Target Corp.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 3 March 2026: press release. Guidance figures: 4 new. The quarter’s numbers.

Read the filing

Key takeaways

• Fourth quarter sales fell 1.5 percent: Q4 net sales were $30.5 billion. Comparable sales fell 2.5 percent, with stores down 3.9 percent and digital up 1.9 percent. Source
• Full-year sales and EPS declined: Full-year net sales were $104.8 billion versus $106.6 billion. GAAP diluted EPS was $8.13 versus $8.86; Adjusted EPS was $7.57. Source
• Non-merchandise sales grew over 25 percent: Membership revenue more than doubled from a year earlier, within non-merchandise sales. Source
• Full-year gross margin fell on markdowns: Full-year gross margin fell to 27.9 percent, driven mainly by markdowns and purchase order cancellation costs, plus category mix. Source
• Transactions fell 2.9 percent in Q4: Q4 transactions fell 2.9 percent after rising 2.1 percent a year earlier. Average transaction amount rose 0.4 percent. Source
• Two senior leaders departing: Rick Gomez departs as chief commercial officer, and Jill Sando retires after 29 years. Both stay briefly to support the transition.

“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,”

Michael Fiddelke, chief executive officer of Target Corporation

Guidance

What changed from last quarter

• New guidance: 2026 expectations for net sales, operating margin and EPS given in this release; the previous release contains no 2026 figures. Source
• New: Cara Sylvester named chief merchandising officer, effective February 15, after serving as chief guest experience officer.
• New: Lisa Roath named chief operating officer, previously chief merchandising officer of food, essentials and beauty.
• Ended: Rick Gomez, chief commercial officer, departs; Jill Sando, chief merchandising officer for apparel and accessories, home and hardlines, retires.

Fourth quarter and full-year results

• Fourth quarter sales fell 1.5 percent: Q4 net sales were $30.5 billion. Comparable sales fell 2.5 percent, with stores down 3.9 percent and digital up 1.9 percent. Source
• Full-year sales and EPS declined: Full-year net sales were $104.8 billion versus $106.6 billion. GAAP diluted EPS was $8.13 versus $8.86; Adjusted EPS was $7.57. Source
• Q4 Adjusted EPS rose to $2.44: Q4 GAAP EPS was $2.30, including 15 cents of business transformation costs. Adjusted EPS was $2.44 versus $2.41 a year earlier. Source
• Interchange settlement gains excluded: Gains on Q1 2025 interchange fee settlements, net of legal fees, were $593 million pretax and $441 million after tax, and are excluded from Adjusted EPS. Source

Categories and merchandise sales

• Food, beauty and toys grew: Food & Beverage, Beauty and Toys grew in Q4, and Essentials and Home trends were stronger than in the third quarter. Source
• Full-year food sales rose: Food & beverage was $24,136 million for the year versus $23,828 million. Hardlines was $15,800 million versus $15,784 million. Source

“Target saw a healthy, positive sales increase in February, serving as an important milestone on our path back to growth this year, and reinforcing my confidence in the momentum we’re building and the future we’re creating together.”

Michael Fiddelke, chief executive officer of Target Corporation

Non-merchandise and advertising growth

• Non-merchandise sales grew over 25 percent: Membership revenue more than doubled from a year earlier, within non-merchandise sales. Source
• Roundel and marketplace grew: Roundel advertising grew at double-digit rates, and marketplace grew over 30 percent. Source

Margins, costs and tax rate

• Q4 gross margin rose to 26.6 percent: Q4 gross margin rose on lower inventory shrink, lower supply chain and digital fulfillment costs, and higher advertising and other revenue. Source
• Full-year gross margin fell on markdowns: Full-year gross margin fell to 27.9 percent, driven mainly by markdowns and purchase order cancellation costs, plus category mix. Source
• Adjusted operating margin fell for year: Full-year Adjusted operating income margin was 4.6 percent versus 5.2 percent. Q4 was 4.8 percent versus 4.7 percent. Source
• SG&A rate rose on lower sales: Full-year Adjusted SG&A expense rate was 20.9 percent versus 20.6 percent, while adjusted SG&A expense dollars were lower than in 2024. Source
• Q4 tax rate lower on credits: Q4 effective income tax rate was 20.1 percent versus 21.5 percent, reflecting additional tax credits. Source

“These leadership changes align the right talent and expertise with key roles, and simplify our structure so we can advance our strategy with greater speed, clarity and accountability.”

Michael Fiddelke, new CEO

Traffic and transaction trends

• Transactions fell 2.9 percent in Q4: Q4 transactions fell 2.9 percent after rising 2.1 percent a year earlier. Average transaction amount rose 0.4 percent. Source
• Sales and traffic accelerated late in quarter: Management said sales and traffic trends accelerated over the last two months of the quarter. Source
• Full-year comparable sales fell: Full-year comparable sales fell 2.6 percent, with new stores and non-merchandise sales partly offsetting the decline. Source

Cash flow, debt and shareholder returns

• Dividends rose on higher per-share rate: Q4 dividends were $516 million versus $513 million. Dividend per share rose 1.8 percent, partly offset by a lower average share count. Source
• No shares repurchased in Q4: No shares were repurchased in Q4. About $8.3 billion remained under the August 2021 repurchase authorization at year end. Source
• Full-year buybacks fell to $408 million: Full-year stock repurchases were $408 million versus $1,007 million. Dividends paid were $2,053 million versus $2,046 million. Source
• Operating cash fell, capex rose: Cash from operations was $6,562 million versus $7,367 million. Capex was $3,727 million versus $2,891 million. Year-end cash was $5,488 million; debt additions were $1,984 million. Source
• After-tax ROIC was 13.8 percent: Trailing twelve-month after-tax ROIC was 13.8 percent versus 15.4 percent. Interchange and transformation items had a net favorable effect of 0.8 percentage points. Source

Strategy and transformation spending

• Four priorities named by management: Management named merchandising authority, an elevated shopping experience, technology use, and investment in team and communities as priorities. Source
• Same-day delivery grew over 30 percent: Same-day delivery through Target Circle 360 grew over 30 percent in the quarter. Source
• Transformation costs excluded from Adjusted EPS: Business transformation costs were $89 million pretax in Q4 and $250 million for full-year 2025, and are excluded from Adjusted EPS. Source

Leadership changes and transitions

• Sylvester leads single merchandising function: Sylvester is the single merchandising chief, expanding authority in style and design across merchandising, product development, assortment and partner collaborations.
• Roath takes operations scope: Roath, as chief operating officer, will scale the style and design focus across the full operation, with an aim of faster, more efficient execution.
• Two senior leaders departing: Rick Gomez departs as chief commercial officer, and Jill Sando retires after 29 years. Both stay briefly to support the transition.

Coming up, as management said on 3 March 2026

• Search for guest experience officer: Company is conducting an external search for a chief guest experience and marketing officer as leaders transition.

Figures management reported

Risks management discussed

• External: Higher product and import costs partly offset merchandising gains in Q4 gross margin. Source
• Financial: Net interest expense rose to $99 million in Q4 and $445 million for the year, reflecting higher average debt. Source
• Regulatory: Full-year effective tax rate was 22.3 percent versus 22.2 percent, reflecting discrete tax expenses and global tax minimums. Source
• Operational: Discrete items in past periods included gains and losses such as asset impairments and severance, and guidance does not reflect them. Source

Earlier plans management reported on

• Met: Management stated Q4 net sales were in line with company expectations, matching the February confirmation. Source
• Met: Management stated full-year Adjusted EPS of $7.57 was in line with company expectations, consistent with the February confirmation. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q3 FY2025 results
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.