Target sees near-term profit squeeze from tariffs, cautious spending

By Siddharth Cavale and Juveria Tabassum

(Reuters) -Target connected Tuesday forecast full-year comparable income beneath estimates, and said uncertainty astir tariffs arsenic good arsenic user spending would measurement connected first-quarter profits.

The Minneapolis-based retailer joined retail bellwether Walmart successful raising caution astir its expectations for the twelvemonth arsenic sticky ostentation and tariffs connected imports projected and implemented by President Donald Trump temper demand, peculiarly for the non-essential categories similar location furnishings and electronics that makes up much than two-thirds of Target's sales.

Target expects comparable income to beryllium astir level successful the twelvemonth done January 2026, compared with analysts' mean estimation of 1.86% growth, according to information compiled by LSEG. It expects net of $8.80 to $9.80 per share, mostly in-line with Wall Street's $9.31 estimate. Target said the yearly forecast does not see immoderate interaction from tariffs.

Consumers, however, proceed to beryllium stressed and astatine slightest immoderate of the sound surrounding the levies deed income successful February, a Target spokesperson said.

"The institution expects to spot meaningful year-over-year nett unit successful its archetypal quarter," it said, attributing the interaction to tariff uncertainty, arsenic good arsenic anemic request for apparel and different discretionary products during February.

"We volition proceed to show these trends and volition stay appropriately cautious with our expectations for the twelvemonth ahead," Chief Financial Officer Jim Lee said successful a statement.

The disappointing outlook whitethorn bespeak the temper of shoppers who successful January pulled backmost spending acold much than expected and showed that they are overmuch much disquieted astir the interaction of tariffs connected their wallets.

Target, successful particular, has besides faced much backlash and boycotts by its patrons for ending its diverseness and inclusion (DEI) initiatives successful January, with immoderate noting the company's estimation for inclusiveness had helped it pull a younger, much divers user base.

Foot postulation astatine Target stores dropped 6.1% connected mean from the week of January 27 done February 23, according to information from Placer.ai. Target did not notation immoderate interaction of ending its DEI initiatives successful its outlook.

For the vacation quarter, Target reported a 1.5% emergence successful comparable sales, topping estimates of a 1.3% increase, according to information compiled by LSEG.

Earnings fell 19.3% to $2.41 per share, but bushed estimates of $2.27. Gross and operating margins declined owed to higher promotions and transportation costs.

Target's shares flitted betwixt gains and losses successful premarket trading connected Tuesday. They were past up 1%.