Target Inc (NYSE: TGT) says its sales were down last month as consumers reacted to the new government’s plans of raising tariffs on China, Mexico, and even the European Union.
The retail behemoth is fully committed to controlling prices in the wake of increased tariffs.
But the company relies heavily on Mexico for fruits and vegetables, which is why “the consumer will likely see price increases” across these categories in the coming days, according to its chief executive.
Target stock is inching down in premarket as concerns of what lies ahead for the retailer overshadowed strength in its recently concluded quarter on Tuesday.
How much is Target exposed to Trump tariffs
Target has been focusing on diversifying its supply chain in recent years to better prepare for any potential changes in tariffs.
The retail giant currently sources about half of the goods it sells from within the United States.
It has trimmed lowered its reliance on China in recent years from more than 60% to 30% only and is committed to cutting it further to 25% moving forward.
This will enable Target to continue to deliver “great value to the consumer” and will “serve us well” through the remainder of 2025, Brian Cornell – the company’s chief executive told CNBC today.
Target stock is still down close to 20% versus its year-to-date high at writing.
TGT chief executive sounded bullish for the longer term
Investors should note that the first quarter of a new year tends to be soft for retailers as consumer rein in spending after the holiday season.
Over the longer term, Target will “build on the momentum we’ve seen in recent months,” its chief executive added on CNBC’s “Squawk Box”.
That said, the New York listed firm continues to expect weakness in its full-year sales.
The metric, it told investors today, will inch up 1.0% only versus analysts’ forecast for a 2.6% increase.
TGT guided for $9.30 a share of earnings in 2025 today that also came only in line with expectations.
Should you buy the post earnings dip in Target stock
On the plus side, Target came in well ahead of Street estimates in its fiscal fourth quarter.
The company earned $2.41 a share on $30.92 billion in revenue. Analysts, in comparison, were at $2.26 per share and $30.82 billion, respectively.
On the CNBC interview, chief executive Brian Cornell particularly touted the retailer’s strong performance in digital.
He attributed part of the Q4 strength to Target Plus as well.
Despite the potential impact of tariffs and Target’s own guidance that failed to impress on Tuesday, Wall Street remains bullish on the retail stock.
The consensus rating on TGT shares currently sits at about $145 that translates to more than 25% upside from current levels.
Target stock does also pay a healthy dividend yield of 3.91% at writing.
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