As Walmart Rises, Target's 12-Quarter Slump Tests New CEO's Turnaround Plan

Target Corp. (TGT) reported a 19% decline in net income for its third quarter, signaling ongoing struggles to reverse a sales slump that has persisted for 12 consecutive quarters. The retailer, which lowered its full-year profit forecast to $7–$8 per share, attributed the weakness to soft demand, markdowns, and external factors like the government shutdown and paused SNAP funding. Net sales fell 1.5% to $25.3 billion, with comparable sales dropping 2.7% year-over-year.

Incoming CEO Michael Fiddelke, set to assume the role in February, outlined a $5 billion investment plan for 2026 to modernize stores, enhance merchandise, and improve digital capabilities. "Mission 1 through 10 is to get back to growth for us," he said, emphasizing the need to address customer concerns about messy stores, limited product variety, and subpar service. The company also announced price cuts on 3,000 everyday essentials and expanded lower-priced holiday items, such as $1 ornaments and $10 throws.

Target's challenges contrast sharply with Walmart Inc.'s (WMT) performance. Walmart, which reports Q3 results later this week, is expected to post a 4% sales increase to $177.1 billion and a 5% rise in earnings per share. Analysts credit Walmart's grocery dominance, cost-absorbing tariffs, and e-commerce scale for its resilience amid inflation and economic uncertainty. Target's stock, meanwhile, has plummeted 35% in 2025, underperforming Walmart's 12.6% gain.

Fiddelke acknowledged the pressure to redefine Target's identity in a competitive retail landscape. "The consumer is looking for great price, but we know that our lane-what makes Target uniquely special-is pairing that with incredible product," he said. The company recently ended its partnership with Ulta Beauty and is streamlining operations, including cutting 1,800 corporate jobs-its first major layoffs in a decade.

Analysts remain skeptical. "Target is losing out," said Louis Navellier of Navellier & Associates, noting the retailer's struggle to retain middle-class shoppers who increasingly turn to Walmart for essentials. Jefferies analyst Corey Tarlowe called Fiddelke's appointment an "underappreciated catalyst" but emphasized the need for sharper inventory management and pricing strategies.

As the holiday season approaches, Target faces heightened scrutiny. While it has boosted capital expenditures to $5 billion for store remodels and technology upgrades, Fiddelke admitted the path to growth remains unclear. "There's still work to do, but we are moving in the right direction," he said. With Walmart and Amazon tightening their grip on market share, Target's ability to execute its turnaround will be critical to regaining investor confidence.

---