Target Corporation Reports Third Quarter Earnings
Minneapolis, MN — Target Corp. announced its third quarter 2025 financial results.
- Third quarter net sales were $25.3 billion, 1.5 percent lower than 2024.
- Digital comparable sales grew 2.4 percent, led by more than 35% growth in same-day delivery powered by Target Circle 360.
- Food & Beverage and Hardlines (“Fun 101”) delivered comparable sales growth in the quarter, offset by continued softness across the broader discretionary portfolio.
- Non-merchandise sales grew nearly 18 percent with Roundel, membership and marketplace revenues all growing double digits.
- Third quarter GAAP EPS was $1.51 compared with $1.85 last year. Adjusted EPS1, which excludes non-recurring severance and asset-related charges, was $1.78.
- To deliver newness, convenience and value this holiday season, Target will offer2:
- Over 20,000 new items — twice as many as the prior year — with more than half exclusive to Target.
- Thanksgiving meals for 4 under $20, with turkey at just 79 cents per pound.
- Lower prices on thousands of food, beverage and essential items to help consumers save on the products they rely on most.
- Thousands of trend-right gifts starting at $5, plus thousands of toys under $20.
- A suite of easy-to-use fulfillment options, including an expanded reach of next-day shipping available to more than half of the U.S. population.
The Company reported third quarter GAAP earnings per share of $1.51 and Adjusted earnings per share1 of $1.78 compared with GAAP and Adjusted EPS of $1.85 in 2024. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.
“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 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.”
Guidance
For the fourth quarter of 2025, the Company is maintaining its expectation of a low-single digit decline in sales.
Full-year GAAP EPS is now expected to be approximately $7.70 to $8.70. Full-year Adjusted EPS, which excludes the gains from the litigation settlements in the first quarter and severance and asset-related charges in the third quarter, is now expected to be approximately $7.00 to $8.00.
Operating Results
Net Sales of $25.3 billion in the third quarter were 1.5 percent lower than last year, reflecting a merchandise sales decrease of 1.9 percent, partially offset by a 17.7 percent increase in non-merchandise sales. Comparable sales decreased 2.7 percent in the third quarter, reflecting a comparable store sales decline of 3.8 percent, partially offset by comparable digital sales growth of 2.4 percent. Third quarter operating income, which includes the impact of non-recurring items, was $0.9 billion, 18.9 percent lower than last year. Excluding those non-recurring items, operating income was $1.1 billion.
Third quarter operating income margin rate, which includes the impact of non-recurring items, was 3.8 percent in 2025, compared with 4.6 percent in 2024. Excluding those non-recurring items, operating margin rate was 4.4 percent in 2025. Third quarter gross margin rate was 28.2 percent, compared with 28.3 percent in 2024, reflecting merchandising pressure from increased markdowns, partially offset by growth in advertising and other revenues, lower inventory shrink and efficiency gains in supply chain and digital fulfillment. Third quarter SG&A expense rate, which includes non-recurring items, was 21.9 percent, compared with 21.3 percent in 2024. Excluding those non-recurring items, SG&A expense rate was 21.3 percent in Q3 2025, in line with last year.
Interest Expense and Taxes
The Company’s third quarter 2025 net interest expense was $115 million, compared with $105 million last year, reflecting higher average debt levels in the current year.
Third quarter 2025 effective income tax rate was 19.8 percent, compared with the prior year rate of 21.7 percent, reflecting the benefit of additional tax credits in the current year.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $518 million in the third quarter, compared with $516 million last year, reflecting a 1.8 percent increase in the dividend per share, offset by the impact of a lower average share count.
The Company repurchased $152 million of its shares in the third quarter, retiring 1.7 million shares of common stock at an average price of $91.59. As of the end of the quarter, the Company had approximately $8.3 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in August 2021.
For the trailing twelve months through third quarter 2025, after-tax return on invested capital (ROIC) was 13.4 percent, compared with 15.9 percent for the trailing twelve months through third quarter 2024. The tables in this release provide additional information about the Company’s ROIC calculation.
Webcast Details
Target will webcast its third quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Corporate.Target.com/Investors (click on “Q3 2025 Target Corporation Earnings Conference Call” under “Events & Presentations”). A replay of the webcast will be provided when available. The replay number is 1-800-876-4955.
Miscellaneous
Statements in this release regarding the Company’s future financial performance, including its fiscal 2025 full-year guidance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company’s results to differ materially. The most important risks and uncertainties are described in Item 1A of the Company’s Form 10-K for the fiscal year ended February 1, 2025. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement.
About Target
Minneapolis-based Target Corporation (NYSE: TGT) serves guests at nearly 2,000 stores and at Target.com, with the purpose of helping all families discover the joy of everyday life. Since 1946, Target has given 5% of its profit to communities, which today equals millions of dollars a week. Additional company information can be found by visiting the corporate website (corporate.target.com) and press center.
|
TARGET CORPORATION |
||||||||||||
|
Consolidated Statements of Operations |
||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
(millions, except per share data) (unaudited) |
November 1, |
November 2, |
Change |
November 1, |
November 2, |
Change |
||||||
|
Net sales |
$ 25,270 |
$ 25,668 |
(1.5) % |
$ 74,327 |
$ 75,651 |
(1.7) % |
||||||
|
Cost of sales |
18,137 |
18,402 |
(1.4) |
53,168 |
53,700 |
(1.0) |
||||||
|
Selling, general and administrative expenses |
5,536 |
5,459 |
1.4 |
15,486 |
15,969 |
(3.0) |
||||||
|
Depreciation and amortization (exclusive of |
649 |
639 |
1.7 |
1,936 |
1,883 |
2.8 |
||||||
|
Operating income |
948 |
1,168 |
(18.9) |
3,737 |
4,099 |
(8.8) |
||||||
|
Net interest expense |
115 |
105 |
8.5 |
346 |
321 |
7.8 |
||||||
|
Net other income |
(26) |
(28) |
(9.7) |
(68) |
(77) |
(11.2) |
||||||
|
Earnings before income taxes |
859 |
1,091 |
(21.3) |
3,459 |
3,855 |
(10.3) |
||||||
|
Provision for income taxes |
170 |
237 |
(28.4) |
799 |
867 |
(7.9) |
||||||
|
Net earnings |
$ 689 |
$ 854 |
(19.3) % |
$ 2,660 |
$ 2,988 |
(11.0) % |
||||||
|
Basic earnings per share |
$ 1.52 |
$ 1.86 |
(18.2) % |
$ 5.85 |
$ 6.47 |
(9.6) % |
||||||
|
Diluted earnings per share |
$ 1.51 |
$ 1.85 |
(18.2) % |
$ 5.84 |
$ 6.45 |
(9.6) % |
||||||
|
Weighted average common shares outstanding |
||||||||||||
|
Basic |
453.7 |
460.1 |
(1.4) % |
454.4 |
461.6 |
(1.6) % |
||||||
|
Diluted |
455.1 |
461.5 |
(1.4) % |
455.7 |
462.9 |
(1.6) % |
||||||
|
Antidilutive shares |
2.3 |
0.5 |
2.3 |
0.5 |
||||||||
|
Dividends declared per share |
$ 1.14 |
$ 1.12 |
1.8 % |
$ 3.40 |
$ 3.34 |
1.8 % |
||||||
|
TARGET CORPORATION |
||||||
|
Consolidated Statements of Financial Position |
||||||
|
(millions, except footnotes) (unaudited) |
November 1, 2025 |
February 1, 2025 |
November 2, 2024 |
|||
|
Assets |
||||||
|
Cash and cash equivalents |
$ 3,822 |
$ 4,762 |
$ 3,433 |
|||
|
Inventory |
14,896 |
12,740 |
15,165 |
|||
|
Other current assets |
1,984 |
1,952 |
1,956 |
|||
|
Total current assets |
20,702 |
19,454 |
20,554 |
|||
|
Property and equipment, net |
33,710 |
33,022 |
32,931 |
|||
|
Operating lease assets |
3,739 |
3,763 |
3,513 |
|||
|
Other noncurrent assets |
1,840 |
1,530 |
1,533 |
|||
|
Total assets |
$ 59,991 |
$ 57,769 |
$ 58,531 |
|||
|
Liabilities and shareholders’ investment |
||||||
|
Accounts payable |
$ 13,792 |
$ 13,053 |
$ 14,419 |
|||
|
Accrued and other current liabilities |
6,317 |
6,110 |
5,738 |
|||
|
Current portion of long-term debt and other borrowings |
1,133 |
1,636 |
1,635 |
|||
|
Total current liabilities |
21,242 |
20,799 |
21,792 |
|||
|
Long-term debt and other borrowings |
15,366 |
14,304 |
14,346 |
|||
|
Noncurrent operating lease liabilities |
3,542 |
3,582 |
3,418 |
|||
|
Deferred income taxes |
2,279 |
2,303 |
2,419 |
|||
|
Other noncurrent liabilities |
2,061 |
2,115 |
2,067 |
|||
|
Total noncurrent liabilities |
23,248 |
22,304 |
22,250 |
|||
|
Shareholders’ investment |
||||||
|
Common stock |
38 |
38 |
38 |
|||
|
Additional paid-in capital |
7,157 |
6,996 |
6,916 |
|||
|
Retained earnings |
8,777 |
8,090 |
8,009 |
|||
|
Accumulated other comprehensive loss |
(471) |
(458) |
(474) |
|||
|
Total shareholders’ investment |
15,501 |
14,666 |
14,489 |
|||
|
Total liabilities and shareholders’ investment |
$ 59,991 |
$ 57,769 |
$ 58,531 |
|||
|
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 452,796,520, 455,566,995, and 459,244,995 shares issued and outstanding as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. |
|
Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented. |
|
TARGET CORPORATION |
||||
|
Consolidated Statements of Cash Flows |
||||
|
Nine Months Ended |
||||
|
(millions) (unaudited) |
November 1, |
November 2, |
||
|
Operating activities |
||||
|
Net earnings |
$ 2,660 |
$ 2,988 |
||
|
Adjustments to reconcile net earnings to cash provided by operating activities: |
||||
|
Depreciation and amortization |
2,331 |
2,215 |
||
|
Share-based compensation expense |
197 |
229 |
||
|
Deferred income taxes |
(21) |
(58) |
||
|
Noncash (gains) / losses and other, net |
8 |
(1) |
||
|
Changes in operating accounts: |
||||
|
Inventory |
(2,156) |
(3,279) |
||
|
Other assets |
(294) |
(265) |
||
|
Accounts payable |
658 |
2,362 |
||
|
Accrued and other liabilities |
102 |
(113) |
||
|
Cash provided by operating activities |
3,485 |
4,078 |
||
|
Investing activities |
||||
|
Expenditures for property and equipment |
(2,842) |
(1,968) |
||
|
Other |
52 |
26 |
||
|
Cash required for investing activities |
(2,790) |
(1,942) |
||
|
Financing activities |
||||
|
Additions to long-term debt |
1,984 |
741 |
||
|
Reductions of long-term debt |
(1,609) |
(1,112) |
||
|
Dividends paid |
(1,537) |
(1,533) |
||
|
Repurchase of stock |
(408) |
(506) |
||
|
Shares withheld for taxes on share-based compensation |
(65) |
(98) |
||
|
Cash required for financing activities |
(1,635) |
(2,508) |
||
|
Net decrease in cash and cash equivalents |
(940) |
(372) |
||
|
Cash and cash equivalents at beginning of period |
4,762 |
3,805 |
||
|
Cash and cash equivalents at end of period |
$ 3,822 |
$ 3,433 |
||
|
TARGET CORPORATION |
|||||||
|
Operating Results |
|||||||
|
Net Sales |
Three Months Ended |
Nine Months Ended |
|||||
|
(millions) (unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
|||
|
Apparel & accessories |
$ 3,838 |
$ 4,003 |
$ 11,635 |
$ 12,161 |
|||
|
Beauty |
3,232 |
3,226 |
9,729 |
9,729 |
|||
|
Food & beverage |
6,008 |
5,917 |
17,499 |
17,308 |
|||
|
Hardlines |
3,190 |
3,152 |
9,786 |
9,634 |
|||
|
Home furnishings & décor |
3,908 |
4,185 |
10,789 |
11,612 |
|||
|
Household essentials |
4,542 |
4,715 |
13,321 |
13,828 |
|||
|
Other merchandise sales |
34 |
30 |
117 |
120 |
|||
|
Merchandise sales |
24,752 |
25,228 |
72,876 |
74,392 |
|||
|
Advertising revenue (a) |
241 |
167 |
621 |
459 |
|||
|
Credit card profit sharing |
119 |
148 |
395 |
433 |
|||
|
Other |
158 |
125 |
435 |
367 |
|||
|
Net sales |
$ 25,270 |
$ 25,668 |
$ 74,327 |
$ 75,651 |
|||
|
(a) |
Primarily represents revenue related to advertising services provided via the Company’s Roundel digital advertising business offering. Roundel services are classified as either Net Sales or as a reduction of Cost of Sales or Selling, General, and Administrative (SG&A) Expenses, depending on the nature of the advertising arrangement. |
|
Rate Analysis |
Three Months Ended |
Nine Months Ended |
||||||
|
(unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
||||
|
Gross margin rate (a) |
28.2 % |
28.3 % |
28.5 % |
29.0 % |
||||
|
SG&A expense rate (a)(b) |
21.9 |
21.3 |
20.8 |
21.1 |
||||
|
Depreciation and amortization expense rate (exclusive of |
2.6 |
2.5 |
2.6 |
2.5 |
||||
|
Operating income margin rate (b) |
3.8 |
4.6 |
5.0 |
5.4 |
||||
|
Note: Gross margin is calculated as Net Sales less Cost of Sales. All rates are calculated by dividing the applicable amount by Net Sales. |
|
|
(a) |
Reflects the impact of a reclassification of prior year amounts, which were not material, to conform with current year presentation. The reclassifications increased Cost of Sales with equal and offsetting decreases to SG&A Expenses. |
|
(b) |
SG&A Expenses and Operating Income for the three and nine months ended November 1, 2025, include certain costs related to our multi-year initiative to transform various aspects of our business. These discretely managed items resulted in a net impact to the SG&A Expense Rate of 0.6 and (0.6) percentage points for the three and nine months ended November 1, 2025, respectively, with an inverse impact on the Operating Income Margin Rate in the respective periods. The Reconciliation of Non-GAAP Adjusted EPS tables provide additional information. |
Sales Metrics
Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed. Digitally originated sales include all Merchandise Sales initiated through mobile applications and the Company’s websites.
|
Comparable Sales |
Three Months Ended |
Nine Months Ended |
||||||
|
(unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
||||
|
Comparable sales change |
(2.7) % |
0.3 % |
(2.8) % |
(0.5) % |
||||
|
Drivers of change in comparable sales |
||||||||
|
Number of transactions (traffic) |
(2.2) |
2.4 |
(1.9) |
1.1 |
||||
|
Average transaction amount |
(0.5) |
(2.0) |
(0.9) |
(1.6) |
||||
|
Comparable Sales by Channel |
Three Months Ended |
Nine Months Ended |
||||||
|
(unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
||||
|
Stores originated comparable sales change |
(3.8) % |
(1.9) % |
(4.2) % |
(2.0) % |
||||
|
Digitally originated comparable sales change |
2.4 |
10.8 |
3.8 |
6.9 |
||||
|
Merchandise Sales by Channel |
Three Months Ended |
Nine Months Ended |
||||||
|
(unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
||||
|
Stores originated |
80.7 % |
81.5 % |
80.7 % |
81.8 % |
||||
|
Digitally originated |
19.3 |
18.5 |
19.3 |
18.2 |
||||
|
Total |
100 % |
100 % |
100 % |
100 % |
||||
|
Merchandise Sales by Fulfillment Channel |
Three Months Ended |
Nine Months Ended |
||||||
|
(unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
||||
|
Stores |
97.7 % |
97.7 % |
97.7 % |
97.8 % |
||||
|
Other |
2.3 |
2.3 |
2.3 |
2.2 |
||||
|
Total |
100 % |
100 % |
100 % |
100 % |
||||
|
Note: Merchandise Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Same Day Delivery. |
|
Target Circle Card Penetration |
Three Months Ended |
Nine Months Ended |
||||||||||
|
(unaudited) |
November 1, |
November 2, |
November 1, |
November 2, |
||||||||
|
Total Target Circle Card Penetration |
16.9 % |
17.7 % |
17.0 % |
17.8 % |
||||||||
|
Number of Stores and Retail Square Feet |
Number of Stores |
Retail Square Feet (a) |
||||||||||
|
(unaudited) |
November 1, |
February 1, |
November 2, |
November 1, |
February 1, |
November 2, |
||||||
|
170,000 or more sq. ft. |
273 |
273 |
273 |
48,824 |
48,824 |
48,824 |
||||||
|
50,000 to 169,999 sq. ft. |
1,576 |
1,559 |
1,559 |
197,274 |
195,050 |
195,050 |
||||||
|
49,999 or less sq. ft. |
146 |
146 |
146 |
4,420 |
4,404 |
4,404 |
||||||
|
Total |
1,995 |
1,978 |
1,978 |
250,518 |
248,278 |
248,278 |
||||||
|
(a) |
In thousands; reflects total square feet less office, supply chain facility, and vacant space. |
|
Reconciliation of Non-GAAP Adjusted EPS |
Three Months Ended |
|||||||||||||
|
November 1, 2025 |
November 2, 2024 |
|||||||||||||
|
(millions, except per share data) (unaudited) |
Pretax |
Net of Tax |
Per Share |
Pretax |
Net of Tax |
Per Share |
Change |
|||||||
|
GAAP diluted EPS |
$ 1.51 |
$ 1.85 |
(18.2) % |
|||||||||||
|
Adjustments |
||||||||||||||
|
Business transformation costs (a) |
$ 161 |
$ 120 |
$ 0.26 |
$ — |
$ — |
$ — |
||||||||
|
Adjusted EPS |
$ 1.78 |
$ 1.85 |
(3.9) % |
|||||||||||
|
Reconciliation of Non-GAAP Adjusted EPS |
Nine Months Ended |
|||||||||||||
|
November 1, 2025 |
November 2, 2024 |
|||||||||||||
|
(millions, except per share data) (unaudited) |
Pretax |
Net of Tax |
Per Share |
Pretax |
Net of Tax |
Per Share |
Change |
|||||||
|
GAAP diluted EPS |
$ 5.84 |
$ 6.45 |
(9.6) % |
|||||||||||
|
Adjustments |
||||||||||||||
|
Business transformation costs (a) |
$ 161 |
$ 120 |
$ 0.26 |
$ — |
$ — |
$ — |
||||||||
|
Interchange fee settlements (b) |
(593) |
(441) |
(0.97) |
— |
— |
— |
||||||||
|
Adjusted EPS |
$ 5.13 |
$ 6.45 |
(20.5) % |
|||||||||||
|
Note: Amounts may not foot due to rounding. |
|
|
(a) |
Includes employee severance and related costs, as well as asset impairments and other charges related to the termination of a commercial partnership. |
|
(b) |
Includes gains, net of legal fees, related to settlements during the first quarter of 2025 of credit card interchange fee litigation matters in which the Company was a plaintiff. |
|
Reconciliation of Non-GAAP Adjusted EPS Guidance |
||
|
(per share) (unaudited) |
Full Year 2025 |
|
|
GAAP diluted earnings per share guidance |
$7.70 – $8.70 |
|
|
Estimated adjustments (a) |
||
|
Interchange fee settlements |
($0.97) |
|
|
Business transformation costs |
0.26 |
|
|
Adjusted diluted earnings per share guidance |
~$7.00 – $8.00 |
|
|
(a) |
Full-year 2025 GAAP EPS may include the impact of additional discrete items, which will be excluded in calculating Adjusted EPS. The guidance does not currently reflect any such additional discrete items. In the past, these items have included both gains and losses, including certain asset impairments, severance, and other items that are discretely managed. |
|
EBIT and EBITDA |
Three Months Ended |
Nine Months Ended |
||||||||||
|
(dollars in millions) (unaudited) |
November 1, |
November 2, |
Change |
November 1, |
November 2, |
Change |
||||||
|
Net earnings |
$ 689 |
$ 854 |
(19.3) % |
$ 2,660 |
$ 2,988 |
(11.0) % |
||||||
|
+ Provision for income taxes |
170 |
237 |
(28.4) |
799 |
867 |
(7.9) |
||||||
|
+ Net interest expense |
115 |
105 |
8.5 |
346 |
321 |
7.8 |
||||||
|
EBIT |
$ 974 |
$ 1,196 |
(18.7) % |
$ 3,805 |
$ 4,176 |
(8.9) % |
||||||
|
+ Total depreciation and amortization (a) |
773 |
754 |
2.6 |
2,331 |
2,215 |
5.2 |
||||||
|
EBITDA |
$ 1,747 |
$ 1,950 |
(10.5) % |
$ 6,136 |
$ 6,391 |
(4.0) % |
||||||
|
(a) |
Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales. |
|
(a) |
The trailing twelve months ended November 2, 2024, consisted of 53 weeks compared with 52 weeks in the current-year period. |
|
(b) |
Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases was owned or accounted for under finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income. Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors. |
|
(c) |
Calculated using the effective tax rates, which were 22.6 percent and 22.5 percent for the trailing twelve months ended November 1, 2025, and November 2, 2024, respectively. For the twelve months ended November 1, 2025, and November 2, 2024, includes tax effect of $1.2 billion and $1.4 billion, respectively, related to EBIT, and $38 million and $35 million, respectively, related to operating lease interest. |
|
(d) |
Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively. |
|
(e) |
Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period. |
|
(f) |
For the trailing twelve months ended November 1, 2025, includes the impact of after-tax net gains on interchange fee settlements and business transformation costs, which had a net favorable impact on after-tax ROIC of 1.0 percentage point. Note (b) to the Rate Analysis table provides additional information. |
