Since the first day of 2020, even including dividends Target stock has declined 17%. That performance is obviously disappointing on an absolute basis, but it looks much worse when compared to some of the company’s biggest peers.
Over the same time period, Costco stock has returned 280%. Shareholders in both Walmart and Kroger have made over 160%. Amazon shares have more than doubled.
It’s obviously been a hugely volatile decade for U.S. retail – but as those stock prices show, that volatility has also created substantial opportunity.
Major retailers have had an opportunity to consolidate market share and take pricing. Target clearly hasn’t taken advantage.
Its adjusted net income, at the midpoint of guidance for this fiscal year, will rise about 10% total in six years (lower than the rate of inflation over the period). On the same basis, Walmart earnings should jump more than 40%. Profits are dropping this year, as Target focuses on price, manages tariffs, and further invests in its stores and its supply chain.
Headwinds Hit Retailers
Certainly, the external environment is a significant headwind at the moment. Target executives called out declining consumer confidence, and they’re not alone in seeing the market that way.
Walmart CFO John Rainey put it simply on his company’s earnings call: “the consumer is pressured”. His counterpart at Amazon, Brian Olsavsky, cited the “uncertainty of consumer demand”; indeed, “uncertainty” was the word of the quarter in the sector (and much of the market). Each company called out the impact of tariffs; Walmart even received a public rebuke from President Trump for disclosing that it would have to raise prices in response to the trade war.
The external environment alone doesn’t explain the problem, however. Walmart is guiding for sales growth of 3% to 4% this year (though, in keeping with the tenor of the moment, its disclaimer ahead of the outlook added a note that the guide is “subject to substantial uncertainty”. Costco reports next week, but analysts (who have access to granular data) expect sales growth near 8% both in the current quarter (ending May) and for the fiscal year (ending August).
In contrast, Target expects sales to decline, even with further investments behind the business, with no improvement expected until fiscal 2026 at the earliest.
In that context, it’s not a surprise that Target stock hit its lowest level in nearly six years this month. The verdict from the market is clear: Target has fallen behind its rivals. At an investor event in late February, CEO Brian Cornell seemed to acknowledge that sentiment. In his opening remarks, Cornell cited three questions the company planned to answer. The first was simple: “What is Target’s unique place in retail?”
It’s not surprising that Cornell led with that question. It’s a hugely important question — and, right now, investors clearly are not confident in the answer.
Feels Like Old Times for Target
Target isn’t the low-price leader; that is Walmart. It has a big food business — 22% of revenue last year came from food and beverage — but it’s not actually a grocery store like Kroger. It doesn’t have the biggest assortment. It’s not a digital leader (Amazon, obviously, and Walmart both seem to be ahead). It is a unique model, perhaps, but it’s not a model that necessarily seems guaranteed to have a place in the modern retail environment. Indeed, even before the disappointing Q1 release, that event did not stem the decline in Target stock; Cornell did not convince investors that Target had a viable path to a turnaround.
But it is worth noting that Target has been here before. In February 2017, Target issued a disappointing outlook for its coming fiscal year. The stock dropped 12%, its biggest one-day drop since the onset of the financial crisis. After the quarter, Target’s own management admitted the company had significant work to do. Cornell said on the earnings call that “in all candor, 2016 was not our best year” and promised aggressive pricing reductions and store remodels to better keep pace with Walmart, in particular.
Investors were not convinced: within months, Target stock was at a five-year low. Its strategy to fix weak revenue performance seemed to be to simply give up profit and cash flow by investing in price and in stores. That hardly seemed like enough, particularly at the same time Target seemed to be falling behind on the digital front. As the Wall Street Journal reported, a Credit Suisse analyst at the time noted that “it is unclear if there is a winning strategy at this point given how far behind [Target] is from competitors” including Amazon and Walmart.
The similarities between February 2017 and May 2025 are striking: the stock price near a multi-year low, management on the defensive, costs rising faster than sales.
Investors are questioning Target’s long-term strategy, potential relevance, and competitive position.
New Business Strategy: Tap into Trends
In both 2017 and now, Target management’s response to the challenges simply seemed to be a promise to do better; those promises are always shaky when they come from executives leading a company that hadn’t done well enough in the first place.
It’s worth remembering, however, that in 2017 Target management was actually right. Performance started to pick up toward the end of the year, and in 2018 Target posted its best same-store sales performance in thirteen years. The grocery business picked up; Target successfully played catch-up in digital. Target stock (again, including dividends) returned 140% in less than three years (against just 79% for Walmart).
Indeed, the company entered this decade with a seeming answer to Cornell’s question, perhaps the same answer he gave this year: “We’re the place [consumers] go to discover on-trend, affordable products that they can’t find anywhere else.”
For last decade, investors didn’t believe in that answer, and Target proved them wrong. We’ll see if Cornell and his team can do it again this decade.
Vince Martin is an analyst and author whose work has appeared on multiple financial industry websites for more than a decade; he’s currently the lead writer for Wall Street & Main. He has no positions in any companies mentioned.
The Food Institute Podcast
It’s tariff time, and companies the world over are working to better understand how their operations will be impacted. Jodi Ader from RSM US LLP joined The Food Institute Podcast to discuss which products and inputs are currently subject to tariffs, and how to best mitigate supply chain risks.
