The Investor
22 May 2025, 09:58
Target Reports Q1 2025 Earnings: Sales Decline, but Digital Growth and Legal Gains Boost Profits
Target Corporation reported Q1 2025 earnings of $2.27 per share (GAAP), up from $2.03 a year ago. However, adjusted EPS, excluding $593 million in pre-tax gains from credit card interchange fee settlements, was $1.30. Net sales fell 2.8% year-over-year to $23.8 billion, with a 3.8% decline in comparable sales. Store traffic dropped 2.4%, while digitally originated comparable sales rose 4.7%, driven by over 35% growth in same-day delivery via Target Circle 360.
Operating income rose 13.6% to $1.47 billion, partly due to the litigation settlement. Excluding this, the operating margin was 3.7%, down from last year. Gross margin declined slightly to 28.2% due to higher markdowns and fulfillment costs. SG&A expenses were down 10.8%, benefiting from legal gains.
Target launched an "acceleration office" led by Michael Fiddelke to speed up execution of core strategic initiatives and improve performance. CEO Brian Cornell noted that while the quarter had bright spots—like the kate spade collaboration—the company remains focused on returning to sustainable growth.
For full-year 2025, Target expects a low-single-digit sales decline. GAAP EPS is projected between $8.00 and $10.00, with adjusted EPS estimated at $7.00 to $9.00.
The company returned $761 million to shareholders through dividends and share repurchases in Q1 and reported a trailing twelve-month ROIC of 15.1%.
Target Corporation reported Q1 2025 earnings of $2.27 per share (GAAP), up from $2.03 a year ago. However, adjusted EPS, excluding $593 million in pre-tax gains from credit card interchange fee settlements, was $1.30. Net sales fell 2.8% year-over-year to $23.8 billion, with a 3.8% decline in comparable sales. Store traffic dropped 2.4%, while digitally originated comparable sales rose 4.7%, driven by over 35% growth in same-day delivery via Target Circle 360.
Operating income rose 13.6% to $1.47 billion, partly due to the litigation settlement. Excluding this, the operating margin was 3.7%, down from last year. Gross margin declined slightly to 28.2% due to higher markdowns and fulfillment costs. SG&A expenses were down 10.8%, benefiting from legal gains.
Target launched an "acceleration office" led by Michael Fiddelke to speed up execution of core strategic initiatives and improve performance. CEO Brian Cornell noted that while the quarter had bright spots—like the kate spade collaboration—the company remains focused on returning to sustainable growth.
For full-year 2025, Target expects a low-single-digit sales decline. GAAP EPS is projected between $8.00 and $10.00, with adjusted EPS estimated at $7.00 to $9.00.
The company returned $761 million to shareholders through dividends and share repurchases in Q1 and reported a trailing twelve-month ROIC of 15.1%.
