The company released first quarter earnings Wednesday (May 20) showing a 6.7% uptick in net sales, reversing several quarters of decline.
“But to be clear, a single good quarter has never been our goal,” CEO Michael Fiddelke said during an earnings call. “Our goal is consistent long term growth. So while we’re very encouraged by our Q1 results, what you’ll hear from me and the team today is our focus on continuing the work to reach our full potential as a company.”
The results show shoppers returning to the company’s stores, with traffic up 4.4%, offsetting a 2.4% dip from a year ago. Digital sales were up nearly 9%, fueled by a more than 27% increase in same-day delivery through the company’s Target Circle 360 program.
“While consumers have proven to be resilient so far, sentiment has been declining recently, and we’re keeping a close eye on their spending behavior,” Chief Financial Officer Jim Lee said.
Last month, the University of Michigan’s Index of Consumer Sentiment fell to the lowest level in its more than 73-year history, driven by rising gas prices.
Advertisement: Scroll to Continue
PYMNTS Intelligence research shows that consumers—especially younger ones—are adopting spending cuts as a way to cope with economic insecurity, while also employing strategies like delaying purchases and turning to installment payments.
Lee also noted that the company believes that this year’s higher tax refunds helped drive first quarter consumer spending, “and that benefit will be fading over the rest of the year.”
During the earnings call, management discussed the company’s efforts to boost its product assortment, with Target adding 3,000 new food items during the first quarter, with sales from those items up 50% over the past assortment.
Target is also trying to capitalize on “the trends that shape culture to create buzzworthy assortments and experiences” exclusive to the retailer, Fiddelke said, while also noting the importance of promoting value.
“For example, in toys, we’ve seen tremendous growth from new offerings priced at $20 or less, including many priced at $5 and $10,” he said. “The combination of on trend toy assortments at prices busy families can afford help to support double digit comp growth for toys.”
Fiddelke became CEO earlier this year to lead the company’s turnaround plans, which include opening more than 30 new stores this year and remodeling another 130, with an additional 300 store openings expected by 2035. These efforts are supported by Target’s $5 billion capital investment plan for 2026.
