MINNEAPOLIS — Target Corp. reported a decline in third-quarter sales and profits as consumers continued to cut back on discretionary spending, even as the retailer relied on digital momentum, higher-margin services, and new investments to reposition the business.
Net sales for the quarter decreased by 1.5% to $25.3 billion. Comparable sales fell 2.7%, with a 3.8% decline in store sales partly offset by a 2.4% increase in digital sales. Total revenue slightly decreased by 1.6% to $25.27 billion.
GAAP diluted EPS stood at $1.51, down from $1.85 a year earlier. Adjusted EPS was $1.78, roughly 4% lower than in 2024 but still above analyst forecasts. Operating income declined 18.9% to $948 million. Excluding severance and asset-related charges related to business transformation efforts, operating income was $1.1 billion.
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“Thanks to the incredible work and dedication of the Target team, our third quarter performance was in line with our expectations, despite multiple challenges continuing to face our business,” said Michael Fiddelke, Target’s incoming chief executive officer. “As we head into the all-important holiday season, our team is well-prepared and ready to serve our guests with the great products, value, and inspiration they expect from Target.”
Fiddelke added that the company remains focused on three core priorities. “We continue to focus on the important work to solidify our merchandising authority, elevate the shopping experience, and harness the power of technology to move at greater pace and consistency, all in support of a return to sustainable growth,” he said.
Category performance was mixed: food and beverage and hardlines posted gains, while toys increased by nearly 10%. However, home, apparel, and other discretionary categories continued to weaken as consumers shifted toward essentials and value-priced options. The retailer stated that its gross margin rate of 28.2% reflected “merchandising pressure from increased markdowns,” partially offset by lower inventory shrink and higher advertising and membership revenues.
Digital remained a relatively bright spot. Same-day services, driven by Target Circle 360, delivered more than 35% growth. “Digital comp sales increased 2.4%, led by the strength of our same-day delivery model,” the company said.
Non-merchandise sales increased nearly 18% during the quarter. Roundel, Target’s retail-media division, experienced double-digit growth, along with membership and marketplace revenue. Target stated that these higher-margin segments remain a key part of its long-term profitability plan.
Fiddelke said the company’s investments in availability and fulfillment are beginning to show results. “On-shelf availability of our most-shopped items is up more than 150 basis points over this time last year,” he noted, adding that a new market-fulfillment strategy rolled out to 35 more markets “is helping us get products to guests faster while freeing up teams to spend more time with guests.”
Technology investment will accelerate in 2026 as Target prepares for its next chapter. “We’re laying the foundation for a stronger, faster and more innovative Target,” Fiddelke said. “It’s grounded in our purpose of bringing joy to our guests and focused on growth.”
Target highlighted its new partnership with OpenAI, which will allow guests to browse and purchase Target products in the ChatGPT app. “We expect Target will be one of the first retailers to offer multiple-item baskets, fresh food purchases and Drive Up or Order Pickup through this platform,” the company said.
The retailer maintained its low-single-digit decline outlook for Q4 sales and now expects full-year GAAP EPS of approximately $7.70 to $8.70 and adjusted EPS of $7.00 to $8.00.
Fiddelke said the company’s broader transformation is aimed squarely at returning the company to growth. “Mission 1 through 10 is to get back to growth for us,” he told reporters. “We know there’s work to do, and we have the best team in retail to do it.”
