Target cuts sales outlook as retailer blames tariff uncertainty and backlash to DEI rollback

Target on Wednesday cut its full-year sales outlook, as executives said weaker discretionary spending, consumer uncertainty about tariffs and backlash to the company's rollback of key diversity, equity and inclusion efforts hurt its business. 

First-quarter sales missed Wall Street's expectations and fell nearly 3% compared to the year-ago period. Transactions across Target's stores and website dipped by 2.4%. And the average amount customers spent during their online and in-store visits decreased by 1.4%.

Target's weak performance in the quarter reflected the company's broader struggles to return to growth and recapture the cheap chic reputation and fan following that gave it the name ''Tarzhay." The company is trying to win back the loyalty and trust of shoppers and investors as its sales slump continues and after its shares plunged more than 37% in the last year, as of Tuesday's close.

On a call with reporters, CEO Brian Cornell pinned many of the retailer's problems on the economy. Yet he said Target is committed to doing better. 

Uncertainty is the name of the game

He referred to a statistic that Target shared on the call: Of the 35 merchandise categories that the company tracks internally, the company gained or held market share in only 15 – a reflection of sales that it is losing to retail competitors.

"We're not happy with that," Cornell said. "We've got to be growing [market] share in 60, 70, 80% of those categories. That's our focus over the balance of the year, and we're going to do that by making sure we provide a great shopping environment." 

Target said it now expects a low-single digit decline in sales this fiscal year, compared to a previous forecast of net sales growth of about 1%. It said it expects adjusted earnings per share, excluding gains from litigation settlements, to be about $7 to $9, compared to the range of $8.80 to $9.80 that it had previously anticipated. 

Target also announced some leadership shakeups and the creation of a new office intended to turn around its results. Chief Operating Officer Michael Fiddelke will oversee the new effort, called the Enterprise Acceleration Office, which will look for methods to simplify company operations, use technology in new ways and speed up Target's growth. 

Target said in a news release that Amy Tu, chief legal and compliance officer, and Christina Henningon, chief strategy and growth officer, were leaving the company. Hennington, who was a key presenter on some of the company's earnings calls, had been widely considered in industry circles to be a candidate to succeed Cornell as CEO.