Target cuts full year guidance as first quarter earnings fall short
Published: 09:44 21 May 2025 EDT
Target Corp (NYSE:TGT) shares moved lower in early trade on Wednesday as it slashed its full-year guidance following a weak first quarter.
The retailer now expects its full-year sales to be down a low single digit percentage versus its prior guidance of 1% growth over last year.
Its earnings per share (EPS) guidance was also downwardly revised to a range of $7 to $9, from earlier guidance of $8.80 to $9.80.
For the first quarter, revenue was down 2.3% year-over-year at $23.85 billion, missing estimates of $24.35 billion, and EPS of $1.30 was short of the consensus $1.65.
Comparable sales decreased 3.8%, as comparable store sales were down 5.7% offset by a 4.7% jump in comparable digital sales.
‘Highly challenging environment’
Target CEO Brian Cornell told investors that the retailer navigated a “highly challenging environment” during the first quarter.
"While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth, led by a 36% increase in same-day delivery through Target Circle 360, and our strongest designer collaboration in more than a decade, kate spade for Target,” Cornell said.
He noted the company’s announcement of a multi-year acceleration office and several leadership changes, which he said “are intended to build more speed and agility into how we operate, and position key capabilities to drive long-term profitable growth.”
Analysts at Jefferies noted Target's Q1 results “weren’t great” and added that store comparable sales being down a mid-single digit percentage was “concerning.”
“Food and beverage momentum is important, but not enough to offset broader slowdown in the business. Gross margin was down due to markdown pressures, too,” they wrote.
They believe it will be more difficult for Target in the current environment amid tariffs and Walmart’s substantial market share gains.
However, they repeated their ‘Buy’ rating and $130 price target on Target, which traded down 7% at $91 shortly after US markets opened on Wednesday.
“Valuation remains cheap, but numbers continue to be pressured; and updated guide is wide-ranging, reflecting elevated uncertainty,” they wrote.
