Target announced a sweeping Target recovery plan as it works to stabilize weakening sales and regain momentum in a soft consumer environment. The Target recovery plan includes a renewed focus on modernization, new store investments, and expanded digital capabilities. The Target recovery plan aims to reposition the retailer for long-term competitiveness amid shifting shopping habits.
Executives revealed the strategy after the company posted a larger-than-expected decline in comparable sales for the third quarter. The drop extended a three-quarter streak of declining sales. Shares slipped during morning trading, adding to a steep year-to-date loss that surpassed 30 percent.
Incoming CEO Michael Fiddelke outlined the company’s next steps during the quarterly call. He officially assumes the top role in February. Leaders said Target will direct about $1 billion in new spending toward store openings, remodels and digital operations in 2026. They expect the changes to streamline operations across both physical and online channels.
Target is testing a revised operating model in 35 markets. Under the new design, specific stores will handle online order picking and packing. Other stores will focus exclusively on in-store service. Executives believe the model will reduce workload imbalances and speed up fulfillment.
The company also introduced new tools to enhance efficiency. Teams now use digital systems to accelerate stocking and unloading tasks. These changes free employees to focus more on customers. For online shoppers, Target rolled out an AI-powered gift finder to support the holiday season. Leaders also said machine-learning systems improved inventory accuracy and increased availability for top items.
Fiddelke previously reduced corporate headcount by 1,800 roles to trim costs and simplify workflows. Analysts said the new CEO has shown early urgency despite formally taking over next year.
The company continues to operate under pressure from inflation, tariff concerns, and reduced government benefits following a lengthy federal shutdown. These trends have restrained discretionary spending. Comparable sales fell 2.7 percent in the third quarter, missing projections. Weakness also spread across other major retailers tied to home improvement and discretionary categories.
Despite the sales decline, Target maintained its outlook for low-single-digit sales reductions during the holiday quarter. Executives trimmed the upper end of their earnings forecast due to lingering volatility. Analysts noted the wide earnings range and pushed for more clarity. Leadership said shifting consumer patterns required a flexible forecast.
Target reduced prices on 3,000 staple items in November to attract budget-conscious shoppers. It also launched a lower-cost Thanksgiving meal kit. These actions aim to secure holiday traffic amid cautious spending trends.
Target reported earnings of $1.78 per share for the quarter, beating expectations. Revenue declined 1.6 percent to $25.27 billion. Executives said they will continue adjusting strategy as they pursue stability throughout 2024 and prepare for heavier investments in 2026.
For more business updates, visit DC Brief.
