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By Jasmine Laws
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Target has reduced its full-year sales forecast, with its CEO signaling price rises over tariffs have not been ruled out and blaming declining sales in part on backlash to rolling back diversity, equity and inclusion (DEI) efforts.
The retailer on Wednesday reduced its full-year sales forecast following a 3 percent drop in sales compared to the first quarter of last year.
Newsweek has contacted Target via email for comment.
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Why It Matters
American businesses face complicated dynamics amid rising trade barriers and polarized public reaction to certain corporate social policies. Tariffs on imported goods are expected to impact prices for everyday items and Target's changes to its DEI programs, following President Donald Trump's executive order to dismantle the federal government's own initiatives, have led to boycotts.
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What To Know
CEO Brian Cornell blamed "ongoing pressure in our discretionary business, plus five consecutive months of declining consumer confidence, tariff uncertainty and the reaction to the updates we shared on belonging in January," according to CNBC.
He indicated the retailer has not ruled out potential price increases to navigate rising operating costs tied to new tariffs, but added to reporters that such a move was "the very last resort," CNBC reported.
Target reported a nearly 3 percent sales drop in the fiscal first quarter compared to the previous year, with comparable sales down 3.8 percent.
Transactions at Target stores and online fell 2.4 percent and the average spend per visit decreased 1.4 percent.
Despite these results, the company's net income rose to $1.04 billion, or $2.27 per share, as Target controlled expenses, from $942 million, or $2.03 per share, in the year-ago period.
The company now anticipates a low decline in sales for the fiscal year, adjusting its projected earnings per share to $7–$9, from an earlier forecast of $8.80–$9.80.
Tariff Pressures and Price Increases
CEO Brian Cornell warned that price increases are a possibility if tariff costs persist.
"We have many levers to use in mitigating the impact of tariffs and price is the very last resort," Cornell said, CNBC reported.
He added the company is "contemplating a wide range of potential scenarios" and "building our plans to preserve maximum flexibility while protecting our business in the face of massive potential costs," CNBC reported.
The Trump administration imposed new tariffs, including a 25 percent levy on imports from Mexico and Canada, with some exceptions, as well as 30 percent on Chinese goods (also with exceptions). China serves as a major production hub for Target.
Walmart, Best Buy, and several other major retailers have also indicated that tariffs could force them to raise prices.
Reputation and DEI Backlash
Target had announced in January that it would roll back its DEI programs following Trump's executive order to dismantle the federal government's DEI initiatives, which he described as "radical" and wasteful."
The move sparked pushback from many customers, who viewed it as a betrayal of the company's previous commitments to promote diversity.
For instance, Reverend Jamal Bryant, a Georgia pastor, had called for a 40-day boycott of Target to coincide with Lent.
Target also fell nine places in a new poll ranking consumer trust in brands, compared to 2024. The company fell from 59th to 68th place among the 100 most well-known brands in the annual Axios/Harris Poll's new Reputation Rankings.
What People Are Saying
Brian Cornell, CEO of Target, said: "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. 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 more than a decade, kate spade for Target."
He added: "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. This morning, 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."
What Happens Next
Target plans to continue evaluating pricing and sourcing strategies as trade policy evolves, while aiming to regain consumer trust. The retailer said cost pressures from tariffs and inventory reduction will likely continue into the next quarter.
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