By Savyata Mishra and Juveria Tabassum
March 3 (Reuters) – Target CEO Michael Fiddelke promised a return to annual sales growth in the company’s latest fourth-quarter report and issued a strong profit outlook, as he spearheads a turnaround at the struggling retailer after taking the helm last month.
Shares of the Minneapolis-based company were up 3.5% in trading before the bell on Tuesday. The stock shed nearly 28% of its value in 2025, a turbulent year for Target as it grappled with persistent weakness in spending on discretionary items such as apparel and accessories.
The company has relied on discretionary categories to drive nearly a third of its annual sales, but the business has become a persistent drag amid uncertain economic conditions, prompting shoppers to curb spending.
Under Fiddelke, Target is focusing on revamped merchandising, sharper pricing and store-experience upgrades to coax shoppers back. The company had pledged about $1 billion more in 2026 in new stores, remodels and an improvement in its digital business.
“Target saw a healthy, positive sales increase in February, serving as an important milestone on our path back to growth this year, and reinforcing my confidence in the momentum we’re building and the future we’re creating together,” Fiddelke said.
The company expects 2026 net sales growth of 2%, its first rise following three years of declines, compared with the expectations of a rise of 1.76%, according to data compiled by LSEG.
It projected full-year earnings per share in the range of $7.50 to $8.50, largely above estimates of $7.67 per share.
BEAUTY AND FOOD SEGMENTS A BRIGHT SPOT
Target’s comparable sales for the fourth-quarter inched past analysts’ expectations, lifted by steady demand in beauty and food-and-beverage, as the retailer leans into everyday essentials, expands its beauty assortment and deploys sharper promotions to draw in value-focused shoppers despite persistent softness in discretionary spending.
“To drive sustained momentum, the team will need to convince the street that the changes they’re making today will enable them to better compete with the likes of Walmart/Amazon, resulting in more consistent top-line performance,” RBC analyst Steven Shemesh said.
Sales in beauty, a bright spot for the company over the last several quarters, rose 1.1% from a year earlier, while sales of food and beverages were 1.8% higher in the quarter.
Its investor day later today is expected to give investors clues on how the new leadership team plans to sharpen merchandising and store plan execution, and outline its strategy for the beauty business with the Ulta partnership contract due to expire in August 2026.
The company has focused on controlling costs by cutting 1,800 corporate roles in October last year, two months after naming Fiddelke as Brian Cornell’s successor. The company also shuffled key roles in the merchandising department as it tries to reignite demand at its stores.
Meanwhile, Walmart last month posted an upbeat quarter, as investments in online delivery and its push to keep prices low drew shoppers during the holiday quarter. It, however, issued a conservative outlook for the coming year, reflecting the fragile state of the U.S. consumer.
Target’s total comparable sales – from online channels and stores open for at least 13 months – declined 2.5% for the three months ended January 31, steeper than analysts’ average estimate of a 2.4% drop. Adjusted earnings came in at $2.44 per share, handily beating estimates of $2.16 per share.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Anil D’Silva)
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