Target Hits Rock Bottom: Can New CEO Turn It Around?

Target Faces Its Toughest Challenge

Target Corporation (TGT), once a retail powerhouse, has officially hit rock bottom in 2025. The retail giant is grappling with plummeting sales, slashed profit forecasts, and a significant stock decline as it enters the critical holiday season. With a new CEO at the helm, Target is betting on aggressive investments and technological innovation to reverse its fortunes.

Plummeting Profits and Stagnant Sales

Target's recent financial performance paints a grim picture. In the third quarter of 2025, the company reported a 2.7% decline in comparable sales, marking the third consecutive quarter of falling same-store sales. Overall revenue dropped to $25.27 billion, falling short of analyst expectations. Net income plunged approximately 19% to $689 million.

The retailer also significantly cut its full-year adjusted earnings guidance, projecting earnings per share between $7 and $8 – down from the previous range of $7 to $9. This comes as shoppers, strained by inflation, become increasingly frugal, prioritizing essentials and value-oriented purchases over discretionary items.

Mounting Competitive Pressure

Target's struggles are rooted in an increasingly competitive retail landscape. Shoppers are flocking to Walmart, Amazon, and TJ Maxx, perceiving these retailers as offering better prices and deals. Target's traditional positioning in the "cheap chic" clothing and home decor segment no longer resonates with value-conscious consumers.

"Target is really struggling and does not seem to be able to climb out of the hole it has dug itself into," noted Neil Saunders, an analyst at GlobalData Retail.

Brand Image Woes

Beyond economics, Target faces significant brand challenges. Earlier this year, the retailer's decision to scale back some diversity, equity, and inclusion (DEI) programs sparked intense customer backlash. Supporters of DEI felt blindsided, leading to online protests and, according to Target, directly contributing to weaker sales figures. This reputational damage has further alienated a segment of its customer base.

New Leadership and Strategic Shifts

In a move signaling a major shake-up, long-serving CEO Brian Cornell announced his departure in August, to be replaced by current Chief Operating Officer Michael Fiddelke effective February 1, 2026. Fiddelke, a longtime insider, has outlined three key priorities: rebuilding Target's reputation for stylish merchandise, ensuring a consistent shopping experience, and leveraging technology.

Target is responding to its crisis with significant investments:

• Price Cuts: Reduced prices on 3,000 everyday food and household items.
• Store Revamp: A 25% increase in capital expenditures to $5 billion for store remodels and upgrades.
• AI Integration: Partnering with OpenAI to launch shopping within ChatGPT, allowing customers to browse and purchase items directly through the platform.

Holiday Season: A Make-or-Break Test

Heading into the crucial fourth quarter, Target is pinning its hopes on an expanded holiday assortment. The retailer is offering 20,000 new holiday items – double last year's number – with over half being exclusive to Target. Strategic pricing on key items (e.g., $1 ornaments, $5 candles, $10 blankets) aims to attract budget-conscious shoppers. Exclusive collaborations, like a special Starbucks drink, are also part of the strategy.

"We are focused every day on making the right investments and the right decisions to get Target back to growth as quickly as possible," Fiddelke stated. However, the company still expects fourth-quarter sales to decline by a low single-digit percentage.

The Road Ahead: Long Road to Recovery

While Target is acting with unprecedented urgency, analysts remain skeptical. The retailer faces the monumental task of regaining customer trust, differentiating itself from fierce competitors, and proving its strategic pivots can translate into sustainable sales growth. The holiday performance will be a critical early indicator of whether Target's new direction can successfully pull it out of its prolonged slump and back towards profitability. The question now is not just if, but when, Target can climb out of its hole.