With online shopping becoming the dominant avenue for many Americans to fulfil their daily needs and make other purchases, Target is reportedly experimenting with a more direct way of getting its products to consumers.
The strategy, although still in development, is poised to challenge existing direct shipping options, including those of e-commerce giant Amazon, as well as budget-friendly platforms like Temu and SHEIN.
What's In Target's Direct Shipping Plans?
As first reported by Bloomberg, Target is experimenting with shipping products straight from factories to customers' doorsteps. The big-box retailer aims to roll out a service similar to those offered by other established e-commerce firms.
Moreover, the company wants to expand its selection of affordable goods through this initiative. The direct-from-factory shipments would mainly cover clothing, household items, and other non-food merchandise, they added, noting that the project is still in its early stages.
'In all cases, we uphold the high quality, responsible sourcing and sustainability standards that Target is known for and that consumers expect from us,' a Target spokesperson told the publication.
An Overview of Target's Q1 2025 Results
Target reported Q1 net sales of $23.8 billion (£17.33 billion), down 2.8% year-over-year, missing expectations. In comparison, comparable sales declined 3.8%, driven by a 5.7% decrease in store traffic, partially offset by a 4.7% increase in digital sales.
GAAP EPS climbed to $2.27 (£1.65), boosted by a $593 million (£431.74 million) pre-tax legal settlement, while adjusted EPS slid to $1.30 (£0.95) from $2.03 (£1.48).
Operating income rose 13.6% to $1.47 billion (£1.07 billion), but underlying margins remained under pressure. Facing a challenging environment—including tariff concerns and consumer uncertainty—Target lowered its full-year guidance to a low-single-digit sales decline and adjusted EPS of $7–$ 9 (£5.10- £ 6.55).
Understanding The Sales Dip
Following a noticeable dip in their net sales, Target CEO Brian Cornell attributed the decline to five consecutive months of falling consumer confidence, inflationary pressure, and reduced discretionary spending post-pandemic.
'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,' Cornell told investors. 'I want to be clear that we're not satisfied with this performance and we're moving with urgency to navigate through this period of volatility.'
Moreover, additional headwinds included new tariffs resulting from US–China trade tensions, which raised costs across key categories, as well as backlash from cutting DEI programs that spurred boycotts, further dampening sales, especially in discretionary lines.
How Target Resolves This Moving Forward
Aside from their direct shipping pilot program, Target is actively mitigating tariff pressures through a multi-pronged approach. The company is renegotiating with vendor partners, evaluating and reshaping its product assortment, shifting production to alternative countries, and adjusting order timing and pricing as needed—all while aiming to absorb most tariff costs rather than pass them on to customers.
Collectively, these tactics aim to protect margins, enhance flexibility, and offer compelling value to shoppers—critical levers in a market plagued by tariffs, inflation, and sluggish consumer spending.
