BAF NEWS

Q3 2025 Financial Performance

Here’s what changed and why it matters. Comparable sales fell 2.7% and total revenue declined 1.5% to about $25.27 billion, reflecting softer discretionary demand. Profit also narrowed, with GAAP EPS at $1.51 and adjusted EPS at $1.78.

By the numbers:

• Comparable sales: −2.7%.
• Revenue: ~$25.27B (−1.5% year over year).
• GAAP EPS: $1.51; adjusted EPS: $1.78.

Zoom in: Store comps fell 3.8%, while digital comps rose 2.4%. Consequently, the mix continues to shift toward online and same day fulfillment. The upshot: execution stayed on plan, but top line demand remains tepid according to company disclosures.

Lowered Guidance and Holiday Caution

Management trimmed its full year adjusted EPS outlook to $7.00–$8.00. It also maintained guidance for a low single digit sales decline in Q4, signaling caution into peak season.

However, the company still expects value and convenience to drive share. As leaders put it, “Thanks to the incredible work and dedication of the Target team, our third quarter performance was in line with our expectations.” Still, the consumer remains selective, and the forecast reflects that reality.

Strategic Investments for Growth

Target plans to invest an additional $1 billion in 2026, bringing next year’s capital spending to about $5 billion. The spend will focus on store remodels, new locations, and digital and fulfillment capabilities.

The upshot: leadership is using a downturn to upgrade the fleet and modernize the tech stack. Furthermore, the goal is to improve convenience economics while refreshing the in store experience. What’s next: expect remodels, openings, and faster fulfillment nodes to roll out through 2026.

Digital and Non Merchandise Revenue Gains

Not everything slowed. Digital comparable sales rose 2.4% in Q3, powered by more than 35% growth in same day delivery through Target Circle 360. Moreover, non merchandise revenue grew roughly 18%, with Roundel advertising and memberships both up double digits.

Zoom in: These higher margin streams help cushion softer discretionary goods. Meanwhile, marketplace growth and media scale can compound as the base gets larger. The upshot: traction in same day and advertising provides optionality if core goods stay pressured.

Leadership Changes and Cost Actions

Michael Fiddelke will become CEO in February, taking the helm after a year of restructuring. In October, Target eliminated about 1,800 corporate roles as part of cost actions.

Therefore, the new chief inherits a leaner headquarters and a clear investment slate. Yet execution risk remains as the company balances cost discipline with growth bets. What’s next: expect early moves to emphasize pricing, store experience, and technology.

Holiday Strategy and Innovation

Target’s holiday playbook leans on exclusive product, value, and speed. The company plans more than 20,000 new items, with over half exclusive to Target. It also cut prices on roughly 3,000 essentials and is offering a Thanksgiving meal for four under $20.

Additionally, Target is piloting a ChatGPT powered shopping experience to speed discovery and gifting. Leaders underscored the consumer mindset: “We think the consumer will prioritize what goes under the tree versus what goes on the tree.” And, “We are not waiting for conditions to improve. We are driving the change ourselves right now.”

The upshot: the strategy favors value, convenience, and novelty while testing AI to remove friction. However, management still expects comps to decline in Q4, so success will be measured in share gains and profitability. What’s next: monitor same day adoption, Roundel momentum, and basket mix into December.