Markets
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Helena Cheng

Target sinks on expense concerns despite Q1 earnings beat

Target shares are sinking in volatile early Wednesday trading, erasing its premarket gains as investor anxiety over rising corporate overhead and tightening profit margins appeared to overawe strong Q1 earnings results that beat Wall Street estimates.

Key numbers:

  • Revenue of $25.44 billion (estimate: $24.11 billion).

  • Adjusted earnings per share of $1.71 (estimate: $1.43).

  • Same-store sales growth of 5.6% (estimate: 1.85%).

Target’s headline numbers signaled a clear, if partial, comeback story with 6.7% net sales growth, breaking a yearlong slump. The company also raised its full-year sales growth forecast to 4.0% compared with 2025, double its previous forecast of 2% growth. The company now projects annual EPS to land at the high end of its $7.50 to $8.50 range, beating the $8.10 consensus estimate from Wall Street.

However, Target’s operational expenses climbed to 21.9% of its total revenue last quarter, up from last year, with the company citing “higher compensation costs” and “higher marketing expense” to explain the jump. These rising costs were only partially offset by the boost from Target’s strong sales growth.

“While we have momentum, we’re also being cautious about the near-term operating environment,” said Michael Fiddelke, CEO of Target. “With consumers weighing multiple headwinds and tailwinds, and recent dips in consumer sentiment, we continue to place a premium on flexibility, not wanting to swing too hard too quickly, despite the early signs of momentum we’re seeing.”

This is the first earnings report under the newly appointed CEO, who officially took the helm in February and who’s focused on enhancing operational efficiency amid a prolonged retail sales slump.

Target yesterday announced that it tapped former Walmart exec Jeff England as chief supply chain officer to optimize inventory and delivery, part of a wider $6 billion turnaround. The retailer is also overhauling its beauty, baby, and apparel categories through exclusive Parke and “Pokémon” partnerships, though margins remain sensitive to inventory markdowns and labor costs.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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