General merchandise retailer Target (NYSE: TGT) met Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 1.5% year on year to $30.45 billion. Its non-GAAP profit of $2.44 per share was 13% above analysts’ consensus estimates.
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Target (TGT) Q4 CY2025 Highlights:
- Revenue: $30.45 billion vs analyst estimates of $30.46 billion (1.5% year-on-year decline, in line)
- Adjusted EPS: $2.44 vs analyst estimates of $2.16 (13% beat)
- Adjusted EBITDA: $2.15 billion vs analyst estimates of $2.13 billion (7% margin, 0.7% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $8 at the midpoint, beating analyst estimates by 4.7%
- Operating Margin: 4.5%, in line with the same quarter last year
- Free Cash Flow Margin: 7.2%, similar to the same quarter last year
- Locations: 1,995 at quarter end, up from 1,978 in the same quarter last year
- Same-Store Sales fell 2.5% year on year (1.5% in the same quarter last year)
- Market Capitalization: $51.24 billion
"I'm incredibly proud of how our team navigated through a challenging year in 2025, as they focused on serving our guests while positioning our business for profitable growth in 2026 and beyond," said Michael Fiddelke, chief executive officer of Target Corporation.
Company Overview
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE: TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $104.8 billion in revenue over the past 12 months, Target is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth. For Target to boost its sales, it likely needs to adjust its prices or lean into foreign markets.
As you can see below, Target’s revenue declined by 1.3% per year over the last three years as it didn’t open many new stores and observed lower sales at existing, established locations.
This quarter, Target reported a rather uninspiring 1.5% year-on-year revenue decline to $30.45 billion of revenue, in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 2% over the next 12 months. Although this projection implies its newer products will catalyze better top-line performance, it is still below the sector average.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Target operated 1,995 locations in the latest quarter, and over the last two years, has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Target’s demand has been shrinking over the last two years as its same-store sales have averaged 1.4% annual declines. This performance isn’t ideal, and we’d be concerned if Target starts opening new stores to artificially boost revenue growth.
In the latest quarter, Target’s same-store sales fell by 2.5% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Target’s Q4 Results
It was great to see Target’s full-year EPS guidance top analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.9% to $117.60 immediately following the results.
Target had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
