Target's 2025 Sales Drop 1.7% to $104.8 Billion, Focus on Digital Growth

Target's full-year sales dropped by 1.7%, which is a decrease from last year. However, digital services grew over 25%.
By Newsroom | Business, Retail |

Sales for the fourth quarter of fiscal year 2025 registered $30.5 billion, according to disclosures made on or around March 3, 2026. This figure represents a modest decline of 1.5% compared to the same period in the prior year.

The full fiscal year's net sales amounted to $104.8 billion, also marking a decrease of 1.7% from the previous year. The company reported a GAAP diluted earnings per share (EPS) of $8.13 for the full year, though adjusted EPS stood at $7.57. This adjusted figure is a point of emphasis, as it excludes certain costs deemed "discretely managed."

Target (TGT) Reports Q4 Net Sales of $30.5B, Full-Year Adjusted EPS of $7.57 - 1

Financial Performance Details

  • Fourth Quarter Net Sales: $30.45 billion, a 1.5% drop year-over-year.

  • Fourth Quarter GAAP Diluted EPS: $2.30, down 4.5% from $2.41.

  • Fourth Quarter Operating Income: $1.38 billion, a 5.9% decrease.

  • Fourth Quarter Gross Margin Rate: Improved to 26.6% from 26.2%.

  • Fourth Quarter Net Earnings: $1.046 billion, down 5.2%.

  • Full-Year Net Sales: $104.78 billion, a 1.7% decline.

  • Full-Year GAAP EPS: $8.13.

  • Full-Year Adjusted EPS: $7.57.

  • Full-Year Operating Cash Flow: $6.56 billion, down from $7.37 billion.

  • Cash and Equivalents: $5.49 billion, an increase from $4.76 billion.

Strategic Shifts and Future Outlook

Target has been actively shifting its focus toward "capital-light" revenue streams, particularly in digital services and advertising through platforms like Roundel. These services, which carry higher profit margins than traditional retail, saw significant growth, with membership revenue more than doubling and non-merchandise sales increasing over 25%.

Target (TGT) Reports Q4 Net Sales of $30.5B, Full-Year Adjusted EPS of $7.57 - 2

The company anticipates a modest recovery, forecasting net sales growth of approximately 2% for fiscal year 2026. Earnings per share for the upcoming year are projected to fall between $7.50 and $8.50.

Target (TGT) Reports Q4 Net Sales of $30.5B, Full-Year Adjusted EPS of $7.57 - 3

Observations and Comparisons

While Target experienced a sales decline, its performance in the fourth quarter saw positive sales trends emerging in February, marking a potential turning point. The company plans to expand its physical footprint by opening over 30 new stores and remodeling more than 130.

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In comparison to retail giants Walmart and Costco, Target's comparable sales growth and revenue trajectory appeared less robust during their respective comparable fiscal periods. Walmart reported $180.6 billion in Q4 sales, an increase of 4.1%, while Costco saw $84.4 billion, up 8.0%.

Background Context

The reporting period concludes on January 31, 2026, with the earnings announcements made on March 3 and March 6, 2026. The company emphasizes the use of non-GAAP financial measures, such as adjusted EPS and adjusted SG&A expenses, to provide a clearer picture by excluding items like "business transformation costs" and "interchange fee settlements." These adjustments are intended to offer "additional transparency" in financial reporting. Target's operational strategy involves efforts to reduce volatility through improved inventory management and operating consistency, while concurrently pursuing growth in its digital and discretionary sectors. Management has indicated near-term profit pressures may arise from tariffs and start-up costs.

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Frequently Asked Questions

Q: How did Target's sales perform in the fourth quarter of fiscal year 2025?
Target's sales for the fourth quarter of fiscal year 2025 were $30.5 billion. This was a small drop of 1.5% compared to the same time last year.
Q: What was Target's total sales figure for the full fiscal year 2025?
For the entire fiscal year 2025, Target's net sales were $104.8 billion. This is a decrease of 1.7% from the year before.
Q: What is Target's plan for growth in the next fiscal year?
Target expects sales to grow by about 2% in fiscal year 2026. They also plan to open over 30 new stores and update more than 130 existing ones.
Q: How is Target focusing on digital services?
Target is growing its digital services and advertising, like through its Roundel platform. Membership revenue more than doubled, and non-merchandise sales increased by over 25%.
Q: How does Target's sales performance compare to Walmart and Costco?
Target's sales growth was not as strong as Walmart's or Costco's. Walmart's Q4 sales grew 4.1%, and Costco's grew 8.0%, while Target's Q4 sales slightly decreased.