Target Digital Sales Up 4.7% in Q1: Is Circle 360 the Real Driver?

Target Corporation’s TGT digital sales were a bright spot in an otherwise soft first-quarter fiscal 2025, marked by sluggish traffic and a decline in comparable store sales. Digitally originated comparable sales rose 4.7% year over year, reflecting a more than 35% jump in same-day delivery powered by Target Circle 360 and continued momentum in Drive Up. 

Target Circle 360 is rapidly becoming a cornerstone of Target's digital strategy. This membership offers same-day delivery with no price markups, not only on Target's own products but also on orders from more than 100 third-party retailers via Shipt. This commitment to pricing transparency provides Target with a notable competitive advantage in a market where rivals often impose hidden fees or inflate partner prices.

Unlike many retail subscription models that are confined to a single brand, Target Circle 360 broadens its appeal by bundling multiple partners, including CVS, Petco, and Lowe’s. In the first quarter, Target successfully fulfilled more than 70% of all digital orders within a day, a significant milestone attributed in part to Shipt’s expanding driver network and retail penetration.

In a quarter where overall traffic declined 2.4% and average transaction amount slipped 1.4%, Target Circle 360 stood as a growth catalyst. Target also reported a nearly 20% year-over-year improvement in delivery speed, enhancing convenience at a time when consumers are looking for value and fast delivery.

Well, Target’s digital gains came against the backdrop of a cautious consumer spending environment and highlight the growing role Circle 360 plays in offsetting those headwinds.

Target Circle 360 vs. Walmart+ & Amazon Prime

Like Target, Walmart Inc. WMT is leaning heavily into same-day delivery to drive digital growth. Walmart has expanded its Walmart+ membership, which includes free same-day delivery on various merchandise. Walmart’s store footprint, much like Target’s, supports its hybrid fulfillment model, with stores acting as local hubs. In the first quarter of fiscal 2026, Walmart’s global e-commerce sales grew 22%.

Meanwhile, Amazon.com, Inc. AMZN continues to set the pace in fast fulfillment. With its Prime membership, Amazon offers same-day or one-day delivery on millions of items, leveraging its vast logistics network. Amazon has also aggressively expanded its same-day sites near major cities to cut delivery times further.

Target’s Price Performance, Valuation and Estimates

Target stock has declined 13.7% over the past three months against the industry’s growth of 8.6%. 
 

Target’s forward 12-month price-to-earnings ratio of 12.63 reflects a lower valuation compared to the industry’s average of 33.21X. TGT carries a Value Score of B.
 

The Zacks Consensus Estimate for Target’s current financial-year sales and earnings per share implies a year-over-year decline of 1.9% and 15.2%, respectively. 
 

Target currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research