Target's Retail Media & Marketplace Tech Unlock Profit Streams

Retail transformation at Target Corporation TGT is entering a new phase, with retail media and marketplace technology unlocking powerful profit streams. In its third-quarter fiscal 2025 earnings call, management highlighted that while comparable sales remain under pressure, its digital ecosystem is accelerating. Beyond first-party sales, Target is building a high-margin, asset-light growth engine that complements its core merchandising business and supports long-term profitability.

A central pillar of this strategy is Roundel, Target’s retail media network. In the third quarter, Roundel delivered mid-teens growth in ad sales, driven by rising advertiser demand for Target’s first-party data and closed-loop measurement tools. Leveraging insights from its expansive Target Circle loyalty platform, the company enables precise targeting, personalized campaigns and measurable returns for brand partners. This margin-accretive revenue stream not only strengthens vendor relationships but also helps offset softness in discretionary categories.

Equally important is the momentum within Target Plus, the company’s curated third-party marketplace. Gross merchandise value jumped nearly 50% year over year in the fiscal third quarter, reflecting strong seller adoption and growing guest engagement. By selectively onboarding marketplace partners, Target expands its assortment without assuming inventory risks. The capital-light model broadens product choice, drives digital traffic and generates incremental revenues through commissions and advertising while maintaining brand integrity.

These digital engines reinforce one another. Marketplace sellers fuel retail media demand by investing in Roundel ads to increase product visibility. At the same time, fulfillment capabilities, now reaching more than 80% of U.S. households with same-day delivery, enhance the ecosystem’s appeal.

As Target plans $5 billion in capital expenditure for fiscal 2026, retail media and marketplace technology stand at the core of a scalable, high-margin growth strategy poised to power sustainable profitability.

Here’s What Latest Metrics Say About Target

TGT, which competes with Dollar General Corporation DG and Costco Wholesale Corporation COST, has seen its shares rally 39.4% in the past three months compared with the industry’s growth of 14.2%. Meanwhile, shares of Dollar General have jumped 48.7% and Costco has gained 11.3%.

From a valuation standpoint, Target’s forward 12-month price-to-earnings ratio of 14.96 reflects a lower valuation than the industry’s average of 33.34. TGT is trading at a discount to Costco (with a forward 12-month P/E ratio of 46.75) and Dollar General (21.11).

The Zacks Consensus Estimate for Target’s current fiscal-year sales and EPS implies declines of 1.6% and 17.6%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates an 2.2% rise in sales and 6.4% growth in earnings. The consensus estimate for EPS for the current fiscal year has increased 1 cent to $7.30 over the past 60 days, while for the next fiscal year, it has improved by 2 cents to $7.77.

Target currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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