wall Street analysts had already expressed some concerns about the retailer. Morgan Stanley analyst Simeon Gutman stated in a recent report that Target "is still struggling to regain its leadership in design and style, and consumer dissatisfaction persists." He noted that with the company set to change CEOs in February, visibility on performance prospects for the next year and beyond is low.

The Bank of America securities division indicated that Target faces "rising long-term sales and profit margin risks," including slowing digital sales growth, insufficient scale in digital advertising and third-party platforms, increased pressure from tariffs, pricing, and merchandise management, as well as fierce competition from Walmart and Amazon.

They pointed out that Target has a higher exposure to tariffs and is also facing challenges from management changes and the termination of partnerships