Target Reports Sales Drop as Consumers Focus on ‘Needs-Based Categories’

Target reported a 3.8% decrease in comparable sales for the first quarter and said it expects to see a low single-digit decline in sales for fiscal 2025.

“In the first quarter, our team and our business faced an exceptionally challenging environment that affected our performance with declines in both traffic and sales, most notably in our discretionary categories,” Target Chair and CEO Brian Cornell said Wednesday (May 21) during the retailer’s quarterly earnings call.

Cornell attributed the drop in part to five consecutive months of declining consumer confidence and uncertainty around the impact of tariffs.

These challenges added to those Target already faced from a decline in discretionary spending from the highs seen during the pandemic, which was compounded by high inflation and consumers’ shift to “needs-based categories,” Cornell said on the call.

Target Chief Commercial Officer Rick Gomez said during the call: “As we’ve shared for multiple quarters, consumers have been choiceful in their buying decisions, and recent declines in consumer confidence have made them even more cautious. They’re focused on finding ways to save as they manage their family’s budget.”

To mitigate the impact of tariffs, Target has been negotiating with vendors, reevaluating its product assortments, changing the country of production, adjusting order timing and “where necessary, [adjusting] pricing,” Gomez said.

Target has reduced the share of products of its own brands that are made in China from 60% in 2017 to 30% today and aims to lower it to under 25% by the end of 2026, Gomez said on the call.

Cornell said during the call: “We have many levers to use in mitigating the impact of tariffs, and price is the very last resort.”

While Target’s overall comparable sales declined in the first quarter, comparable digital sales grew 4.7%, according to a Wednesday earnings release . The overall decline was driven by comparable store sales, which fell 5.7%.

The company said in a presentation that same-day delivery grew by 36% and that curbside pickup now accounts for nearly half of its digital sales.

Despite the costs it faces from tariffs, Target remains committed to new stores, remodels of existing stores and “robust investments” in technology and supply chain, Cornell said during the call.

“Because of this company’s long history of disciplined financial management, we have a strong balance sheet and ample cash,” Cornell said. “That will allow us to navigate through these near-term challenges as we continue to invest in making us even stronger over time.”