Target announces strategic initiatives amid Q3 sales decline

Target Corporation reported lower earnings for the third quarter of 2025, with GAAP earnings per share (EPS) of 1.51 dollars and adjusted EPS of 1.78 dollars, down from 1.85 dollars a year earlier. The company said the decline reflects ongoing pressures in merchandising and operating costs.

Net sales for the quarter were 25.3 billion dollars, down 1.5 percent year over year. Merchandise sales fell 1.9 percent, partially offset by a 17.7 percent increase in non-merchandise sales. Comparable sales declined 2.7 percent, with store comps down 3.8 percent, while digital comparable sales grew 2.4 percent.

“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, incoming chief executive officer.

Strategic actions intensify

Last month, Target announced plans to eliminate 1,800 corporate roles, its largest workforce reduction in a decade, as part of a broader effort to streamline operations and sharpen its merchandising edge. The retailer has also taken steps to reinvigorate its fashion credibility — including sending designers to rodeos and ski lodges for trend inspiration — and has refined its store-based online-fulfillment model to free up employees to focus more on shelf-stocking and customer service.

Speaking to reporters on a call discussing the third-quarter results, Fiddelke spotlighted a series of technology-driven initiatives now shaping Target’s strategy. He highlighted Target Trend Brain, a generative AI-powered tool that helps designers and merchants identify emerging colours, patterns and styles. The company is also employing synthetic audiences — AI-generated customer simulations — to test product concepts and marketing campaigns before launch, reducing risk and speeding up decision-making.

On the same investor call, Jim Lee, chief financial officer, outlined Target’s investment plans for the year ahead. He said the company expects to significantly increase capital spending in 2026, supporting a wide range of strategic initiatives across stores, digital capabilities, and new locations. He added that Target’s current plan calls for 2026 capital expenditures to rise by roughly 25 percent, or about 1 billion dollars, compared with 2025.

The company also intends to leverage a continuous pipeline of productivity initiatives and approximately 180 million dollars in expected annualized savings from its recent business transformation efforts. According to Lee, these resources will be reinvested to advance Target’s three strategic priorities: strengthening merchandising authority, elevating the guest experience, and accelerating technology and operational efficiency.

Target maintains Q4 outlook

For the fourth quarter of 2025, Target continues to expect a low-single-digit decline in sales. The retailer now forecasts full-year GAAP EPS of 7.70 dollars to 8.70 dollars, and adjusted EPS of 7 dollars to 8 dollars.

Target paid 518 million dollars in dividends during the quarter, slightly higher than last year’s 516 million dollars, reflecting a 1.8 percent increase in dividend per share, partially offset by a lower average share count.