Target Slashes Guidance Again as Sales Decline — A Turning Point for the Retail Giant?

Target reported another disappointing quarter, with sales falling for the fourth straight period, and management issued yet another earnings guidance cut. The retailer now faces a critical moment as incoming CEO Michael Fiddelke attempts to reverse a year-long downtrend that has left the stock 36% lower in 2025.

Sales Keep Falling Despite an Earnings Beat

Adjusted third-quarter earnings came in at $1.78 per share, beating expectations of $1.71. But that’s where the good news ends. Sales slipped 1.5% to $25.3 billion, and comparable sales fell 2.7%, marking the fourth consecutive quarter of negative comps.

Executives warned that macro headwinds—uncertainty over the government shutdown, softer labor markets, and inflation sensitivity—continue to weigh on shoppers’ willingness to buy discretionary goods.

The retailer’s latest Target earnings guidance cut lowers full-year EPS to $7–$8, down from $7–$9 previously. GAAP EPS was cut as well.

A New CEO, A Big Turnaround Attempt

Incoming CEO Michael Fiddelke takes command in February, but he is already moving aggressively. He outlined three pillars for the turnaround:

Merchandising reinvention — strengthening authority in key categories
Guest experience upgrades — cleaner stores, better digital integration
Tech acceleration — including AI tools and smarter fulfillment

To support this, Target will boost capital expenditures by 25% in 2026, pushing annual capex to $5 billion. That includes store remodels, redesigns of fulfillment flows, and efforts to reduce the operational strain that online orders have placed on high-traffic stores.

Still, another Target earnings guidance cut underscores how difficult the road ahead may be.

Target Joins Walmart, Shopify, and Etsy in the AI Commerce Push

Target also announced a partnership with OpenAI, allowing shoppers to buy directly through ChatGPT. This places Target among early adopters of AI-powered commerce, following Walmart, Shopify, and Etsy.

The beta launch next week will let customers purchase multiple items, add fresh food to carts, and select fulfillment methods—all within ChatGPT. Fiddelke framed the initiative as part of a broader strategy to reassert Target’s innovation edge.

Bulls vs Bears: Both Camps Found Ammunition

Analysts were split following the report. JP Morgan’s Christopher Horvers said both sides “have something to point to.” Bears cite weakening demand, deteriorating comps, and the ongoing Target earnings guidance cut. Bulls point to improving inventory discipline, healthy margins, and extremely discounted valuation multiples.

Oppenheimer’s Rupesh Parikh maintained an Outperform rating, noting that long-term investors should take advantage of weakness—though volatility may persist until comps turn positive again.

Trading Implications for TGT

📉 Short-Term Bias: Weakness Into Q4

The market reacted negatively to the Target earnings guidance cut, pushing shares lower in early trading. For day traders, the following setups may emerge:

ORB downside breaks under premarket lows
Short VWAP rejections during the morning session
Fade rallies into $130–$132 resistance zones

📈 Swing Traders: Watch for Capitulation

With the stock down 36% YTD and valuation compressed, TGT could become a mean-reversion candidate if:

RSI reaches oversold levels
Price stabilizes above major weekly support (~$118–$120)
Consumer data surprises to the upside

But until comps turn positive, the Target earnings guidance cut will likely keep pressure on the stock.

Bottom Line

Target’s challenges are real: falling sales, cautious customers, and a tough retail landscape. The company’s transformation strategy—AI innovation, store upgrades, and fulfillment restructuring—could pay off, but the payoff won’t be immediate.

Traders should brace for continued volatility as the market digests the latest Target earnings guidance cut and evaluates whether 2026 will finally mark the beginning of a recovery.

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