US' Target's Q3 declines mild as digital momentum supports performance

The company saw 1.9 per cent fall in merchandise sales. The comparable sales were down 2.7 per cent, with a 3.8 per cent decline in stores countered by a 2.4 per cent increase in digital comparable sales. Same-day delivery—powered by Target Circle 360—expanded more than 35 per cent, contributing significantly to digital momentum, Target Corporation said in a press release.

GAAP earnings per share (EPS) fell to $1.51 from $1.85 last year, while adjusted EPS reached $1.78, excluding non-recurring severance and asset-related charges. Operating income dropped 18.9 per cent to $948 million, with the operating margin softening to 3.8 per cent versus 4.6 per cent a year earlier. Excluding non-recurring items, the operating margin stood at 4.4 per cent.

The gross margin held nearly flat at 28.2 per cent, affected by higher markdown activity but supported by improved shrink levels, efficiency gains in supply chain and digital fulfilment. SG&A expense rate was 21.9 per cent, or 21.3 per cent when adjusted, matching last year’s underlying run-rate.

The company’s detailed financial statements show that cost of sales fell 1.4 per cent in the quarter to $18.1 billion, while SG&A increased 1.4 per cent to $5.54 billion. Depreciation and amortisation rose modestly, and net interest expense increased 8.5 per cent. Net earnings for the quarter were $689 million, down 19.3 per cent.

“Thanks to the incredible work and dedication of the Target team, our third quarter performance was in line with our expectations, despite multiple challenges continuing to face our business,” said Michael Fiddelke, incoming chief executive officer (CEO) of Target. “As we head into the all-important holiday season, our team is well-prepared and ready to serve our guests with the great products, value, and inspiration they expect from Target.”

“At the same time, we continue to focus on the important work to deliver on our three key priorities: solidifying our merchandising authority, elevating the shopping experience, and further harnessing the power of technology to move at greater pace and consistency, all in support of a return to sustainable growth,” added Fiddelke.

In the first nine months (9M) of 2025, net sales totalled $74.3 billion, 1.7 per cent lower YoY. Net earnings for the period reached $2.66 billion. Basic EPS was $5.85 versus $6.47, while diluted EPS stood at $5.84. Operating income for the 9M declined 8.8 per cent to $3.74 billion.

For the fourth quarter (Q4) of 2025, Target maintained expectations for a low-single-digit sales decline as discretionary softness persists. Full-year GAAP EPS guidance is now $7.7–$8.7, while adjusted EPS guidance is $7–$8, excluding litigation gains recorded in Q1 and one-off severance and asset charges in Q3, added the release.

ALCHEMPro News Desk (SG)