Target Shatters Low Earnings Expectations as Stock Prices Nosedive

Target just pulled off the ultimate retail magic trick—beating rock-bottom expectations while simultaneously watching its stock get absolutely hammered.

Wall Street's Low Bar Olympics

Analysts set the bar so low a caterpillar could've tripped over it—and Target still managed to stumble over it with grace. The company technically 'beat' forecasts, but shareholders responded by dumping shares faster than a hot potato in a bear market.

The Great Expectations Game

Another quarter, another masterclass in corporate expectation management. When everyone expects disaster, merely surviving looks like victory—unless you're holding the bag of plummeting shares. The street's reaction proves that beating expectations means nothing when those expectations were already six feet under.

Another reminder that 'beating expectations' is Wall Street's favorite participation trophy—everyone gets one eventually, even if your stock performance belongs in the bargain bin.

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].