MINNEAPOLIS — Target reported second-quarter results on Wednesday, showing continued sales pressure but signs of improvement in its digital and non-retail businesses. The retailer also reaffirmed its full-year outlook despite investor concerns that sent shares down nearly 9% in early trading.
Leadership change also loomed in the background: Target announced that Chief Operating Officer Michael Fiddelke will succeed Brian Cornell as CEO in February 2026, with Cornell transitioning to the role of executive chair. The transition comes as the company works to regain momentum following four years of stagnant sales and heightened competition from Walmart.
Bill Schiffner
For the quarter ended August 2, Target reported net sales of $25.2 billion, a 0.9% decrease from the same period in the prior year, while comparable sales declined 1.9%. Store transactions declined by 1.3% and the average basket size dropped by 0.6%, reflecting weaker in-store demand. Digital sales provided a bright spot, rising 4.3% year over year, with more than 25% growth in same-day services such as Drive Up and Target Circle 360.
Beyond merchandise, non-retail revenue increased 14.2%, driven by strong growth in the Roundel advertising business, membership programs, and marketplace services. Executives highlighted these businesses as key to offsetting sluggish store traffic and lower spending in core categories.
Profits were under pressure from higher markdown rates, purchase order cancellations and tariffs, with the gross margin rate narrowing to 29% from 30% a year ago. Still, disciplined cost management helped deliver earnings per share of $2.05, which was above analyst expectations, although down approximately 20% year-over-year. Operating income fell 19% to $1.3 billion.
Target maintained its 2025 guidance for a low-single-digit sales decline and adjusted EPS in the range of $7.00 to $9.00. The company noted that trends improved compared with the first quarter, with all six core merchandise categories seeing sequential gains.
Despite a modest earnings beat and growth in newer revenue streams, Wall Street remains cautious. Target shares are down more than 20% this year and about 60% from their 2021 peak, underscoring investor doubts about the pace of its turnaround.
