Target Corp (NYSE:TGT) reported third-quarter earnings that beat Wall Street expectations on a per-share basis, even as revenue and comparable sales declined amid persistent consumer pressures.
The retailer posted adjusted earnings of $1.78 per share, in line with consensus estimates, while total revenue fell 1.5% to $25.27 billion, slightly below the projected $25.47 billion. Comparable sales dropped 2.7% year-on-year, driven by a 3.8% decline in store sales, partially offset by a 2.4% gain in digital channels, led by over 35% growth in same-day services powered by Target Circle 360.
Merchandise sales fell 1.9%, while non-merchandise revenue surged 17.7%. Advertising and other non-merchandise streams also showed strong growth, with advertising revenue up 44% year-on-year.
Net earnings fell 19.3% to $689 million, and operating income dropped 18.9% to $948 million, reflecting margin pressures from higher selling, general, and administrative costs and slightly lower gross margins. The company reported a gross margin of 28.2% and an operating margin of 3.8%, down 10 and 80 basis points, respectively, from a year earlier.
Target reaffirmed its guidance for a low single-digit sales decline in the fourth quarter. For the full fiscal year 2025, the company expects adjusted EPS of roughly $7 to $8, slightly below analyst expectations of $7.29.
Despite the slowdown in overall sales, Target’s disciplined inventory management helped reduce merchandise inventories by 1.8% to $14.9 billion. Capital returns continued, with $518 million in dividends and $152 million in share repurchases during the quarter.
Analysts at Jefferies said the results reflected both challenges and resilience. “Target continues to navigate discretionary spending headwinds, but strong growth in digital and non-merchandise channels shows the company’s diversified revenue streams are paying off,” they wrote.
Shares of Target rose about 1% in premarket trading following the results.