Target to invest extra $1B in stores as Q3 earnings fall
Target Corp.’s Q3 profit took a hit from shoppers struggling to manage inflation and seeking better deals.
Headed into the critical holiday season, the discount retailer is making significant investments to lure back consumers.
The discount retailer reported net earnings of $689 million for the third quarter of fiscal 2025, down 19% from $854 million in the prior-year period. Adjusted earnings declined year-over-year to $1.78 from $1.85.
Net sales were $25.3 billion, a 1.5% drop from $25.7 billion last year. Comparable sales decreased 2.7% in the third quarter. This dip, which surpasses the company’s 1.9% decline in Q2, is the third straight quarterly decline.
Results come on the heels of a recent cost-cutting move where Target eliminated 1,800 corporate jobs. This was the company’s biggest round of layoffs in a decade — a move that it expects will drive efficiency and streamline decision-making.
"Target is struggling to navigate an unsteady environment for consumer spending and its Q3 performance failed to build on the previous quarter’s incremental progress," according to Emarketer principal analyst Sky Canaves. "Results underscore that a real recovery is still a ways away, and incoming CEO Michael Fiddelke will have tough job ahead when he takes the reins early next year."
Looking ahead to the fourth quarter, Target maintains its expectation of a low-single digit sales decline. The company reduced its projected full-year adjusted earnings per share to between $7 to $8 from approximately $8 to $9. This excludes company gains from litigation settlements in the first quarter and severance and asset-related charges in the third quarter.
Michael Fiddelke, incoming CEO of Target, said the retailer will continue to focus 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.” Fiddelke officially takes the reins Feb. 1, 2026.
[READ MORE: Target names next CEO]
Investing in Future Growth
These priorities are taking center stage as the crucial holiday season approaches — and the company aims to boost sales well into 2026. As a result, Target is upping the ante with AI-enabled features on its consumer app designed to enhance its in-store shopping experience, provide maximum value, assortment and more shopping flexibility to its customers.
Focused on fueling future growth, Target announced it will invest an additional $1 billion in its business in 2026. Approximately $5 billion in planned capital expenditures will support new stores and remodels and enhancements to the store experience, as well as advancements in technology and digital fulfillment capabilities. This is a 25% year-over-year bump.
Minneapolis-based Target Corp. operates nearly 2,000 stores and the Target.com e-commerce site.
