TGT - Earnings call transcript Q3 2025

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Target Corporation Third Quarter Earnings Release Conference Call. [Operator Instructions]

As a reminder, this conference is being recorded Wednesday, November 20, 2024. I would now like to turn the conference over to Mr. Investor President, Vice Hulbert, Relations. John sir. Please go ahead, .

John Hulbert

joining Good third our for call. morning, and thank everyone, us quarter on you XXXX conference earnings

On Gomez, today Chief me and Jim Fiddelke, the Cornell, Financial Officer; line and Officer. Chief Chair Chief are Operating Executive Commercial Chief Brian Rick Lee, Officer; Michael Officer; with

the Brian, priorities and third few Jim along performance In for quarter their remainder our provide moments, with a and year. will Rick, Michael outlook the of our insights on

phone lines the a Following question-and-answer their open remarks, for session. we'll

This joined and this via call others conference who comments morning, our on we're by are investors listening webcast. to

the be available Following to I questions. follow-up Jim call, and answer will your

in measures, a our to morning's remarks, on this of to Relations any non-GAAP numbers non-GAAP refer to uncertainties, XX-K. share. subject recently are this finally, statements that website. our press per described in filed these and we directly reminder, release number and Reconciliations morning's morning financial as most Also, earnings is in adjusted posted all are release, we make GAAP which included in most including risks And those the Investor forward-looking earnings comparable press this including

and Brian fourth I'll over that, it the for his quarter priorities to turn on thoughts quarter and With beyond. his the for Brian?

Brian Cornell

take years business, morning, problems to I presented you'll and enjoy several into here just data, he our generate is call and Since he most the where I've confident Target innovative PepsiCo, have know business. in as to CFO. to Thanks, solutions I'm months. wealth start in then ahead, my been joined want first them. conference what's ability with team positions Lee, September, Jim a good synthesize I from amounts numerous John, Jim remarks large of over incredibly quick address drill and their last and Jim of with getting quarters impressed to Jim important, everyone. his the when arrived today and by action learning his throughout as to welcoming gained our experience recently

Target want CFO and also And did first search up stepping those teams for leading for finance performance the period half teams And the across over challenges occupying in a our grateful of during He navigating I the leadership. difficult his their course, roles a to of team an the which I number a leadership entire the highlights want business. multiple know I Michael X incredible included presented thank through both for to this of operations important job of environment thank also process. and successfully and both quarter, are that year.

encountered of our we We to expected. operating value. Despite Because these quarters our as that serving saw throughout newness on has the headwinds some first grown delivering to the traffic we're lower through caused that guests headwinds, quarter income macro X.X% team's of our ES even and healthy the X year. their focus encouraged dedication in growth be strong and than

representing profitable in year. current right volatility. drivers that sales, last in our importantly, continuing strategy move this healthy with the XX Among comp traffic deliver compared the well us transactions grew this our years incremental in of X.X% growth a million quarter, ahead. the over And make ability confident proven in highly and to our We're help we're beyond investments long-term to will our business

increased the X.X%, of in by ticket spend average near growth to consumers traffic comp categories. expected range. sales third Overall, mostly continue in most notably was a This bottom our quarter decline as in our offset cautiously, discretionary

the our As and newness, is to we've differentiated and growth guest a a delivering key you we value of know, of seeing a validation commitment our on focus indicator traffic strategies experience. and guest-focused as team's been engagement

response scores, price the holiday to service guest this enter X,XXX in increases reductions we introduced year-over-year year, as which season. with we measure another extending the to thousands more we're we're of with pleased continue We and earlier really

the We've Target our services, delivery, also more XX% it this in seen saw the results Circle offers. XX% growth this which Among we by quarter. same-day and digital to strong nearly XXX, powered learned value channel, and grew in nearly as respond service guests our about digital by convenience

We more sales. also billion accounted this saw for quarter, our $X double-digit growth which QX in Drive-Up than in

the guests healthy saw and and increased speed QX, ship-to-home sortation to as centers. costs made in to shipments also of We changes moving by responded in our reliability our through lower streamline business we shopping the more our growth experience,

pleased in quarter, while persistent in level, increase And delivered relative X% the comp solid of with businesses frequency of market where At strength sales. in seen both more across category and in a than we an traffic our beauty, decline a saw even which sales first the our sales small apparel, the the slow we're cold we've apparel in industry. with in environment performance weather saw growth

softness seeing discretionary continued X QX the to we spend other categories. of in and in consumer many continue environment, that budgets saw of and Hardlines macro remain Consumers environment and consumers us multiple of work themes Home we're shopping tell businesses, inflation. the have cautiously Our When defined these as stretched impact overcome their they're cumulative price same they the years for time. the to carefully some as assess

stocking of shopping need, last moment their and on behaviors, waiting they when in resourceful increasingly then buy deals find until becoming up They're focusing to them.

moments seeing in still right important we're combination Yet strong they're the willing to seen when than result, newness year. find the some of they a consumers to and and we've a As celebrate are time. seasonal response throughout spend value to continuing promotions

Because allow moment little right spending, the or when they a control item them consumers bit day-to-day arrives. right they find splurge to sometimes seasonal to the their sells worked hard

faced and to Gulf As Michael more will highlight our Coast related challenges supply strikes. chain in detail, the East port some unique

in other the resulted higher-than-expected softer-than-expected in our in levels Receipt in-stocks In order the our portion of a we're to ports. earlier costs shipments discretionary and than QX, leading changes a our team of supply categories, for receipts changed and certain elevated timing chain. ready ensure directed sales our year, to inventory protect timing in of and of typical impact to

pleased confident we plans. weren't reliability, protected merchandising pressure, actions to decisive While safeguard the took with we QX team's supporting right steps stocks in as our this we QX our our cost while are

our Beyond we the headwinds in minutes. some outline this supply also quarter, will in Jim faced general in expenses chain, and liability unexpected care a few pressure which health

Circle Target responding this week they We Another in this our every focus making the investments appreciate at loyalty are reaching early nearly this Target QX incremental million October. we enrolled the into was with new a Yes, recent program, highlight level. Circle it we've new program continue members to our X changes and and incorporated among provides value on driving most quarter, base. in members, existing we'll long-term engagement and

in traffic and Beyond about sales which their total more benefiting preferences, margin mid-teen see brand fuel Target our ad in learn gross helps revenue profitable our vendors. guests, and the deeper delivered our the from among we Targeted driving and rate, growth and us Randall our Randall our business. guests both this to helps Circle, also turn QX, connections program while

we're Rick minutes, really for controlling we've can plans our the volatility a control In while holiday will planning marketing And what on season. the business few been focused we're seeing. merchandising cautiously, and we also the excited and about them, given highlight

on best our managing focused the we And about for While inventory outlook our to the QX remainder we're plan helping ending believe happy respond year with into going business we're agile appropriately, position our the in of year, will is teams our we and reduction if accelerate. that XXXX. business we our stay an see ready aren't and business our position this

refreshes, we're investments guests, that over we're growth that we're decades. increase have still the efficiency the includes investments and layout to of in remodels, changes long-term full our our strategy. long-term Importantly, shows existing delivered in strong services. confident with making our This capital winning our stores in and same-day Traffic performance smaller

We're planned based in fulfillment performance more on for year's digital to pipeline and app a and and this and become investing locations for strong XXXX. of investing capabilities guests. website, reliable of in We're full new even our our new of our experience convenient robust store program menu our openings our

deliver in every lower offer compelling year. to Target our every season, target guest ensure experience day do deals allow and investments holiday own unique everyone across guests joyful differentiated, a to combination portfolio, channel, our invest the We're can to we the including assortment our Circle day of investing brand a the more quickly. that style and We're from investments to else in for We're team AI, marketplace. making delivers throughout and in in prices our which our our we're smart every differentiates deliver to through members, technology, will our continuing in value more value promotions delivering team they throughout and the the

the year. them their shift Throughout notably into pause the make everything supply Target. to Thanksgiving enormous quarter, corner, want team acknowledge for for in I company, the fourth our gear. of bring fellow and the members, to been But of even to With efforts around most our they We've the energy season stores work. my they a members an our to Target higher chain do in thank preparing facilities. spending months right busiest and want I team

Rick. Now to turn over I'll the call

Richard Gomez

and start our Brian, I'd morning, around color some planned current results. of everyone. have our sharing quarter first, highlight the for but we this view excited to everything . consumer Thanks, I'm season, and good to holiday third like by

As newness we've those with the continue save to in essentials Brian some shared prior compelling consumer on-trend of to everyday mentioned, quarters. up they trying are at spend difficult their on is pressured, price free what trade-offs willing Consumers when to budget our balance largely points. make must-have of find new They view of for consistent to right items. but the remain

that despite consumers are true. We describe facing, and the as still resilient is they challenges often

However, to might today. I that something add description

multiple wait become sales deals have increasingly found, willing to resilient, willing retailers Beyond and there know They they're be also across to them. find to resourceful. search for consumers to are

yet. of Target our week this example, biggest was quarter For X Circle our

just pronounced and are budgets. they both monthly out essential stretch into promotions event, in the week everyday we promotions when saw their week seeking a planful However, sales consumers Similarly, to consumers further dip lean the the we shop. after the before more saw quarter showing throughout how stock-up

the across compared platforms, the nearly quarter, Throughout sales softer quarter. grew sales Turning QX. broadly grew in reflecting digital third as and we to continued performance discretionary strong categories XX%. our faced Comparable volatility sales on with business our where X.X%

earlier, strong quarter. throughout mentioned to I promotions we reaction As a the saw

these up year-to-date Compared around our a to more X of much markdown have year, to depth was pronounced. last were increased the meaningfully and similar year these While are point. rates offers to promotions guest promotional percentage ago, responses

market performance, strongest quarter sales beauty gains and share of In than category sales comparable were this in with terms X%. growth of more again

well as at business our beauty core our in Ulta offerings. growth with Beauty as broad-based was performance strong This Target

across success Blake hair with guests. from to with array those portfolio of resonated to continues wide with the a our growing care consumers Newness Blake Brown, of our be Z indulgences the Lily's line, continued including guests a assortment to Gen Target affinity sizes little standout beauty many that offer younger exclusive

and continue for low on-trend snacks which In as this seasonal to our Our Food flavors gain as well grew love new & from with Guests Beverage portfolio. strength Halloween the particularly Essentials both single food, & digits Day share. brands, new flavors and the the Gather, quarter. own Favorite season's preference span drive Good helping to categories in candy

powders like new Essentials, well. in items protein very supplements meal and nutrition are In categories performing

featuring the limited time owners fun category. the them and engage and Circle, comp our with And Additionally, gain the insights personalized seen acceleration assortment offering, Target of collaboration, a collaboration can offers in and in issue stylish now we meaningful have since ways. through pets pet guests from to pet products in our help pets broader Cattle shop trends launch we for that the we the bigger

less in being cooler were for trends. saw regions. those sales year-over-year, consumers little the than and our from X%, the weeks to we turns to that volatile comparable our comp resonating this pleased we in with weekly with Unseasonably bode weather regional colder single compared ranged despite as apparel, our for single confidence warm trends, when growth relative sales gives well should In are a performance high our us This weather seasonal the but made more weather offerings consistently, apparel industry. digits and down low digits

apparel including Despite challenging business, by weather, day apparel everything an from young starting array women's at game our mix-and-match seen strength favorable $X under featuring driven contemporary, we've and $XX. team colors wild in and strength assortments, items of

pleased pop categories outperforming incredibly with Women's sleepwear the expectations. of with with under which low continue Consistent to glitter. a been be Intimates motion digits. single performance industry all and brand, with was down especially our fabrication We've also also trends, in is sales with Hardlines pressure, Aden, strong, very $XX leggings the our relaunch in comparable featuring soft of

softness, overall Rachel performance also tie-ins Toys resonating in this with of Ms. to guests, Despite with back-to-school seen we new We've wildly backpacks. toy strength with series. her launch saw including successful and YouTube characters particular offerings strong the

digits. down in the with And and led affordable finally, in sales quarter across Hand grew portfolio third comp by the by year. last home threshold Trends and accessories, and around Studio Home, like mid-single XX% with and soft relatively both bright grew versus comparable McGee, which key sales newness, our mid-teens decorative fall of our by were were program refresh Magnolia Hearth partners which spots

performance assortment, create driving within excitement them that between others well-balanced move unique And as a well on and we innovation simply merchandising can finally, of focus in and ways can't. our beyond categories because our

example, As perfect brands, QX, powerhouse L.F. Stanley. in Cosmetics introduced a we and

favorite So their now selling to well. act current well new match create to not color and we guests on drinkware. innovative gloss can program but incredibly as only ones how help trendy This their lip trends shows is

including the and ultimate grow only those opens of As we available more. We're anticipated of apparel for at items are compelling. excited Universal line Target, In more Friday, than costume designer, toys, XX% Wicked destination opportunities so the to most movie-inspired home food, beauty, spanning created film's cross-merchandising year page are XXX the fan just theaters. apparel, X we the an by film. only Studios turn items Paul Caswell. this to more the offering QX, the and theatrical be hits days, release Nearly

the of displays, in wicked Our guests surprises season. digital the experiences and theme immersed store through be magic throughout odds will other shop-in-shops,

Star brought alike on Areva, campaign, wow the a marketing beyond our with featuring of social Cynthia response fans channels. and to our assortment, factor film from exclusive Target we huge And the this magic the wicked

X,XXX moments X,XXX on throughout we ah. drive and on the prices designed wonder everyday plans Building response earlier help our from the to will our balance throughout We'll creating families compelling are reductions season holidays. celebrate items help we sure for an quarter, also after with theme value, perfect magical the this inspire, season want to we and price celebrate season, of traffic the our to returning year, make ease, the fourth this holiday popular to holiday in inspiration. of holiday incredible to seasons, items And the low this and long our Day, display promotions runs like some of reduced that on all on promotions newness, be and be full the of season. an additional Deal which offer the everyday first Value the started month on prices

to to and gather Thanksgiving $X.XX family than wine, And to including hosting everything and in sectary hard pound well deal, a to held from tabletop $XX new and side options our Black wide fresh on This X dishes. just gift-giving on-trend per good holiday recently It's momentum Black meal Plus, helping The Turkey as we're next of just we housewares keep and core, Thanksgiving Turkey Figment, bringing while stuffing variety is early going. flowers, on sale additional for week, year, will with offering this which year, trays and ago. owned as team members we of weeks and back last only to threshold Friday need added couple together. to an our like Day, be that popular Thanksgiving now is will the ones, of back believe from a our $X brands loved we're a are closed celebrate year. stores meal at Friday lower gather X families includes have

the of after after Taylor And only releases X helping Thanksgiving, don't available feel we'll offering And out free Swift Circle like pizza members. you when while on view announced in the photos recently of before the reflections Target Taylor comprehensive by written cooking last. Target at Swift, for and speaking the day, moving frozen Swift, phenomenon Tour never a Friday The Black exclusive a book day into supplies behind-the-scenes be online Taylor only ARRIS we'll the assortment the Tour, seen ARRIS day launching provides next the on we before Taylor. be XXX that well, stores Thanksgiving, including by our official personal cultural

for In vinyl X tracks, bonus both addition, the featuring on sure family, exciting CD, XX we options of gifting including exclusives versions we department, be Swift's on the have unbeatable prices. the anthology have tortured acoustic all at wish And songs. are to while everyone top these list, poets exclusive in and

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Our XX% like the holiday only GiggleScape. exciting assortment and biggest year. is more toys LEGO our new well new items compared brands as last include as brand, Disney, These Schwartz FAO biggest with target from our to ever

XXX X/X we'll offer items year's options. at just items, range with this incredible great than $X beauty, starting new of In assortment assortment including gift is of $XX. more under priced set a nearly This giftable

the bread items this mugs and first eating. British on-trend themed Christmas than $XX. and In shortbread, kits candy the Spencer, new and the more in family items be home for Marks London the cookie featuring we'll time, across treats ornaments XXX partnership our and enjoy new & from under pond, best like all with retailer, for will offer new seasonal And to offering and season, whole food, flavors, again, ginger building

season. to also worked ever make than We've shopping this easier

Drive making XXX, we're with it Of gift. on that determine like and Up perfect services Target industry-leading easier course, but same-day can same-day also our to delivery pickup, rely order guests Circle

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make when that and have who wish ones. what those tie to clear under assures magic, Plus prices guess feature our like to get consumers the the want no imagination, shop it And planned their tree will work removes the immersing moments. marketing top matter they that find best for together, digital for they'll on to match loved our we of And all list and choose the holiday the perfect they're it larger-than-life this year, hoping present, our bow guarantee season. guests in how for price

Target land families guests peppermint forest will holidays, experiences be courtesy holiday social landscapes at transported to and fantastical to iconic and feeling a all Target. pop-up have happier to that their festive, leave want we of of from swirls will TV them in-store spots friends

for their is As baton retail for day, our the the to reminded talent guests, I am brings. for thank I friends. communities. and brand, how Michael, and pause special they and I this team humbled want am Every many to the leaders I and And among our passion to work pass world-class ways up ready colleagues, of by get this it teams for show to over

all for you do all I'll Target. call to that, pass you Michael. Thank to Target, over With make the

Michael Fiddelke

fourth short, is The we are quarter ready. in Rick. Thanks, And here.

for assessing shopping, securing minute. the operations already inventory, like those for with some for team, Friday And about season across environment until our months Cyber external consumers last their Christmas their been are won't list While forming promotional . thinking now. are major start and done or plans, the others Black we've the the events preparing and holiday Monday, waiting some

increased we effort challenges throughout these put operational and macro season. both from in of our despite the our our great and As both ability quarter, and But serve holiday volatility into this resulted heard business. already planning, for third expected Rick, has the about the feel unexpected challenges, team to you guests because all and headwinds Brian financial

so weather of year's Beyond season and for the delays the the patterns, running of This has retail unusual added many overseas hurricane normal strikes complexities quarter. considerations a business, particularly large communities. port to been devastating port

damage and While from we we're impacted affected areas Milton members communities are are in has know recovering. Hurricanes grateful that Helen that been and still vast the team also our safe,

of weather few volume the and and passed, the troughs quarter, would dozens facilities hours. throughout as XX members and to created storms safe. supply we and team storm, nearly These quarter. assessed resilience advance carefully in holiday the reopen the expected, each chain In stores this of within we're location lower higher as facilities we our storms displaying our otherwise After all well of able spikes closed advance a be supply unseasonably chain to of keep than of warm our peak guests

challenges East the navigated by presented port and successfully also the disruptions Coast We Gulf the ports. on

positioned a and key but the been in was action to West months, us January. protect closely have strike watch cost, for potential allowed in anticipation well We the continued closely strike shipments programs in our into team to holiday season. to This took for of strike, our decisive the fourth situation route guests the situation a be short-lived. at to lead through seasonal the negotiations to continue select We'll up quarter. the Thankfully, the came Coast monitoring to ports for

also volatility volatility the receipt in Collectively, timing Asian in ports and impacts costs We early higher-than-expected additional port the the quarter. drove in quarter. strikes the in timing some from receipt saw

navigate to able were teams our this volatility well. incredibly Fortunately,

are and operations prepared well position inventory holiday our So for season. the

inventory. note on final quick One

about to Third grown we've period. than year look that way comparison, the sheet quarter years. as XXXX have beyond ago. on as volatility faster And sales our ending inventory the that same business than last a in QX see year a slightly to X% was seen this over compare by before, our we've X over often you'll inventory XXXX balance we said, done higher ending useful the That our back versus

delight and serving world to those guests supply thank and care the around incredibly each incredible challenges of and and guests has of managing ready of type our team our this it's to Their the to head experience us work that minute proud chain teams amazing trials on. our and like a to for Target. with stores hand, other the at throughout headquarters me this take of these regardless through find can this only holiday you team, season, I'd the at to commitment makes at of each

you, brand this in our you do to Target, and communities out. Team and Thank for for show day for all day up

you've focus on remain heard fundamentals while we our for with level laser-focused now, a improve for As that retail the me is of calls these in-stock strong list service meaningfully on continuing shop. goal when, in consistently they High to of our results on a consumers. on share our to once our improved how And being where, want year and for guests, already stock our again this position ago. quarter, from

product But demand. support as considered to If inventory measure I are the combination in-store stock, X to be mentioned digital before, we reliability. the that stocks depth not only but might that have in enough of in on shelf, way inventory and is

we such, also experiences. which shopping call purchasability guests track metric helps As a we our and us digital protect in-store

we low, this Here's significantly to year-over-year. choose number to of order temporarily run same-day the an encouraged improved trends, in-stock begins item been experience. reduce times team we're the in-store metrics to in make The unpurchaseable an purchasability If working has hard to our the in item stock that consistent may with fulfillment protect and example. our happens, we've for shopping

at potential progress we're guests. clear, our and for purchasability, both continue we hard be to for But mistake to for reliability improving inventory and won't work in-stocks

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XX having in secure in expectations. portfolio our of of opened state to new quarter Monte, are responding ahead of consumers the us backyards. of neighborhoods performing stores target this work for as experience my thousands Miami, own that year, these this This clearly, our of past just new in stores, newly El will locations their And helped a is from of California, joy guests Iowa, to which Florida XX wake home

work In fleet the in addition we're investing of that find in relentless of also the to to a enhance our our talent to new we've experience. top investments we've in we shopping the to operate, store and pursuit existing joyful, convenient stores, experience front our where sure done our we're making store markets the made provide efficient stores from

nearly always and Net indicates measure every progress. to satisfaction products while we extensive all cleanliness specifically, are making team we data our the track, shopping, Promoter find there year-over-year. stores And of survey member interactions at wait by with for improve More and checkout checkout Scores both ability is room while meaningful lanes, to up at are times our

fulfillment. guest our And of sales Ship digital the making digital ship-to-home types homes, as course, last seeing year, fulfillment ever, we're than investments to well. stores the healthy guests In speed growth of to name helping the business And all in of shipping and is Home business. across our packages in our to with power we're sortation centers more here packages game than faster handling XX% close we're our

average fact, reduce We've ago. package, faster a as an shipping In times implemented eliminating as split source increase and fulfilled for a day in delivery also well. nearly this year of mile to changes costs network quarter, are a driving third reducing across units than last of shipments, friction per time our the our guests

loved nothing services, last dollars centers options. guest in than this when have even our already it services, them tens same-day delivery saved to speed, sortation And faster better. so of upon feedback making we is these other why there's fulfillment to when compared costs of our which year rely to the on comes continue millions mile company build far Altogether, to

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things him I pass welcome his to off echo and Before like first earnings Brian, to call. I'd to Jim,

As what have few leader through I've he of Jim onboarding already months the first be have the seen him worked strategic process, a I compassionate couldn't is, to his on and team. and together I curious, happier and Target

that function, the excited call accomplish to our under Jim over what to that, to leadership. Jim's I'm continue I'll I'll will and ramps Jim. work up closely With see in team leading finance as he with guidance pass and

James Lee

Thanks, Michael.

profitable I've deeper also and that brand Target the team arrived enjoyed partnerships. much and portfolio outstanding ago, And as a I've national brands greater to company's hub our and a Retail. and admired collection of the here, including Target strategic own positioning large, for getting differentiated long-term our a long of unique nearly model I've since growing know pioneered an with I've gain American its a business. unique coupled advantages, understanding Target appreciation decade with developed stores the brand

and retail brand capable and to strong marketplace, robust together. A behind strong that's including business our culture Circle, that passionate and about winning a our of third-party and footprint Plus, Roundel includes Target growing Target operations team a and capabilities, broad caring, model committed a

gained ahead. Having deeper these profitable excited insights the and potential our into even sustainable I'm in growth to deliver more assets, about years

third Turning financial to our quarter results.

drivers categories, X.X% EPS largely due shopping softness expected their which of while by and budgets. unique was of primarily was decline offset guest end increase came in sales a traffic in trends as where was the healthy of by comparable multiple were the of in to driven sales, some near X% Our consumers headwinds, ticket. expectations comparable manage discretionary cost soft to our X.X% of average our quarter. they cautiously This household Among range, our growth below are decline low the discretionary

strongest the we monthly to quarter, Circle in our improvement week and categories. Target were in as responded promotions comps guests October Within sequential saw discretionary

with store digital XX%. While Within pleased increased delivery comp Circle Target digital, powered of by XXX, were XX.X%. nearly X.X%, were our same-day comparable we down sales growth

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softer-than-expected merchant expense Our in margin about operating of rate and margin both ago, X.X% our sales of impact lines. SG&A combined was basis and a on pressures year highest from the gross XX the down reflecting points cost categories,

from multiple in supply Overall, chain costs our supply the lower gross impact XX was costs saw margin basis and earlier from including points the outlined of digital digital of that growth last drivers, sales. XX about incremental rate basis resulting factors, chain about and double-digit Michael than Among fulfillment pressure the we points year.

note, down was categories, XX our with compared in slowdown QX, trends Offsetting This change driven a X the and apparel when both merchandising. about decelerated about mix QX. basis percentage primarily points comp points point shrink about of financial benefit a basis basis in this highest-margin whose benefit and by gross XX home, impact to points from QX. discretionary we was rate of benefit margin of saw in flat pressure, One approximately in merchandise inventory related XX

basis saw multiple of cost of near the sales which our range. that's low expected higher-than-expected most rate points notable well. Among reflecting line costs were occurring broadly with the drivers, pressures, and care XX Our costs, the SG&A combined as some unexpected, third trend quarter, end higher-than-expected increased in expense more we liability health top about a general

year. Year-to-date, adjusted our was Altogether, EPS with last with a ago. $X.XX QX GAAP $X.XX increased compared have adjusted and EPS X.X% GAAP both year compared and

firmly cash now want priorities, flow for and today. deployment, turn have been reiterate I and decades which I in our capital As to remain place to consistent

fully look that in business invest and We our first financial to the strategic in criteria. projects meet

those dividend record we something and look beyond we've on growing support middle by constraints our dividend build X the A since cash And ratings. first any of repurchasing look XXXX. to we of excess credit time the return annually, within Second, over done to finally, our the uses shares

lower. year-to-date, timing, full range priority, expect $X just guidance for CapEx in we've near at project updated year the Regarding $X first our we billion billion the the will be invested of under and or with year CapEx our slightly low end

long-run remodels, and over anticipating outlined strong we will new range $X will year. project and supply of a the this that billion, generate on stores chain projects timing, earlier with along CapEx we As billion Michael and of Based the pipeline time. have middle technology we're near expectation expect robust between XXXX Brian returns expected $X mentioned,

we priority, Regarding our million million the second year $XXX And dividends finally, of $XXX third QX. shares up about from in paid million million quarter, to ago. retire of $XXX in X.X deployed we the a

repurchasing expect Given in our and shares to position our going well. cash we expectations continue as forward, QX

with on Following our the capital quarter which X ago. after-tax quality XX-month year ROIC higher quarter, ROIC, XX.X%, of third measures my after-tax on a In time. percentage over than points trailing comments commentary was the the investments some our

metric mid-teens a expansion further While return strong, anticipate our of time. the teens quite is into over this long-term high plans after-tax

our expectations I QX. want Now move to for to

planning this As Brian the mentioned, business the we've year. far volatility focused cautiously based on on encountered so we're

in X last XXrd days this also the year's unique after loss the expectations Christmas this including fiscal of reflect shopping some of year's year's and Thanksgiving calendar calendar shift Our between and week. attributes

point to these comps. impacts could nearly headwind to X percentage While fourth to our calendar we are quarter difficult they estimate amount isolate,

total that million did outlined context, turn our they're week equaling. on comp as a Note ago, our year's about last extra addition, we not as to to $XXX an to our year reported operating guidance. periods week all based With the of $X.X XXrd and updated contributed sales I'll last as that billion year's estimated income. In sales affect

slightly flat anticipating categories and around we On the range, it I headwinds a range fourth in If full discretionary comparable translate we're up sales would quarter line, the comp negative earlier. QX mentioned of the top near reflecting for a middle continued to year. that calendar softness the end in

line, with view guidance, approximately new be ending pressures our sales, fiscal comparable of including will Consistent ongoing ongoing of our QX, expectations inventory continue inventory benefit we efficiency updated we prior and the the shrink position in flat to quarter reflect bottom year. appropriate expect believe the from work. to to an cost P&L impact this the our updated commitment SG&A On and in for expectations, our

range the year quarter, the adjusted is this for that of $X.XX and back the end $X.XX range full in and have Altogether, updated translating in full our profit year. headwinds our light EPS fourth GAAP emerged This back an of of brackets range to of end to $X.XX, new to initial guidance updated $X.XX year share. March in lower the sales a

Having outperformed disappointing our demand, through a to pressures us last it's our deceleration combined profit cost in with multiple expectations quarter. QX it down raising after that caused have discretionary take guidance

position holidays swift disciplined to ourselves approach while and Given it's during ongoing prudent to believe action uncertainty, XXXX. we taking and conservative take win this the consumer in to

place strategy, investment of have in confident Looking business, strength assets our we and in of trajectory our the long-term given our the in pipeline. ahead, remain the projects we the

confident demand they current team our facing. offset cost normalize, shown While to in has that discretionary we're find the challenging, are help and efficiencies we're conditions quite can categories will pressures

last this we this decade growth ahead. in performance generate top financial compelling the As year, and company strong decade, earlier can bottom the I Michael and believe generated shared line over

the As earlier, more about ahead. forward the our joined since to I've become years in progress sharing I team, look excited prospects, said even and I I our

to the call over turn remarks. Brian? closing Brian I'll some Now for back

Brian Cornell

Thanks, Jim.

provided namely, strategy goals his at shared to your a we pick to the couple want March. Before those Meeting assets assets remarks, on up on deliver how model, we highlight the leverage our move financial business Jim long-term I underlying back to the want our to and questions, and I in in of Financial can thoughts Michael Community

portfolio, assets often experience the our work We where brand huge how and differentiate the goal, build In our online pursuit business. far weight across that brands and a locations we an capabilities, differentiated our outpunches we design our shopping to invest its and sourcing growing of others own national These our we Plus. and from in business include best-in-class in stores, and marketplace. Target advertising highlight unparalleled offering partnerships, merchandising marketplace rapidly that

chain In we large best the to build nationwide and these stores, our X of capabilities, headquarters, in aligned brand. have whom loyalty a all the card includes support of are made and largest We of and valuable programs investments significant payment across also which in service. retail, supply program behind delivery have America, a team our same-day

and with and We wants that singular Those storage on approach model, put convenience, curated a elevated combined our fulfillment low experience. these unique the assets leaning merchandising combined focus deals, needs assortment both and value into a of to strategy interaction. while and that an work speed and includes through prices power with that differentiated and sub a human offering highlights compelling genuine includes are that spans a

headwinds, strategy like beyond challenges. and leveraging assets short-term encounter seen to we as even So move we've immediately on our recently, we focus those

we categories the discretionary over in And years. our efficiency we've help to as have recently, top look continue of like begin unexpected just we're while will beauty see cost to couple normalize that demand line ongoing For help to can to and last pressures. on lean pressures time, confident pressures, frequency ways when offset we example, work those those our we over for offset to Roundel growth we encountered and leverage

profitable But sustainable focusing underlying business foundation of and with work starts with it all deeper the them a build our serves on and consumer, building the to guests our engagement as X.X%, traffic out as of of last representing million our time. additional and deliver shareholders XX for with more QX our that focus. compared transactions growth point evidence year than over I'd

attain strategy and to right goals. right we the and strategic sit confident the have As assets, today, we're in team our we place here right the financial

look As with always, progress time. in call, this we sharing appreciate forward participation your and you our your engagement over to and

questions. that, we'll your to With turn

will be Now take Jim happy Rick, I to questions. Michael, and your

Operator

[Operator Instructions]

Our first question Morgan with Simeon from comes Gutman Stanley.

Simeon Gutman

SG&A, gross and you it first was How can, are costs guidance? and unique costs you quantify fourth of question tell split that what mentioned, was? or quarter what the among embedded unique the on level My the if into magnitude is us you can

Brian Cornell

start? to Michael, do want you .

Michael Fiddelke

happy be Simeon. to. I'd for Yes, question, the Thanks

we and we and a for back guide outcomes step a what's highest start remarks. and Jim QX, saw couple deceleration the on as in mind it a margin his with, of our I'd you at summarized our look QX of If in profit lot in categories.

home X So decelerated from about apparel, QX. and percentage points both

felt inventory those the impact the we to the QX, clean so QX, we've And appropriately as we're year profit softer-than-expected in categories in committed certainly an business ending . believe from perspective. cautiously we sales. guided We the of to and got think and

we was list. of ensure I some You the strike, we monitoring how guest feel a were We were experience costs pleased right preparing stock like as decision, perspective. inventory situation advance year unique down mentioned we a this remarks, that's the we're thing. in with we out closely, that it and in had my for in from prepositioned that in further some additional port click the obviously to played

of mentioned unique a those ability time, not SG&A a or offset to always headwinds also efficiencies to then within find quarter. that's on the team's while the And or prudent things few have do a in month over I confidence Jim to a appropriate ton of And side. some

You can things. some do shortsighted

building we'll find If levers I you But back pull us. efficiencies lot the there. of track of record wrong confidence given over a the have right too quickly time, for team's profitability this

Brian Cornell

. else want to add? you anything Jim,

James Lee

mentioned I liability specifically line, costs. the care on we mean Yes. SG&A general and health

dimensionalize increase can of . saw SG&A You that in approximately X% that the quarter. in you as the

Simeon Gutman

by about year you try is a step to the back? not reinvigorating innovation introduced the or I as approach you're consumer Or Rick, your this try change, especially through do does maybe taking know what And you're and and risk keep going follow-up doing appetite and backdrop. push I more for a to you're holiday you end and clean, and but little showing through, it, The Okay. up. discouraged do was pushing you not risk? you've Brian this newness line year Can ask top to or to

Brian Cornell

Yes. to short-term some have we certainly the embrace macro of Simeon, well, challenges.

company going thing incremental we're we're doing You've this million years, things the right sure and the long strength XX the transactions long-term to highlighted that the in for shareholders, in a play equates say X.X%, QX even us interest make the we've traffic, difficult for of to heard during is of X environment, the up and quarter. our game and

long fact really online. the we good assets. good for certainly, feel term. target, term, short our well feel of or are we're that But really and the our about choosing lean digital the to expansion . We about So whether bodes consumers going it's performance, in-store that into to digital continue

really grow unique to seeing make and by and XX%, So Circle talked importance XXX encouraging. that around about home awareness sure almost XX% Target delivery capability. to almost We've grew program, digital the of that at we're in continue we'll our investing building

it's again important for a point saw offering. of be digital our part us a to continues really and growth, double-digit and differentiate Drive-Up

invest headwinds newness. short-term unique some play discretionary we're some facing, categories. even we're spots there's going bright long while and saw And we in in So to continue game, value the to

We continue in take and about have But in growing apparel, important apparel even the we're very and spots. in Rick category, about we long with to saw apparel. taking term. and think Michael within both motion performing deceleration there's bright talked some digits, that real share term And those both how categories. double category, we all share in the performance short

going in in investing the And in front we're long but we're to sure playing make and in quarter, channel leverage XXXX beyond. to a So that of number to there's shoots investing we'll think and value, continue and fourth of continue game. stores the us digital green I certainly investing our the in newness, in

Operator

question from next Rupesh Oppenheimer. is Our Parikh . with

Rupesh Parikh

going lingering better outlook What's in disruption expect and the team's to the on So XXXX? recovery thoughts a do just category your weakness. latest you discretionary, back in

Brian Cornell

. some some spend to seeing categories. time want we're you Rick in what big of our about discretionary talking

Richard Gomez

And start Sure. apparel. I'd to. be with happy I'd

at new It's seeing spots. our an motion at are performance, that we're in women's our both colors, based bringing We're And double-digit In new bright point $XX, are are quarter, price and day seeing seeing what that. broad are with bright excited the new brand, with We continue. slightly excited while was fabrication, outstanding consumer new spot new respond particular, there of delivering growth. that. we apparel fashion, brands apparel, about about third our $XX. we're new And which it also colors, we're leggings of very performance, both in lots a to down pleased contemporary all Fable, the expect styles, to in on young in at Wild we

point in think when other the consistently. perspective, deliver spots. we When We and select apparel get we're we I our we businesses categories, happy hard newness the if really say for are. also want industry gets we with to on improvement. worth noting, would assortment well weather lines, markets, the discretionary challenged weather as that bright break they're to some of and In what And respond. in growth. where see an our we these you XXX basis not colder bodes about both But particular, saw a is then some there And It's home, consumer from are would focus home. we saw

we partnerships, of In that launched Magnolia consumer Studio its Hearth with right seeing We're with Mig, or now our some when Threshold is with the whether key newness, Hand responding. that fall it's

big-ticket lines, is items like buying from said, And then We perspective. so challenge that a an And that, see is industry consumers like hard very encouraging within don't for us. I TVs.

bit ways seasonal core. affordable add ways they up their of freshen looking are looking to They're a for to to However, home. little for

see we we expect think, decor. well new consumers bodes to and refresh as really their we candles, we the holidays, vases, So also that, continue the like delivering home accessories, to holiday and go frames, decorative to with well, performing growth, things want into in

So the is is shop see willing long to the as as at new, consumer affordable price discretionary trend on it's we as we at it's business, look what .

Brian Cornell

Rupesh, a categories about will to of upwards our couple as of XXXX, business. of points, represent we those continue only discretionary think add XX%

consumer discussed, value, of the get macro continue to and trends. we'll newness lean we Rich ahead of got As don't and the we've just to sure ahead innovation into and and make

for green look We'll we've sure we're . but in the step follow to trends, will consumer. with and cautiously. staying got plan We'll appropriately. plan shoots we'll make So

Operator

next Our question Goldman with . Kate from is McShane Sachs.

Katharine McShane

last You on why pointed just than more made quarter. consumers I into they to sounds like was compared sales how for leaning a and did comment promotions about so waiting think previously, it are curious happening do you you consumer promotions. comes And been is pricing decisions approaching now it alter this think making to this has for has now. the to how I as when while you're and a QX and even . caused choiceful

Brian Cornell

for Kate, those at QX, talked look expect about they to change quite here the essentials. of consumer and a looking seen it I And behavior to time think in going see we've that shopping a are we promos for know seen and deals QX, consumers looking as certainly they're behavior shopping into and for we we value, everyday when think are resourceful is consumer. a resilient years, think we've trend it I we've last And sitting for some we'll today, now. couple over very I

some to taking We going find unique savings carefully to shopping those think they're in and And discretionary categories really that's want. of those continue. that items they

see providing and the Target. to that are going we're that staying looking we're going for fourth see continue the and got season, in quarter, the make bundling shop that uniqueness into great of recognizing value, trend I holiday to leaning we're certainly in to the value That's XXXX. some make throughout So they the sure with that value that step that that we we'll sure with again when newness they're consumer, right think in a we

Operator

is with UBS. next Lasser from Our Michael question .

Michael Lasser

concentrating My even does invest be better increasingly position need amongst in consumers consistent to where are their itself . first consideration set to performance retailers, or to way anything different generate Target a very do question anymore more of number among is, spend and in that a world an few

Brian Cornell

Michael, I'm brands, partnership that on Taylor mix our to happy strength Swift, an will in to to sure those traffic brands, But using got for an Rick to unique we've is which Rick start unique will add we're exciting Target. be and think Michael and period. And of to and Black come national make during a important with great own Target their perspective. talked continue driver partnering invite Jim holiday Friday, I being then business life about partnerships. our our

XXXX. XX is opened Michael We've digital to of really be some invest in in we're some to over to into expanding we're continue our our continue big we We'll great footprint saw the know about, a But encouraged pipeline going and assets, years. had in points new QX. proof important. to stores, we've next the talked with We our stores going lean

or We've continue to our out delivery to build continue we'll pickup drive or to home, spaces. assets, lean digital it's up into to got whether those

to So consumers joy we're make delight us, delivering whether shopping expect our they the going continue stores, we're and the visiting to looking are sure for, sites. from our they're

way deepen alone, drive to lean continue program, we into million our that's own us those X our important partnerships engagement brand national We'll QX and an We'll members, that continue deepen for Circle we constantly our another to in look brand new and our in continue portfolio, our partners, talked to about with and brand. traffic had accelerate for engagement. partnerships to

mid-teen deliver critical Roundel we're the asset that a with has and the We're We'll years to quarter. we to very in become media retail saw us. for third for continue the space again side, doing on work pleased come. and growth in

our . consumers is things expect in from the step Target stay and strategy, make continue doing that So we'll with us. consumer on across America the current sure

Michael Fiddelke

Yes, I'm bit that. just on build happy to a little

say shop, guests to maybe we categories us I'll X consumer, the everyone got that in a and which heard in we before, a we've our share round who likes compete. You've to Michael, remind

excited over now in So about a we're time, we see and for of we're support foundation the lot that. growth runway building of

make that on intentional the more saw Brian when some XX%, things, And really into those strength over delivery almost quarter. in business in it program same-day Circle long in that We maybe did ways reward a investment with Circle around of to spend a the all we XX%. digital everyone just the to to strength I Target easy XXX work we see but different to growing team touched that's know double-click remind Digital real time. Target few the the the by term. with important shop the relaunch at up of us

even increase term. guest total, Circle delivery. a when of excited really comes some And so same-day XXX that that the that uses increased the about in becomes we're the spend long that building member a that in store for We're foundation

pay way can over time, it traffic we're making numbers, appropriately, growth see the in will and off right you see and so that the the in it term. the long can managing You the term investments digital the for but short

Richard Gomez

differentiates our what think do business. Target multi-category I is

as for And you get we you go a get can the turkey family also so meal season, of holiday but can for into the $XX the tabletop decor. X,

season. You you party all shop, the now get of can decorations. can our for apparel the with through get those home And festifications the

think is something do differentiates for is that that need really for our everything I you Target shop So one-stop that the season. holiday .

Brian Cornell

perspective. still love is Target, to know early his And while get Jim new to I . I'd

James Lee

to clear X unique, sure That's and making me targeting we great just for I that months mean are think question. a to how it's Michael, are about mean, important Target. we and that to think just I marketplace it's make in, our I Yes. that We third-party it think as model. we business in carefully partners to extend sure that and about growth Plus. on business Target carried even our our we're that brand category we

brand. us we important ensure on . stay for it's So to

Brian Cornell

provide be and apparel reverse. we're we're apparel. over a time terrific a for facing that macro it's going of And state great and the and style about of this a time, morning, Michel, we've and still destination of already talking about you know kind on to talking on-trend lot really design will in some those categories. the job I of headwinds trends important the spent discretionary did state, today We thought CNBC

We know We category goods home America sporting going rebound will the know buy over and time. is toys. to

blend the expect physical those going we've macro are experience, and from headwinds both to strength unique our that that But term, portfolio, there's of national multi-category some long have model, got understand. we think the So brands, business of strength going own short-term in brands embrace and to the American we're to a into the be sure forward, of and a and Target the things we experience that term Target. digital hallmarks focused we've and consumers long great got make leaning on our

Michael Lasser

could on that I some one one if the Brian, on is today discussion of innovation which is that upside discretionary in focused last that a just and is is the it's newness, are improve, categories going up message interpreting for investors from lot to follow Target have known the of the when that Target marketplace. the

with recovery investors that there's but Target So of right the reporting upside is that areas the And are be as willing now, the more to Target message would maybe from to going some that not even interpret trade is those of in quarter-to-quarter? present be others upside a of is consistency should you with there some these for consistency more in areas? some

Brian Cornell

trends position, leaning line, strength to Michael, see beverage in the want. that today, of some big Rick into We improving sitting make we to those these and strength sure food continuing growing that for the in things make we're we're some consumers trends certainly share and lean macro And going we're in strength moments. ready about here the essentials, seasonal the consistently our business, our into upside But and top want sure to in talked the beauty. we're the change. of the future

categories, X headwinds discretionary And getting that consumer for Halloween, celebrating or X moments for we who's to for of those see whether and a season, for we the and we've macro those Christmas consumers. are ready Fourth continue July, important really despite some meal quarters know still it's of shopping really seen or Mother's moments the Day in seasonal Thanksgiving

make to sure in and lean Those we're are win. and we moments, Target going

continue looking green for long-term who to only advance Target. consumers a brands, for those and own we performance or business, in you Target shopping see of that are where our today, great to a our experience that find for destination magical where bring . those come certainly stores but improvement We're national So that over at our opportunities brands, assets we an we lot partnerships and consumers great a we're our visiting online are unique time. shoots not our pleased to lot and of place can where continue be

Operator

is question Short Karen next Melius Our Research. from with

Karen Short

have little questions X So I a unrelated. that are

pivot as to basics versus as to more sales of is, a it basics? versus would The first look And a into fashion. what little is you percent fashion apparel, relates

think third any just there second The state? X% risk sales. CapEx in a inventory Is then of how is, to steady is XQ, question is about that now and if at

Brian Cornell

talk the let think let apparel, start Rick, apparel? inventory. to and you want I'll about we'll coming And Jim CapEx let about Karen, our Michael do year. about . about talk Rick with talk

Richard Gomez

apparel. kind how we how about short, with trends And consumer, putting and start apparel of think first. consumer really I'll think is Sure. to in about the we the the listening

seeing example WildTable compelling we right, fabrication is a And we right really now, a really, the consumer talented respond. team is price emerging, what's see fashion both the style, is have colors, price. at be newness, it's and We that with what's right really what what are get a those that, looking point, the that really resonate working. at combination guests. when going right who always design we're to trend perfect relevant of and is going the plus fashion, to . And the

Michael Fiddelke

little closed Karen, good quarter. this in look season. of we the X% inventory at if balance up across positioned the on we the we're about as that side, On sheet, bit a feel already. touched we're you we've well year-over-year to And balance holiday But the the be stock

newness of see to walk you now excellent the us to set. doors in see an trim see It's store front the apparel. a Target it's or through online, great great right If

we an got . we're to inventory year accomplish from position that the for the important we a It's in that us perspective, the clean that think that allows fourth And also we've so holidays. positioned well quarter guided really finish feel we and goal. good

Brian Cornell

Jim?

James Lee

slightly year this $X XXXX. billion $X at and remarks, of And supply as And and about $X remodels then investments, we mentioned to at my or I at close lower anchoring look technology we're that. looking CapEx in CapEx, chain new as then for of XXXX, our than pipeline out to we'll about and on stores billion billion

Brian Cornell

question long, know why a take we're but don't today. I Operator, X . last running little we

Operator

Robbie from Bank last Ohmes America. Our with . question of comes

Robert Ohmes

is should thing what that how the chain in that from there in I inefficiencies any third would as the quarter get the there of helpful, timing? quantify back fourth And one you onetime next impacts maybe be that quarter way could is of supply receipt and year? sort were think any well pressures are of and sort to we the think onetime

of sales And clarify, fourth wanted to or -- XQ that going impact impacted impacts are then I just there receipt the also in related chain or were supply also goods that to was to sales quarter? any

And then is way on have you the Target Circle last Target relaunch, question Circle impacting more launch. the negative expected following a than costs that would is,

Michael Fiddelke

Thanks little question. the question, Simeon's Yes. of to bit to my back a for go Robbie. I'll kind answer

you cautious we quarter, for that about the If in appropriately being categories. as fourth the and on think guide trends based the on it's QX are mind seen the our big we've the discretionary in things factors

some And of our and profit guide shows factors for QX outcomes that deceleration QX. the in up into

guidance want high-margin clean to and the like of into did and in year and factors our they outcomes decelerate those are that both end them profit isn't categories. important, see home to our category we Apparel

there the this we've year, you then down P&L, the and earlier year, in click were further of to more that versus unique on that the other around strike, expenses P&L side side, through time. and the that on factors due the trends down prior we'll the over saw now, As inventory good had, were had feel those we up expense seen things we we're moving port to some like some to and that work certainly the further manage creep they that

it's is top like last the a has But And all the line, line. Circle I place the top a time on confidence in starts be work to gives be with able said, team to we're launch, made we'll even I that. And line at XXX think, may total. add to back efficiency in see over great lot growing to investments it question progress work time. really your great against us bottom million top build making the me XX% with that and quite things the delivery of those seen guest to great see the think the that line are we're almost the quarter. in because members same-day new the accretive And to over It's in we've are CirclXXX. we in bridge response all excited X circle to to

Brian Cornell

and our that a you happy joining appreciate concludes in wish Operator, third quarter holiday. see us, We'll everyone you XXXX. call. I .

Operator

Goodbye.

Target (TGT) 20 Nov 242025 Q3 Earnings call transcript