By Savyata Mishra and Juveria Tabassum
March 3 (Reuters) – Target’s new CEO Michael Fiddelke pledged to restore annual sales growth, betting on a plan to spend billions to remodel stores, improve the customer shopping experience and speed up deliveries to turn around the struggling retailer.
Shares of the Minneapolis-based company rose nearly 7% to a one-year high of $120.84 on Tuesday. The stock shed nearly 28% of its value in 2025, a turbulent year for Target as it grappled with persistent weakness in spending on non-essential items such as apparel and home furnishings.
Fiddelke, expanding on Target’s November target to lift annual capital spending to $5 billion, told investors the company would spend more than $2 billion across the business this year — including $1 billion for new stores and remodels and another $1 billion aimed at improving the overall guest experience.
Merchandising chief Cara Sylvester laid out a sharper merchandising strategy, including an overhaul of 75% of decorative accessories, a relaunch of its Threshold home brand, faster product cycles for trendy apparel, and plans to introduce a new Target Beauty Studio in 600 stores later this year.
The company has relied on discretionary categories to drive nearly a third of its annual sales, more than rivals, but the business has become a persistent drag amid uncertain economic conditions, prompting shoppers to curb spending.
“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,” Fiddelke said.
NEW CEO OFF TO A ‘SMART’ START
Under Fiddelke, Target is focusing on revamped merchandising and store-experience upgrades to coax shoppers back. The company had pledged about $1 billion more in 2026 for new stores, remodels and improving same-day deliveries, as well as store order pick-ups.
The company expects 2026 net sales growth of 2%, its first rise following three years of declines, compared with analysts’ expectations of a rise of 1.76%, according to data compiled by LSEG.
Target projected full-year earnings per share in the range of $7.50 to $8.50, largely above estimates of $7.67 per share.
“After the guidance cut cycle Target went through, Fiddelke is smart to keep the bar low and let execution do the talking,” Ethan Feller, stock strategist at Zacks Investment Research said.
Fiddelke’s appointment was met with investor skepticism, as he was taking over from company veteran Brian Cornell, inheriting a business that was struggling with several consecutive quarters of sluggish sales, and consumer backlash over Target’s diversity, equity and inclusion initiatives.
The company has since focused on controlling costs by cutting 1,800 corporate roles in October, two months after naming Fiddelke as Cornell’s successor. It said it will put more money into in-store labor, to tackle messy shelves and long checkout lines that have pushed shoppers away.
Target’s latest results suggest the turnaround under its new CEO is beginning to gain traction, said Brian Mulberry of Zacks Investment Management, but he noted that sales are still under strain and the longer-term recovery depends on Target drawing more shoppers back into its stores, with sustained traffic gains.
BEAUTY AND FOOD SEGMENTS A BRIGHT SPOT
Target’s comparable sales for the fourth quarter were propped up by resilient demand in beauty and food-and-beverage. The retailer has been leaning into everyday essentials, expanding its beauty offerings and deploying sharper promotions to draw in value-focused shoppers despite persistent softness in discretionary spending.
“To drive sustained momentum, the team will need to convince the street that the changes they’re making today will enable them to better compete with the likes of Walmart/Amazon, resulting in more consistent top-line performance,” RBC analyst Steven Shemesh said.
Sales in beauty, a bright spot over the last several quarters, rose 1.1% from a year earlier, while sales of food and beverages were 1.8% higher in the quarter.
Fiddelke – who in his last role led an effort to remove complexity and expand the use of technology at Target – is also expected to accelerate the retailer’s online business, an area where rival Walmart has been steadily gaining share.
Meanwhile, Walmart last month posted an upbeat quarter, as investments in online delivery and its push to keep prices low drew shoppers during the holiday quarter. It, however, issued a conservative outlook for the coming year, reflecting the fragile state of the U.S. consumer.
Target’s total comparable sales – from online channels and stores open for at least 13 months – declined 2.5% for the three months ended January 31, steeper than analysts’ average estimate of a 2.4% drop.
Adjusted earnings came in at $2.44 per share, handily beating estimates of $2.16 per share.
(Reporting by Savyata Mishra and Juveria Tabassum in Bengaluru; Editing by Anil D’Silva and Nick Zieminski)
