TGT stock slumps after disappointing earnings report
TGT stock has continued its downward trend, falling 5.2% after Target’s latest earnings miss and guidance cut. Over the past three years, TGT has dropped 39%, sharply underperforming the S&P 500’s 50% gain.
The company reported revenue of $23.85 billion, missing Wall Street’s estimate of $24.35 billion, while comparable sales dropped 3.8%.
EPS misses highlight growing operational pressures
Adjusted earnings per share fell to $1.30 from $2.03 a year earlier, well below expectations of $1.65. Gross margins also dipped, sliding from 28.8% to 28.2%.
These numbers show growing inefficiencies in TGT’s operations as it struggles to navigate weakening consumer sentiment and competitive pricing pressure.
Weak demand hits discretionary categories hard
Target’s soft performance was broad-based. Discretionary categories, including home decor and apparel, continued to decline. Home goods were especially weak, with sales falling 8% to $3.2 billion.
Only food and beverage showed resilience, underscoring TGT’s struggle to balance its product mix during economic uncertainty.
Boycotts and brand disconnect hurt TGT sales
TGT management acknowledged that backlash from ending its DEI initiatives led to a boycott, contributing to lower traffic. While the boycott has subsided, it revealed deeper concerns: TGT may be losing touch with its customer base.
As Walmart outpaces it on price and merchandising, TGT risks slipping further behind.
TGT cuts guidance, signals continued struggle
Target slashed full-year EPS guidance from a prior range of $8.80–$9.80 to $7.00–$9.00. It also forecasts a low-single-digit decline in annual sales.
This cautious outlook suggests TGT has limited visibility into recovery, reinforcing investor skepticism around its near-term prospects.
Tariffs add another layer of pressure for TGT
Trump’s tariffs are adding to TGT’s headaches. Management said it is revamping its supply chain and leveraging scale to delay price increases.
These efforts may soften the blow, but they also create short-term cost burdens as TGT scrambles to protect its margins without losing customers.
Dividends and valuation provide limited silver lining
Despite poor performance, TGT maintains a 4.8% dividend yield and trades at a forward P/E under 12. It remains a Dividend King, having raised its payout annually for over 50 years.
This steady dividend gives long-term investors a reason to stay, even as TGT struggles to regain momentum.
Can TGT recover? Not likely this year
Target has strengths—its omnichannel capabilities, brand identity, and growing digital ad business. But the company still lacks clarity on why sales are declining and how to reverse the trend.
Until TGT delivers a few solid quarters, the stock may remain in limbo. A turnaround isn’t impossible—but it’s unlikely before next year.