Target posted a major earnings miss and cut its outlook amid a "difficult" environment for Q1 results. The retailer faces Trump tariff concerns, slowing traffic and a boycott after scaling back its diversity, equity and inclusion initiatives earlier this year.
Target reported earnings of $1.30 per share adjusted, down 36% vs $2.03 a share last year. Revenue declined 2.8% to $23.8 billion.
FactSet expected earnings of $1.61 per share on $24.22 billion in revenue.
Comparable sales fell 3.8% for the quarter, missing views for a 1.9% decline. Target reported that same-store sales fell 5.7%, partially offset by 4.7% comparable digital sales growth.
CEO Brian Cornell in the release said the Q1 operating environment was "highly challenging" and that he is "not satisfied" with the company's current performance.
"We faced several additional headwinds this quarter, including five consecutive months of declining consumer confidence, uncertainty regarding the impact of potential tariffs and updates we shared on belonging in January," Cornell said in the earnings call. "While we believe each of these factors played a role in our first quarter performance, we can't reliably estimate the impact of each one separately."
CCO Richard Gomez said that Target is negotiating with vendor partners, reevaluating assortment decisions, changing country of production for certain products, as well as adjusting prices and order timing where necessary to navigate the tariffs.
Target on Wednesday also announced that it established a new Enterprise Acceleration Office, consisting of a group of executives to drive greater operational speed, adaptability and innovation.
Target cut its adjusted EPS guidance for fiscal 2026 to $7-$9 from $8.80-$9.80. The retailer now expects a low single-digit decline in sales. In its fiscal Q4 2025 report, Target expected about 1% net sales growth.
FactSet analysts had expected full-year earnings of $8.34 per share adjusted on a slight uptick in sales to $106.67 billion.
Walmart Warns Of Price Hikes
Meanwhile, Walmart CFO John Rainey last week told CNBC that tariffs are "still too high" even with the recent rollbacks, saying it's "more than any retailer can absorb." He expects consumers to start seeing tariff-related price hikes later this month and "much more" in June.
President Donald Trump took aim at the Dow Jones retailer in a Saturday Truth Social Post, writing that "Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain."
"Between Walmart and China they should, as is said, 'EAT THE TARIFFS,' and not charge valued customers ANYTHING," Trump continued. "I'll be watching, and so will your customers!!!"
FactSet data shows that Walmart has an average operating margin of 4.46% over the past five years. The company's gross margin during that period was 24.66%.
Treasury Secretary Scott Bessent told CNN on Sunday that Walmart will absorb "some" of the tariffs, while "some may get passed on to consumers."
The U.S. last week announced a trade deal that slashed tariffs on Chinese-made goods to 30% from 145% for 90 days while further negotiations take place.
President Donald Trump has altered or paused his "reciprocal" tariffs on various countries multiple times since the April 2 "Liberation Day" announcement. And a majority of the current tariff levels are not final as the U.S. is still negotiating with most of the world.
Target Stock Performance
Target retreated 5.2% to 93 on Wednesday. The stock edged up a fraction to 98.12 on Tuesday to test its long-sliding 50-day moving average.
Shares have recovered modestly from their April 8 bottom of 87.35, the lowest level since 2019.
Still, TGT stock has tumbled more than 31% so far this year.
Walmart stock eased 1.5% Wednesday to 96.38, holding above a 96.03 cup-with-handle buy point. Investors also could use a weekly cup-with-handle buy point of 99.74 as an alternate entry.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
