In an aerial view, a Target store is seen on August 11, 2025 in Austin, Texas.
Brandon Bell | Getty Images
Target beat Wall Street’s earnings and sales expectations and reaffirmed its outlook on Wednesday, even as the discounter’s sales and traffic across its stores and website declined.
Yet the Minneapolis-based retailer pointed toward the future – and its focus on getting back to growth – by naming its next CEO. Chief Operating Officer Michael Fiddelke, who has also served as Target’s CFO, will step into the role on Feb. 1. He will succeed CEO Brian Cornell, who will become executive chair of Target’s board of directors. Fiddelke is a 20-year Target veteran.
On a call with reporters, Fiddelke, 49, described his two decades with the company as “an asset.” He said he knows what the big-box retailer can be at its best – and what it must recapture – and isn’t waiting until February to make changes.
He laid out three priorities: Reestablishing Target’s reputation as a retailer with stylish and unique items, providing a more consistent customer experience and using technology more effectively to operate an efficient business.
Beyond the CEO announcement, the Minneapolis-based discounter topped Wall Street’s expectations for sales and earnings during the fiscal second quarter. It reiterated its full-year forecast, which it had cut back in May. Target said it expects a low single-digit percentage decline in sales and adjusted earnings per share, excluding gains from litigation settlements, to be about $7 to $9.
Here’s what Target reported for the three-month period that ended Aug. 2 compared with Wall Street’s expectations, according to a survey of analysts by LSEG:
- Earnings per share: $2.05 vs. $2.03 expected
- Revenue: $25.21 billion vs. $24.93 billion expected
Target’s annual sales have been roughly stagnant for the past four years, and its inconsistent performance has tested the loyalty of shoppers and shaken the confidence of Wall Street. Store traffic at the big-box retailer has fallen almost every week since late January, according to Placer.ai, an analytics firm that uses anonymized data from mobile devices to estimate overall visits to locations. And shares of the company have tumbled about 60% from their all-time high in late 2021.
Customers and former employees told CNBC Target has lost some of the unique traits that set it apart from competitors, such as its eye-catching merchandise, well-kept stores and attentive customer service. Higher tariffs have compounded Target’s challenges because it imports about half of what it sells.
And last week, Ulta Beauty and Target announced they are ending a deal that opened mini beauty shops in nearly a third of Target’s stores. The partnership, which also added Ulta’s beauty brands to Target’s website, will end in August 2026. Target had spoken about the addition of Ulta shops as a traffic-driver and a boost to its beauty category.
Fiddelke told reporters that the company is “always assessing our partnerships.” He said Target has posted annual sales growth in its beauty category, excluding Ulta Beauty items, every year since 2010, and it’s confident that can continue.
Target’s latest quarter reflected its ongoing struggles. Its net income fell to $935 million, or $2.05 per share, from $1.19 billion, or $2.57 per share, in the year-ago quarter. Revenue declined from $25.45 billion in the prior-year period.
Comparable sales decreased by 1.9% year over year. That metric, also known as same-store sales, includes sales on its website and stores open at least 13 months.
Customer transactions dropped 1.3% and the average amount customers spent during those transactions declined 0.6% from the year-ago quarter.
Its profit margins were pressured by higher markdown rates, cancellation costs for purchase orders and customers buying more merchandise in lower-profit categories like hardlines. Hardlines, a category that includes electronics and toys, tends to have lower margins than other parts of the store like apparel.
Digital sales were a bright spot, rising 4.3% year over year.
Target also posted gains in parts of its business that are outside of retail. Its non-merchandise sales grew 14.2% compared to the year-ago period, as it drew more revenue from its advertising business Roundel, its membership programs and its third-party marketplace.
Target’s retail sales trends improved from the first quarter to the second quarter – even though they were still negative, Fiddelke told reporters on a call. He said sales trends in all six of Target’s key merchandise categories improved from the previous quarter.
As leader of the Enterprise Acceleration Office, a unit Target created in May to lead its turnaround, Fiddelke said he’s gotten a chance to take a closer look at the business and where it has underperformed. For example, he said, the retailer lost ground with home goods, a category it was known for and one that exploded in popularity during the Covid pandemic. He said Target focused too much on “core” items and “lost some of our fashion and design leadership that’s so important in a category like that.”
But, he said, it has made some progress, such as by adding Disney and Marvel-themed bedding and decor to Pillowfort, Target’s brand for kids’ home goods.
“Now, we need more of those examples across the category, but they give me a ton of confidence that we’re on the right path there,” he said.
