Target Shatters Rock-Bottom Earnings Expectations Despite Ongoing Sales Plunge

Another quarter, another earnings miracle—Target just pulled off the retail equivalent of alchemy by turning declining sales into profit beats.

Beating the Lowest Bar

Wall Street set expectations so low you'd need a shovel to find them—and Target still managed to dig its way out. Sales keep dropping, but somehow the bottom line didn't implode. Classic case of expectations management outperforming actual business performance.

The Real Story Behind the Numbers

Cost-cutting measures and inventory magic did the heavy lifting here. They're trimming fat everywhere except the executive bonus pool—because nothing says 'operational excellence' like rewarding C-suite while same-store sales bleed out.

Finance's Favorite Magic Trick

Another earnings season, another masterclass in how to lower expectations so dramatically that 'beating' them requires nothing more than showing up. The Street eats it up every time—maybe they should try shopping at Target instead of just trading it.

Earnings analysis

• Second quarter net sales: -0.9% year over year to $25.2 billion, vs. estimates for $24.53 billion

• Gross profit margin: 29% vs. 30% a year ago, vs. estimates for 28.08%

• Diluted earnings per share: -20.2% year over year to $2.05, vs. estimates for $2.01

• Comparable sales: -1.9% year over year, vs. -3.14% estimate (Last year, comparable sales rose 2%.)

  • Digital comparable sales: +4.3%

What else caught our attention

• Inventory rose +2.2% from the year-ago period (estimates: +3.44%).

• The company didn't repurchase any stock in the quarter; $8.4 billion remains available to repurchase under a prior authorization.

• The number of transactions fell 1.3% in the quarter, and the average transaction amount dropped 0.6%.

• Full-year earnings per share are projected to be $7 to $9 (fiscal year 2024: $8.86), compared to estimates of $7.28. Comparable sales down by a low-single-digit percentage.

  • Previous guidance (May): $7 to $9; low-single-digit percentage drop in comp sales.

  • Original 2025 guidance: $8.80 to $9.80.

Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].