- Target reported sliding sales in its first quarter to May 3.
- CEO Brian Cornell said sales “fell short of our expectations” in a “highly challenging environment.”
- Executives did not say if tariffs would lead to price rises.
Target sales fell sharply in the three months to May 3, in a period marked by its decision to roll back DEI initiatives in January.
In an earnings call Wednesday, Target CEO Brian Cornell said the reaction to the DEI changes was one of several “additional headwinds” that had an adverse impact on sales, but the company could not quantify the amount.
Business Insider reported in March that consumer analytics firm Numerator found customer foot traffic and market share had shifted from Target to Costco, particularly among shoppers who value DEI.
On an earlier media call, Target executives declined to comment on DEI-related consumer boycotts or say whether tariffs would mean price rises.
Comparable sales fell by 3.8%, store traffic was down 2.4% and average transaction size decreased 1.4%.
Store-originated sales declined 5.7% and were partially offset by 4.7% growth in digital sales, led by a 36% surge in same-day delivery via Target Circle 360.
Target is “looking at ways to mitigate some of those price changes,” Cornell said. Sourcing more products from the US rather than China was a potential solution to absorb tariff-related price increases.
“So there’s certainly items that are being reduced. Some will go up,” he said.
Target now expects a low-single-digit decline in sales for the full year.
Stock fell more than 4% in premarket trading and was down 28% this year at Tuesday’s close.
It also announced an “acceleration office” led by former CFO Michael Fiddelke aimed at speeding up strategic execution and reversing recent declines.
Amy Tu, the chief legal and compliance officer, and the Christina Henningon, chief strategy and growth officer, are both leaving the company.
Net income rose $62 million to $1.04 billion.
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