Target Q2 Sales Fall 0.9% Amid Merchandise Slump and Tariff Pressures

Target Corporation (NYSE: TGT) reported mixed second-quarter financial results for fiscal 2025, with a 0.9% year-over-year decline in net sales to $25.2 billion. The drop was primarily driven by a 1.2% decrease in merchandise sales, though partially offset by a strong 14.2% increase in non-merchandise revenue [1]. The company noted a nearly 2 percentage point improvement in sales trends compared to the first quarter, particularly in in-store traffic and sales, which showed meaningful progress. Meanwhile, digital comparable sales rose by 4.3%, fueled by more than 25% growth in same-day delivery services, reflecting a continued shift in consumer behavior toward online shopping and the effectiveness of services such as Target Circle 360 and Drive Up [1].

Despite these improvements, earnings per share (EPS) fell short of expectations. Target reported both GAAP and adjusted EPS of $2.05 for the quarter, below the anticipated $2.09 and down from $2.57 in the second quarter of 2024 [1]. The earnings shortfall was attributed to ongoing cost pressures, including those related to tariffs, though the company managed to mitigate some of these impacts through strong expense management and efficiency gains.

For the full year, Target is maintaining a conservative outlook, projecting a low single-digit decline in sales and setting a GAAP EPS range of $8.00 to $10.00. Adjusted EPS, which excludes gains from litigation settlements in the first quarter, is expected to fall between $7.00 and $9.00. This guidance underscores the company’s focus on financial discipline amid a challenging retail environment. Newly appointed CEO Michael Fiddelke is emphasizing the importance of sustainable growth and consistent execution, particularly as the company prepares for the back-to-school and holiday shopping seasons [1].

The retail sector as a whole continues to face headwinds, with many S&P 500 companies reporting mixed results. Analysts had set relatively low expectations for the quarter due to economic uncertainties, including concerns over inflation, tariffs, and valuation levels [3]. Target’s ability to exceed earnings expectations despite declining sales highlights some resilience within its operations, though the negative net sales growth underscores the need for continued innovation and customer engagement to drive long-term growth. The company’s strategic focus on omnichannel enhancements, store remodels, and digital transformation will likely be critical to its future success.

Source:

[1] Target Corporation Reports Second Quarter Earnings (https://www.stocktitan.net/news/TGT/target-corporation-reports-second-quarter-7cds3c7x9k55.html)

[2] TGT - Target Corp Stock Price and Quote (https://finviz.com/quote.ashx?t=TGT)

[3] Earnings live: Home Depot results miss, Palo Alto Networks ... (https://finance.yahoo.com/news/live/earnings-live-exxon-chevron-oil-output-boosts-profits-moderna-stock-tumbles-amazon-sinks-120617054.html)