Why did TGT's Q3 2025 EPS fall short of expectations?

Target's Q3 2025 EPS fell short of expectations due to a combination of factors:

1. **Inflation-Induced Discretionary Spending Drop**: Target faced challenges due to inflation, which led to a decrease in discretionary spending. This negatively impacted the company's sales and profitability.
2. **Supply Chain Pressures and Higher Fulfillment Costs**: Target encountered supply chain pressures and higher fulfillment costs, which affected its bottom line. These costs were driven by increased inventory levels, higher digital sales volume, and the introduction of new supply chain facilities.
3. **Strategic Shifts and Store Comps**: Target has been shifting its focus to categories like apparel and sportswear, which is part of its effort to grow sales and drive shareholder value. However, these shifts may not have been fully effective in the short term, as evidenced by the Q3 performance. Additionally, while Target's third-quarter comparable sales increased by 0.3%, this was partly offset by a 4.9% comp decline from the previous year.

In summary, Target's Q3 2025 EPS fell short due to inflation-induced decreased discretionary spending, supply chain pressures and higher fulfillment costs, and strategic shifts that are still in the early stages of producing the expected results.