Target reported lower second-quarter comparable sales and earnings and announced that COO Michael Fiddelke will become its next CEO as the company works to refresh its merchandising and consumer strategies.
Fiddelke will take up his new post on February 1, 2026. At that time, Brian Cornell, chair and CEO, will become executive chair of Target’s board, the company maintained.
Second quarter net earnings were $935 million, or $2.05 per diluted share, versus $1.19 billion, or $2.57 per diluted share, in the year-before period.
A Zacks Investment Research analyst consensus forecast called for earnings per diluted share of $2.09 and revenues of $24.91 billion.
Comparable sales decreased 1.9% in the quarter year over year, reflecting a comp decline of 3.2%, partially offset by comp digital sales growth of 4.3%, Target indicated. Net Sales were $25.21 billion versus $25.45 billion in the year-prior quarter. Operating income was $1.32 billion versus $1.64 billion in the period a year earlier.
Target asserted that second-quarter traffic and sales trends improved from the first quarter, particularly in stores. The company added that its six core merchandising categories saw quarter-to-quarter improvements. However, the year-over-year sales results were mixed, and revenues in Target’s Home Furnishings and Decor category declined to $3.66 billion from $3.91 billion in the year-past quarter.
Target reaffirmed its fiscal 2025 expectation of a low-single digit decline in sales, GAAP EPS of $8 to $10, and adjusted EPS, excluding gains from litigation settlements in the first quarter, of $7 to $9.
Fiddelke, in a conference call, emphasized that Target is currently moving to improve in critical parts of the enterprise, saying, “I’ve established three key priorities to help us reinforce what will continue to set us apart for years to come. First, we must reestablish our merchandising authority in a way that is distinctly Target. Second, we’re a retailer that believes that an elevated experience is every bit as important as product. We want guests to find a sense of joy from every trip to Target, and we must do that more consistently and frequently. And third, we must more fully use technology to improve our speed, guest experience and efficiency throughout the business.”
In terms of presentation, Fiddelke said: “Industry-leading style and design has long been one of the most critical attributes that makes Target Target, and we need to reclaim that merchandising authority. As you’ve seen over the last few years, even when overall results have fallen short of our aspirations, we’ve shown how strongly our guests respond when we offer the right blend of quality, value and style not seen anywhere else in the market. To reestablish our leadership here, we need to go beyond the occasional design partnership or new product launch and ensure we’re bringing this authority across each category in our business throughout the year.”
Target is applying a new approach to the hardlines business dubbed Fun 101, which he said is helping move to positive comps and traffic growth in home and other key categories.
“Looking ahead, we need to push much harder in bringing this approach to our home category,” he noted.
Fiddelke said Target has not been satisfied with its home category performance over the past few years and is pressing for improvement.
Rick Gomez, Target executive vice president, chief commercial officer, said the Fun 101 initiative has included changes that, in the home operations, resulted in “an acceleration driven by newness, innovation in small appliances like Ninja Shark.”
Gomez said that, although the home business is not where Target wants it to be, specific efforts have generated positive results, including, on the children’s side of the segment, collaborations with Disney and Marvel in the Pillow Fort own brand.
Gomez also pointed out, in discussing tariffs, that Target, in its internal operations and with vendors, is working to mitigate the effects of duties, taking price increases as a last resort, and focusing on bringing shoppers good, competitive values.
Cornell, in announcing the financial results, said, “With the board’s unanimous decision to appoint Michael Fiddelke as Target’s next CEO, I want to express my full confidence in his leadership and focus on driving improved results and sustainable growth. He’s contributed meaningfully during times of change and played a critical role in establishing the differentiated capabilities that will continue to drive Target forward. Michael brings a deep understanding of our business and a genuine commitment to accelerating our progress. Today, we also reported our second quarter earnings, which showed encouraging signs of recovery, including improved traffic and sales trends, particularly in our stores, and disciplined cost management in a challenging retail environment. As we enter the critical back-to-school and holiday seasons, our team remains focused on consistent execution and building momentum as we look ahead to the new year.”
