Target's Cautious Forecast Amid Trade Uncertainty

Target projected full-year comparable sales below estimates, citing tariff uncertainty and weak consumer spending. The retailer observed declining sales, especially in non-essential categories, while facing backlash for ending diversity and inclusion efforts. However, holiday quarter digital sales showed growth.

Target Corp., the Minneapolis-based retailer, has issued a cautious sales forecast for the year, primarily driven by concerns over tariffs and weak consumer spending. The company's projection of flat comparable sales through January 2026 falls short of analysts' expectations of 1.86% growth, influenced by potential tariff impacts, particularly on home furnishings and electronics, which constitute a significant portion of the retailer's sales.

The forecast aligns with broader industry caution, as exemplified by Walmart, with both companies navigating the challenges of sticky inflation and recent tariff implementations under the Trump administration. Target's first-quarter profits are expected to come under pressure, attributed to uncertainties surrounding tariffs and subdued demand for apparel and other discretionary items.

In addition to external economic factors, Target is also contending with internal challenges, including recent consumer backlash and decreased foot traffic following the termination of its diversity and inclusion initiatives. The retailer reported mixed results in its holiday quarter, with a slight increase in comparable sales driven by beauty, apparel, and digital purchases, while facing reduced earnings and margin pressures due to elevated promotional activity and delivery expenses.

(With inputs from agencies.)