Target continues to battle its big-box retail rival, Walmart, for customers, but it has faced a constant stream of struggles and setbacks over the past two years that have widened the gap between the two giants.
The company’s deep post-COVID clearance of household products in 2022 weighed down profits and controversy surrounding its 2023 Pride collection and its subsequent decision to roll back DEI policies in 2025 led to boycotts, further muddying its messaging. Meanwhile, less staffing at registers and limits on self-checkout have frustrated customers, making the shopping experience less fun.
The self-inflicted pain from its policies isn’t the only problem. Customers are also shifting their buying away from discretionary purchases that have long contributed the lion’s share of Target’s sales and profits. Unlike Walmart, which generates about 60% of its sales from essentials like groceries, grocery sales account for only about 23% of Target’s revenue.
As a result, Target (TGT) has struggled to retain customers at a time when they’re increasingly turning away from items like apparel and electronics toward necessities and retailers more traditionally seen as offering the lowest prices, like Walmart.
The company’s comparable store sales at stores open at least one year declined 3.2% in the second quarter and 5.7% in the first quarter. Target will update its customer trends on Nov. 19, and Bank of America isn’t expecting much improvement.
Target struggles to win over customers
On Nov. 14, Bank of America weighed in on what Target will likely tell investors about its third-quarter performance. In a report shared with TheStreet, its analysts predicted that comp sales would once again be negative.
Target has seen foot traffic and sales at its stores slump in 2025.
In Q2, total comp store sales, including e-commerce, which grew while brick-and-mortar sales slipped, fell 1.9%. Bank of America estimates that comp sales declined 1% in the third quarter, with weakness at physical stores partially offset by ongoing e-commerce growth.
That’s not encouraging for loyal fans hoping that Target’s efforts to get people back in stores, including price cuts and new collaboration, are working.
Related: Target’s efforts to make amends with customers hit a snag
Worse, Bank of America analysts think their outlook may be too optistic, given observed credit card spending at Target during the quarter.
“Observed sales for TGT slowed in 3Q according to Bloomberg 2nd Measure data, implying downside to BofA & Street comp forecasts,” said the analysts.
Specifically, Bloomberg Second Measure data show spending declined by 1.9% in the quarter, as transactions decreased by 2% and the average transaction value increased by 0.1%. Year-over-year, sales and transactions slipped 3%.
Those figures could point toward a disappointing quarter for Target.
Target makes moves to get back on track
The bar has been set low for Target and changes could position it to return to growth in 2026.
Michael Fiddelke will officially replace long-time CEO Brian Cornell in February 2026 after Cornell announced in August he’s stepping down. Fiddelke has worked at Target for over 20 years, including as Chief Financial Officer, so I wouldn’t expect major changes to Target’s strategy. Still, new CEO’s have a tendency to put their own unique stamp on companies, and subtle changes could help Target renew some luster. The change may also be a positive given recent missteps under Cornell.
In the meantime, Target is moving to improve perceptions of it as a low-price leader, announcing in November that will reduce prices on 3,000 food, beverage & essential items.
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It’s also testing Warby Parker locations within its stores, and launched recently a collaboration with Woolrich, new wellness products, and a Kate Spade collaboration that may contribute some buzz into the holidays.
Still, those efforts may not be enough to repair its relationship with cash-strapped consumers or those frustrated by its past policy decisions. Walmart doesn’t have as much so-called baggage with consumers and Amazon and Walmart remain fierce rivals with deeper pockets that already have established themselves as go-to destinations for cost-conscious consumers.
What Target says on its earnings call this week about customer trends heading into the holidays will watched closely, given holiday shopping accounts for a significant share of its annual sales.
