Target's sales drop in Q1, and they may continue dropping all year
Target logo (file photo) (FOX 9)
MINNEAPOLIS (FOX 9) - Target's sales fell more than the Minneapolis-based retailer expected they would in the first quarter, and the company is warning they will slip for the rest of the year as shoppers limit spending.
Target's sales slip
What they're saying:
In a first-quarter earnings report released on Wednesday, Target said its first-quarter net sales were $23.8 billion, compared with $24.5 billion in 2024. Net sales were 2.8% lower than 2024, which reflect a merchandise sales decrease of 3.1% and a 13.5% increase in other revenue, Target said.
Meanwhile, Target says comparable sales were down 3.8% in Q1, which reflects a comparable store sales decline of 5.7% and comparable digital sales growth of 4.7%. First-quarter operating income of $1.5 billion was 13.6% higher than last year.
"In the first quarter, our team navigated a highly challenging environment and focused on delivering the outstanding assortment, experience and value guests expect from Target," said Brian Cornell, chair and chief executive officer of Target Corporation. "While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth, led by a 36 percent increase in same-day delivery through Target Circle 360, and our strongest designer collaboration in more than a decade, kate spade for Target. While these highlights reinforce our confidence in the underlying health of our business, we're not satisfied with current performance and know we have opportunities to deliver faster progress on our roadmap for growth. This morning, we announced the establishment of a multi-year acceleration office, led by Michael Fiddelke, along with several leadership changes. These steps forward are intended to build more speed and agility into how we operate, and position key capabilities to drive long-term profitable growth. With these changes and the financial strength to continue investing in our business, I'm confident we can emerge an even stronger company over time."
Looking at fiscal year 2025, Target says it now expects a "low-single digit decline in sales."
Target boycott impacts
Dig deeper:
Target scaled back diversity, equity and inclusion initiatives in January after President Donald Trump took office and conservatives attacked DEI initiatives. This move prompted some customers to boycott Target in recent months.
Target said this week these boycotts have also done some damage to Q1 results, according to The Associated Press.
Shoppers are also pulling back on spending due to tariffs' impact on prices and as they grow uneasy over the U.S. economy. Some companies are raising prices due to tariffs. Target didn't offer specifics on the tariffs' impact on prices; it did say it's looking at different ways to offset costs.