Target Cuts Profit Outlook as Shoppers Pull Back and New CEO Prepares a Major Reset

Target delivered another mixed quarter as consumers became more cautious with spending. Revenue came in at 25.27 billion dollars, slightly under forecasts, while adjusted earnings of 1.78 dollars per share beat expectations but remained lower than a year ago. Net income fell to 689 million dollars as shoppers made fewer trips and spent less per visit.

Comparable sales declined 2.7 percent, marking a third consecutive quarter of contraction. Traffic dropped 2.2 percent and average transaction size dipped 0.5 percent. Digital demand offered a small boost with a 2.4 percent increase driven by strong growth in same-day services.

The company cut its full-year earnings outlook to a 7 to 8 dollar range and reaffirmed that holiday sales will likely fall by a low single-digit percentage. Target’s share price has slid sharply, down around 67 percent from its 2021 peak and 35 percent year to date.

CEO-elect Michael Fiddelke plans to lift capital spending to 5 billion dollars next year to improve stores, online fulfillment and overall customer experience. Target has already cut 1,800 corporate roles and introduced AI-powered tools such as Target Trend Brain and synthetic audience testing to refine products and marketing.

The retailer is also launching an OpenAI-integrated shopping experience that allows customers to shop Target’s app within ChatGPT. To attract budget-minded shoppers, it has reduced prices on 3,000 essentials and expanded its holiday collection to 20,000 new items, more than half exclusive to Target.