Target Corporation reported first-quarter GAAP earnings per share (EPS) of $2.27 and Adjusted earnings per share of $1.30 compared with GAAP and Adjusted EPS of $2.03 in Q1 2024. Adjusted EPS had been estimated at $1.65 per share. TGT shares were down more than 4 percent in mid-morning trading.

“In the first quarter, our team navigated a highly challenging environment and focused on delivering the outstanding assortment, experience and value guests expect from Target,” said Brian Cornell, chair and chief executive officer of Target Corporation. “While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth, led by a 36 percent increase in same-day delivery through Target Circle 360, and our strongest designer collaboration in over a decade, Kate Spade for Target. While these highlights reinforce our confidence in the underlying health of our business, we’re not satisfied with current performance and know we have opportunities to deliver faster progress on our roadmap for growth.

Cornell continued, “This morning, [May 21], we announced the establishment of a multi-year acceleration office, led by Michael Fiddelke, along with several leadership changes. These steps forward are intended to build more speed and agility into how we operate, and position key capabilities to drive long-term profitable growth. With these changes and the financial strength to continue investing in our business, I’m confident we can emerge an even stronger company over time.”

Guidance
For fiscal 2025, the company now expects a low-single-digit decline in sales, and GAAP EPS of $8.00 to $10.00. Adjusted EPS, which excludes the gains from the litigation settlements in the first quarter, is expected to be approximately $7.00 to $9.00.

First Quarter Summary
Comparable sales decreased 3.8 percent in the first quarter, reflecting a comparable store sales decline of 5.7 percent and comparable digital sales growth of 4.7 percent. Net Sales of $23.8 billion in the first quarter were 2.8 percent lower than last year, reflecting a merchandise sales decrease of 3.1 percent and a 13.5 percent increase in other revenue. First quarter operating income of $1.5 billion was 13.6 percent higher than last year.

First quarter operating income margin rate, which includes the one-time benefit of the settlement of credit card interchange fee litigation, was 6.2 percent in 2025, compared with 5.3 percent in 2024. Excluding the litigation settlement gains, operating income margin rate was 3.7 percent in 2025.  First quarter gross margin rate was 28.2 percent, compared with 28.8 percent in 2024, reflecting the net impact of merchandising activities, including higher markdown rates, as well as digital fulfillment and supply chain costs due to increased digital sales penetration and new supply chain facilities coming online. The benefit of lower inventory shrink partially offset these pressures. 

First quarter SG&A expense rate was 19.3 percent in 2025, compared with 21.0 percent in 2024, reflecting credit card interchange fee settlements and disciplined cost management partially offset by the deleveraging impact of lower sales and higher costs, including employee pay and benefits. Without the litigation settlement gains, the SG&A expense rate was 21.7 percent in Q1 2025.

Interest Expense and Taxes
The company’s first quarter 2025 net interest expense was $116 million, compared with $106 million last year, reflecting lower interest income in the current year.

First quarter 2025 effective income tax rate was 25.0 percent, compared with the prior year rate of 22.7 percent, reflecting the impact of discrete tax expenses in the current year.

Capital Deployment and Return on Invested Capital
The company paid dividends of $510 million in the first quarter, compared with $508 million last year, reflecting a 1.8 percent increase in the dividend per share.

The company repurchased $251 million of its shares in the first quarter, retiring 2.2 million shares of common stock at an average price of $114.60.  As of the end of the quarter, the company had approximately $8.4 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in August 2021.

For the trailing twelve months through first quarter 2025, after-tax return on invested capital (ROIC) was 15.1 percent, compared with 15.4 percent for the trailing twelve months through first quarter 2024.

Image courtesy Kate Spade for Target