Target forecasts a 2026 sales rebound after holiday-quarter declines as CEO outlines turnaround priorities

Target posts another holiday-quarter sales decline, but projects growth through fiscal 2026

Target reported a fourth-quarter sales drop during the holiday period and closed fiscal 2025 with lower annual revenue, while forecasting a return to growth in fiscal 2026 under newly installed CEO Michael Fiddelke.

For the quarter ended Feb. 1, Target said net sales fell 1.5% year over year to $30.5 billion. Comparable sales declined 2.5%, driven by a 3.9% drop in comparable store sales, partially offset by a 1.9% increase in comparable digital sales. Full-year net sales decreased 1.7% to $104.8 billion, as comparable sales fell 2.6% for the year.

Earnings held up better than sales as margins improved

Target reported fourth-quarter GAAP earnings per share of $2.30 and adjusted EPS of $2.44. For the full year, GAAP EPS was $8.13 and adjusted EPS was $7.57. The company said fourth-quarter operating income totaled $1.4 billion, down 5.9% from a year earlier, while gross margin improved to 26.6% from 26.2%.

Management attributed margin improvement to lower inventory shrink, lower supply-chain and digital fulfillment costs, and growth in advertising and other revenues, partly offset by higher product and import costs and other merchandising pressures.

Areas of growth: essentials categories and higher-margin services

Within the quarter, Target cited net sales growth in Food & Beverage, Beauty, and Toys. The company also highlighted faster growth in non-merchandise revenue streams, including advertising, marketplace, and membership-related revenue. Same-day delivery tied to Target Circle 360 rose more than 30% in the quarter.

Target said sales and traffic trends accelerated in the last two months of the quarter and described February as showing a positive sales increase, which management framed as an early sign of improving momentum.

Outlook: modest sales growth, improved margins, and a back-half-weighted earnings profile

For fiscal 2026, Target projected net sales growth around 2% versus 2025, reflecting a small increase in comparable sales, with new store contributions and non-merchandise sales expected to add more than one percentage point of growth. Target said it expects net sales to rise in every quarter of the year.

• Projected 2026 GAAP and adjusted EPS: $7.50 to $8.50
• Expected operating income margin: about 20 basis points higher than the 4.6% adjusted operating margin reported in 2025
• First-quarter EPS: expected to be flat to slightly higher year over year, with stronger year-over-year growth anticipated later in the year

Leadership transition and stated priorities

Fiddelke became CEO on Feb. 1, succeeding Brian Cornell. In outlining the company’s direction, Target said its focus for 2026 centers on strengthening merchandising authority, improving the shopping experience, advancing technology capabilities, and continuing investment in employees and communities.

Target is positioning 2026 as a transition back to quarterly growth after a holiday season that did not reverse the broader sales slowdown.