Target (TGT) Earnings: Retail Sales and Same-Store Sales in Focus
Target (TGT) Earnings: Retail Sales and Same-Store Sales in Focus
By:Gus Downing
Target (TGT) will report their Q3 FY2025 earnings Wednesday, November 19, before market open.
Analyst consensus estimates call for an earnings per share (EPS) of $1.71 and revenue of $25.3 billion.
Aside from EPS and revenue, retail sales, same store sales, margins, and the competitive landscape will be the most important factors for Target this call.
What Drove the Slowdown
Target is having a downright abysmal year, currently trading down over 35% year-to-date (YTD). Comps have been negative, full-year sales and EPS were slashed in the spring, and management’s guidance indicates a low-single-digit decline in overall and same-store sales. Likewise, a 2% decline in same-store sales is anticipated for this quarter.
To combat this overall decline, Target is leaning into price cuts on 3,000 everyday items to win back traffic ahead of the holidays. They are putting a particular emphasis on cutting prices in their discretionary categories amid this tough consumer backdrop, though there are concerns about how all of these price cuts will impact their margins.
What to Watch on Wednesday
Target’s core numbers for EPS, revenue, and their forward guidance will obviously be the largest determinants of share price movement at this call’s conclusion, but there are three other critical factors that investors will be eager to hear about as well; same-store sales, margins, and the competitive landscape.
With regard to sales, investors want to know if these recent value prices and promotions can stabilize traffic, or if comps continue to stay negative. Analysts are braced for the aforementioned 2% decline in same-store sales and relatively flat revenue; anything beating those expectations has the propensity to push shares higher.
As for margins, everyone wants to know what impact these lower prices have had on gross margin. If margin headwinds seem to be easing, that would obviously be a bullish factor for the company, and vice versa.
Lastly is Target’s revenue mix and position in the competitive landscape. The revenue mix between essentials (food and household goods) and discretionary spending (apparel and home decor) will be important, as will Target’s market share when compared to Walmart (WMT) and other club/discount industry peers.
Digital, Drive Up, and Loyalty
The last two years have been nothing but doldrums and stagnation for Target, but there is a path back to growth. In the short term, the primary path is the holiday season; if price cuts can drive unit growth without crushing margins, and that momentum can carry into the new year, Target would position themselves very well for a recovery in 2026. However, if those price cuts eat their margins alive, shares could be in for more of the same.
In the longer term, traffic, loyalty, and digital orders come into play. Management believes that Drive Up and app offers can increase loyalty and visit frequency from their consumers; if that thesis holds up, things could stabilize and eventually turn around for Target.
Leadership also comes into play in the long term; 2025 has been a year full of organizational changes and layoffs for Target, but those leadership changes do not formally take effect until the start of 2026. Investors will be watching closely for execution from new leadership and any major changes that they have in mind for 2026 and beyond.
Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus
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