Target’s In a Slump. Can a $5 Billion Makeover and a New Boss Save It?

With input from Bloomberg, CNN, New York Post, Axios, Business Insider, Reuters.

Target’s rough patch isn’t over yet.

The retailer is now deep into a multi-year funk: sales fell again last quarter, it cut its full-year profit outlook, and it’s already axing corporate jobs while trying to reboot the brand. Shares are down about 35% this year, badly trailing rivals like Walmart and Costco.

Incoming CEO Michael Fiddelke is promising to get Target “back to growth as quickly as possible.” But the latest results make one thing clear: there’s no quick fix.

For the quarter that ended Nov. 1:

• Net sales fell 1.5% to $25.3 billion.
• Total revenue slipped to $25.27 billion, down from $25.67 billion a year ago.
• Comparable sales (stores and online open at least 13 months) dropped 2.7%, worse than Wall Street expected.
• Store traffic was down 2.2%, and the average ticket declined 0.5%.
• Net income fell 19% to $689 million.
• Adjusted earnings per share came in at $1.78, slightly ahead of forecasts.

Target has now logged negative or flat comparable sales in 10 of the last 12 quarters. The company also warned that holiday-quarter sales will likely be down again, expecting a low single-digit decline.

For the full year, Target now expects adjusted earnings of $7 to $8 per share, trimming the top end from its prior $7–$9 range.

“If you’re frustrated with our recent performance, we are too,” Fiddelke told analysts. “Mission 1 through 10 is to get back to growth.”

Target’s classic formula — cheap-chic clothes, cute seasonal decor, stylish home goods — just isn’t connecting the way it used to.

Inflation-weary shoppers are:

• Shifting toward essentials and value;
• Trading down to Walmart, Costco, Amazon, TJ Maxx, Shein, Temu and other discounters;
• Holding off on big discretionary purchases, especially home and apparel.

Target says customers are still spending, but they’re being “choiceful” — carefully prioritizing what they really need or what feels core to celebrating the holidays.

On top of that, the environment hasn’t helped:

• The record 44-day US government shutdown and a pause in SNAP benefits hurt lower-income shoppers.
• Persistent inflation, layoffs and tariff worries are weighing on confidence.

Target has also been dealing with fallout from its own decisions. After the company scaled back some diversity, equity and inclusion (DEI) efforts, it angered supporters of those programs; earlier this year, Target acknowledged that the backlash and boycotts hurt its sales.

While sales shrink, Target is both cutting costs and spending more:

• Last month, the company laid off about 1,800 corporate employees — roughly 8% of its office workforce, its largest restructuring in a decade.
• At the same time, it plans to boost capital spending by 25%, to $5 billion next year.

That money will go into:

• Remodeling and refreshing stores;
• Opening new, larger-format locations;
• Overhauling product assortments and floor plans;
• Improving digital operations and same-day/next-day fulfillment.

Fiddelke says shoppers have been complaining about messy stores, empty shelves and trouble getting help — and he’s betting that a cleaner, easier in-store experience will be key to winning them back.

Target is also testing a new version of its “stores as hubs” model: in some markets, only select stores will handle picking and packing online orders so others can focus more on in-store shoppers.

Like everyone else in retail, Target is gearing up for a cautious holiday season.

To grab budget-conscious customers, the company has:

• Cut prices on 3,000 everyday items, including food and household staples.
• Rolled out cheap holiday deals:

  • $1 ornaments;

  • $5 candles;

  • $10 throw blankets.

• Expanded its holiday lineup to 20,000 new items — more than double last year — with over half exclusive to Target.
• Stocked up on toys under $20, betting on parents who still want to make the holidays feel special.

Chief commercial officer Rick Gomez summed up the mind-set: shoppers are likely to prioritize “what goes under the tree versus what goes on the tree” — spending on gifts, not décor.

Some bright spots last quarter:

• Digital sales grew 2.4%, with same-day delivery (Circle 360) up more than 35%.
• Non-merchandise revenue (ads, memberships, marketplace) jumped 18%.
• Food, beverage, toys, sporting goods and wellness categories grew.
• The “Fun101” push to re-energize categories like toys, games and certain home items is starting to show results, with near 10% toy growth and double-digit gains in video games and sports gear.

But home and apparel — classic Target categories — are still lagging, even though denim is a rare bright spot.

Target is also leaning hard into tech.

The company announced a partnership with OpenAI:

• A Target experience inside ChatGPT is launching in beta around Black Friday week.
• Shoppers will be able to browse Target products, add multiple items to a cart, and even choose Drive Up or pickup options, all within ChatGPT.
• Target is also using AI and machine learning behind the scenes to improve forecasting, keep its top 5,000 items in stock and help customers find gifts more easily with a generative AI “gift finder.”

The retailer says shrink (loss from theft, damage and other issues) is now back near pre-pandemic levels, suggesting that high-profile shoplifting worries are no longer the main drag.

On Feb. 1, longtime CEO Brian Cornell will step down after 11 years, and Michael Fiddelke — a 20-year Target veteran who started as a summer intern — will officially take over.

His challenge is simple to say but hard to pull off: stop the slide and make Target feel exciting and affordable again, without wrecking profit in the process.

Target has:

• A powerful brand that used to stand for fun, style and value;
• A loyal customer base that’s currently trading down or shopping elsewhere;
• A turnaround plan built on store investment, sharper prices and new tech.

For now, Wall Street isn’t convinced the company has turned the corner — but if this really is “rock bottom,” Fiddelke’s multi-billion-dollar makeover will soon show whether Target can climb back out.