US retailer Target has reported net sales of $25.2bn for the second quarter (Q2) of 2025, a 0.9% decrease year-on-year (YoY).
The decline is attributed to a 1.2% decline in merchandise sales, somewhat cushioned by a 14.2% rise in non-merchandise sales.
When compared with the first quarter of 2025, the Q2 2025 net sales saw an almost two percentage point improvement. There was a significant improvement in both traffic and sales trends compared to the first quarter, especially in physical stores.
Net earnings for the Q2 2025 stood at $935m, a 21.5% decline YoY.
The company reported a generally accepted accounting principles (GAAP) and adjusted earnings per share (EPS) of $2.05, a decrease from $2.57 in 2024.
Target chair and CEO Brian Cornell stated that the second quarter earnings showed “encouraging signs of recovery, including improved traffic and sales trends — particularly in our stores — and disciplined cost management in a challenging retail environment.”
“As we enter the critical back-to-school and holiday seasons, our team remains focused on consistent execution and building momentum as we look ahead to the new year."
The retailer experienced a 1.9% drop in comparable sales in Q2 2025, influenced by a 3.2% decline in comparable store sales, which was partially mitigated by a 4.3% increase in comparable digital sales.
Operating income for the latest second quarter was $1.3bn - a 19.4% reduction from the previous year.
The operating income margin rate for the second quarter was 5.2%, down from 6.4% in 2024.
The gross margin rate also saw a decrease to 29% in Q2 2025 from 30% in Q2 2024, reflecting the combined effects of higher markdown rates, purchase order cancellation costs and category mix pressures, offset by lower inventory shrink and growth in advertising and non-merchandise sales.
Target maintains its forecast of a low-single digit decline in sales for fiscal 2025, with GAAP EPS between $8 and $10.
Adjusted EPS is anticipated to be between $7 and $9, excluding gains from litigation settlements in the first quarter.
Target has also announced a forthcoming change in leadership. Michael Fiddelke, its chief operating officer, has been unanimously elected by the board of directors to succeed Brian Cornell as CEO from 1 February 2026. Cornell will transition to the role of executive chair of the board of directors.
