Why Target (TGT) Shares Are Getting Obliterated Today

What Happened?

Shares of general merchandise retailer Target (NYSE:TGT) fell 5% in the morning session after the company reported weak first-quarter 2025 results with sales and earnings falling below Wall Street expectations. 

The weak performance was due to a 5.7% drop in in-store sales (weaker traffic) and softer demand across key categories like apparel and home furnishings. 

Adding to the weakness, the company cut its full year sales outlook due to tariff uncertainty. Also, its full-year EPS guidance missed and was projected to drop significantly from the previous year's level. Overall, this was a softer quarter.

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What The Market Is Telling Us

Target’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 22.4% on the news that the company reported weak third-quarter results. Despite a modest increase in comparable sales driven by strong guest traffic and digital sales, same-store sales declined by 1.9%, reflecting a drop in in-store purchases. 

Profitability also came under pressure, as gross margin fell slightly due to higher supply chain and fulfillment costs. This, combined with elevated operating expenses, contributed to a significant EPS miss. 

Additionally, Target's full-year EPS guidance was reduced and missed significantly, further disappointing investors. 

Management called out "unique challenges and cost pressures that impacted our bottom-line performance." Overall, this was a surprisingly bad quarter.

Target is down 32.5% since the beginning of the year, and at $92.64 per share, it is trading 42.4% below its 52-week high of $160.69 from October 2024. Investors who bought $1,000 worth of Target’s shares 5 years ago would now be looking at an investment worth $780.54.

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