Target stock and sales fall as CEO Brian Cornell contract ends

Shortly before a road trip in early 2024, Mary Molina realized her view of Target had changed.

Molina, a mother of five and entrepreneur who lives in Westchester, New York, said her weekly trips to Target looked and felt different from her experience before the Covid pandemic. Items such as national brands of laundry detergent or shampoo were often out of stock. She said store employees weren’t as friendly as before, with heads down or eyes glued to a handheld device as they picked orders for an online shopper. And when she browsed for the cute and trendy swimsuits, pajama sets or sandals she had typically found at Target, she said it felt like “a sea of generic.”

“It was a small evolution, and then one day, my husband said, ‘Let’s stop at Target and then we’ll go to Rhode Island,'” she said of preparing for the road trip. “And I said, ‘What for?'”

Molina and customers like her reflect a fading loyalty to Target that’s testing its business model and slowing its sales.

The retailer, which gained a loyal following over decades for its quirky, progressive and chic approach to big-box retail, now appears stuck as it tries to grow again and bounce back from lower store traffic, inventory issues and customer backlash. Shares of Target have fallen about 61% since their all-time high in late 2021. That peak came after Target’s sales rose more than $15 billion in the fiscal year following the start of the Covid pandemic, but its annual revenue has stagnated for the past four years. And Target said in May that it expects sales to fall this year.

Target leaders have described the weaker performance as a blip, pointing to higher inflation or other temporary factors, and expressing confidence in its long-term strategy. In May, Target said sluggish sales resulted from weaker discretionary spending, uncertainty about President Donald Trump’s tariffs and backlash to its decision to roll back key diversity, equity and inclusion efforts.

But customers, former employees, vendors and analysts painted a picture of a company at an existential crossroads. In interviews with CNBC, they attributed Target’s struggles to the weakening of unique traits that helped the retailer stand out, including its eye-catching merchandise, attentive staff, well-kept stores and commitment to celebrating diversity through both the items that it sold and the policies it supported.

Multiple former employees, who asked not to be identified because they weren’t authorized to speak publicly on the matter, said Target’s store standards have slipped in recent years as the company has tried to juggle online and in-store businesses with a leaner store staff — leading to items being out of stock. Customers and analysts also told CNBC they have seen longer checkout lines, messier aisles and fewer employees at stores. Plus, former employees said Target’s sharp turn away from diversity efforts, along with cost cuts, hurt corporate culture and employee morale.

“They have kind of lost their identity,” said a former employee, who worked for the company for nearly a decade but left recently to work for a competing retailer.

The bulk of the work to turn Target around will likely fall to a new chief executive. CEO Brian Cornell is 66 years old, and in September 2022, Target said he agreed to stay in the role three more years. The company has not disclosed when that contract expires or named his successor.

Investors have speculated about who will lead the company after Cornell — and what that internal or external pick may mean for the company’s future.

Cornell took the helm at Target in 2014, another troubled time in the company’s history. He started as CEO after ex-CEO Gregg Steinhafel resigned following a data breach that compromised the personal information of as many as 110 million people — equivalent to roughly 1 in 3 Americans at the time.

Target said it believes it can rebound again from its current low point, as it invests in store renovations and plans to open 300 more locations over the next 10 years. Target declined interview requests for this story, but provided a statement from Cornell, who said the company is “built for long-term, profitable growth,” boosted by its store fleet, growing digital business and brand partnerships.

“Backed by strong assets, proven capabilities and a talented team, we’re confident in our ability to accelerate near-term performance while continuing to innovate and serve our guests—today and in the years ahead,” he said.

The company announced several key changes in May as it tries to revamp its business. Target said it was starting an Enterprise Acceleration Office to speed innovation and rev up sales. It tapped Chief Operating Officer Michael Fiddelke, a Target veteran of more than 20 years who also served as chief financial officer, to lead the new effort. He is considered a potential successor to Cornell.

The announcement of the new office coincided with another shakeup. Target said two key executives would depart: Chief Growth Officer Christina Hennington, another CEO candidate discussed in industry circles, and Chief Legal and Compliance Officer Amy Tu, a retail veteran who was at Target for less than a year.

Through word of mouth and social media, Target’s name became synonymous over the years with fashion-forward finds for less. The retailer’s creative approach to merchandise — including exclusive brands and limited-time collaborations with fashion designers — sparked stories of shoppers who went to the store for one item but left with a basket full of merchandise they didn’t know they wanted.

The discounter’s cheap chic approach inspired some customers to call the retailer “Tarzhay,” a nickname that evoked French high fashion.

Target turned its giant stores into a mall-like experience where suburban shoppers could order a Starbucks coffee and spend hours browsing the aisles for lipsticks, throw pillows or new outfits. And it attracted time-crunched customers by making it possible to pick up a gallon of milk or box of diapers without leaving the car.

At its July 2021 peak, Target’s market cap catapulted to about $129 billion — after Americans sought retail therapy during the pandemic and splurged with stimulus checks and money they weren’t spending on travel, dining out or other activities. Since then, the “Tarzhay” formula hasn’t translated in the same way. Target’s market cap has tumbled to about $47 billion.

As a retailer known for selling discretionary items, Target has been vulnerable to high inflation and economic uncertainty. Rival Walmart is the nation’s largest grocer, and only 40% of its sales come from discretionary items, compared with about half at Target, according to estimates by GlobalData Retail.

Yet analysts, employees and even the company have said Target faces issues that go well beyond the economy. On an earnings call in the spring, Target’s leaders admitted the company is losing some of its shoppers.

Target held or gained market share in 15 of its 35 merchandise divisions in the first quarter, Chief Commercial Officer Rick Gomez said in May. Put another way, it lost ground in the majority of categories that it sells.

Duller merchandise has driven some of those customer losses, said Stacey Widlitz, retail consultant and president of SW Retail Advisors.

“They’re not as edgy as before,” she said.

Widlitz said Target’s brand collaborations haven’t seemed as exciting, either. Target’s recent partners have included weaker brands than they did in the past.

For example, Target launched a collection in the spring with Parachute, a direct-to-consumer bedding and bath company that shuttered some of its stores as it faced financial difficulties. Target announced a new line that will debut this fall with Champion, a sportswear brand it previously dropped from its stores.

Target, however, pointed to collaborations that have drawn shoppers in. The company said its recent Kate Spade collection was its strongest limited-time designer partnership in a decade.

Company leaders have touted other moves to revamp its image — including Warby Parker pop-up shops that it’s testing at a handful of stores later this year. Gomez also described the new line with Champion — which hasn’t hit store shelves yet — as “really the epitome of Tarzhay.”

Even the Kate Spade collection didn’t launch unscathed. Some shoppers poked fun at items in social media posts and mused that Target may be losing its sharp eye for design.

They pointed to Kate Spade-branded black and cream garbage bags, priced at $10.

Some suppliers said Target is taking fewer bets on emerging brands as it tries to boost profits. Private label products, which drive higher margins, and national brands, which tend to have more recognition and pricing power, are taking up more shelf space instead, said an executive of a company that advises and represents national brands carried by Target, who asked not to be named due to the sensitivity of speaking about a business partner.

That profit-focused strategy comes with “a risk of missing the next big thing,” especially at a retailer known for being a place where shoppers discover fresh items, the executive said.

“If people feel like they’re not getting what they expect from Target, then there’s nothing special at Target for them,” the executive said. “So why not go to Aldi or another mass [retail] location?”

Decades-high inflation in recent years forced Target to cut prices to stay competitive. But the company has a difficult balancing act, as it faces pressure from investors after its operating income margin fell below typical levels following the pandemic.

Widlitz said Target has gotten stuck in a loop of marking down merchandise to motivate buyers. The wave of promotions began in summer 2022 when Target started to sell through a glut of unsold inventory, such as small kitchen appliances and bicycles, that consumers no longer wanted as they prioritized experiences.

Trump’s tariffs have not helped Target’s efforts to become more profitable, because, the company said, roughly half of its merchandise is imported.

Target has announced major price cuts, including on 10,000 household items, such as butter, baby wipes and laundry detergent in 2024. And it recently pledged to maintain year-ago prices on key school supplies — moves made to woo value-conscious customers and compete better with discounters such as Walmart and off-price players such as T.J. Maxx.

It’s also leaned into new revenue drivers that have higher profits, including its advertising business, Roundel, and its third-party online marketplace, Target Plus. The company said both of those segments grew by double digits in the fiscal first quarter.

At the same time, Target’s competitors have turned up the heat and taken some pages from its playbook.

Walmart, for example, has launched more fashion-forward private brands, including a new clothing and accessories brand, Weekend Academy, for tweens that debuted this month. It’s also added more items to Bettergoods, a grocery brand with trendier flavors and colorful packaging that launched in 2024 and is reminiscent of Target’s own Good & Gather line.

Those brands have contributed to the big-box rival’s gains with wealthier households.

Walmart has gained market share from Target, according to Indagari, a data analytics firm that analyzes billions of debit and credit card transactions from U.S. shoppers to understand consumer behavior and company performance. After customers churned from Target, about half made their next purchase at Walmart and about 30% made their next three purchases at Walmart, the firm found. It calculates churn as customers who lapse from shopping with a brand over an extended period of time, based on the average shopping cadence.

The number of Target’s customers who are shopping with other competitors, including Costco, Aldi and Trader Joe’s, in the same quarter, has increased over the past five years, the firm’s data showed.

Newer entrants, such as Chinese-owned Shein and Temu, have also taken market share from Target, according to Indagari. The percentage of Target consumers who are shopping with Shein in the same quarter has risen from about 5% in early 2021 to nearly 10% in early 2025.

Some of Target’s challenges are the byproduct of recent success.

Target’s annual sales jumped more during fiscal year 2020, at the start of the Covid pandemic, than its total sales growth over the prior 11 years.

But that also brought growing pains that are still tripping up the discounter.

Inventory troubles have lingered beyond the pandemic at Target. In the most recent quarter, the company said inventory was up 11% year over year, and its profits took a hit from markdowns and cancelled orders.

In social media comments and CNBC interviews, shoppers said Target has lost a quality that put the retailer a cut above other retailers: Tidy and easy-to-navigate stores.

Trouble finding items at Target drove Molina — the Westchester, New York, mom — to other retailers. She said she now buys more from Walmart and Amazon and makes Target trips once every two or three months instead of every week.

Molina said she cut Target slack when the pandemic hit. As a founder of Lola Snacks, a nutrition bar company, she said she understands the challenges of retail. Her products were sold on Target shelves for about a year, before Molina decided to focus on grocers located closer to home.

“I gave them a lot of leeway because of all this turmoil, but it never seemed to correct itself,” she said.

On a trip to a Target store in early July, she said she saw many empty shelves, and the only employee who acknowledged her was the security guard.

Other customers have grown frustrated by Target locking up deodorant, razors and other everyday items, a tactic Target has used to try to prevent theft. Cornell raised eyebrows in 2023 when he said shoppers had a “positive” response to the policy and had said “a big thank you” for it because products were in stock.

Barclays retail analyst Seth Sigman cut the retailer’s price target in late June and said the company appears to be losing some of its most loyal customers. Sigman wrote in a research note that the firm’s analysis of shopper transaction data indicated that it has had a more pronounced drop among people who historically shopped Target more than eight times per year. 

On the company’s earnings call in May, Cornell said Target is focused on retail fundamentals, including making sure “we’re in stock every time you shop.” Fiddelke also told analysts that in-stocks had improved from a year ago.

Target’s e-commerce business, which boomed during the pandemic, brought new opportunities and challenges, too. Digital sales rose from about $6.8 billion in the fiscal year that ended in early 2020 to nearly $21 billion in the most recent full fiscal year that ended in early 2025 — a more than 200% jump. The retailer’s curbside pickup offering, Drive Up, now accounts for nearly half of the retailer’s total digital sales.

Target has capitalized on that popularity by tacking on more perks, such as allowing shoppers to make returns or get a Starbucks drink without unbuckling their seatbelt.

Yet two former employees, who asked not to be identified because they were not authorized to speak publicly on the matter, said Target’s stores have struggled with a tradeoff of whether to prioritize brick-and-mortar stores or the online business. Target’s stores act as hubs for online fulfillment, with about 96% of total digital volume fulfilled at the locations in the most recently reported quarter, according to the company.

The employees said that juggle contributed to out-of-stocks on store shelves and weaker customer service as they raced to keep up with online orders.

As sales stagnated, the company cut costs, which lowered store payrolls and took a toll on employees’ morale, the employees said. Among those cuts, stores received fewer shipments of Target-themed swag to hand out to reward employees, said a six-year employee who recently retired. And the recognition budget for stores got slashed, which meant less money for snacks or coffee in the break room or gatherings like pizza parties, the retiree said.

The employee said low morale contributed to other problems, including more store workers calling out and falling behind on unloading trucks or straightening up store aisles — all of which can hurt the customer experience.

Alice James said she saw those store quality issues on a recent trip to her local Target in Austin, Texas. As she shopped for bras at the location, she said merchandise was scattered across the floor, bras weren’t organized by style or size and a rack of inventory intended to stock the department was parked and abandoned.

James said Target has lost sight of its “secret sauce”: its friendly employees, engaging store displays and fun in-person shopping experience.

James, president of a fashion consulting company, said Target’s rollback of key diversity initiatives was a turning point for her, too. Her clients include a small brand that lost out on business opportunities when Target pulled Pride merchandise from shelves two years ago.

“There was a joy to shopping at Target,” she said. “It made you feel good. And I don’t have that same feeling when I walk through Target.”

For the first time in about two decades, there was no Target float in the Twin Cities Pride parade this June.

The public split between Target and Twin Cities Pride, the nonprofit that throws the parade in Target’s hometown, captures how brand loyalty has weakened among some shoppers who have objected to the company’s flip-flop on its Pride collection and DEI stance.

Twice in the past two years, Target has backed away from diversity and inclusion efforts that some customers associated with its identity as a retailer. The company in 2023 pulled some merchandise from its Pride line, an annual collection that it has sold for more than a decade, after it said its employees faced safety threats. It also rolled back major DEI initiatives in January, just days after Trump signed executive orders to end similar programs in the government.

At the same time, Target has also taken heat from conservative customers who objected to the company’s sales of Pride merchandise for children and tuck-friendly swimsuits for adults, and received praise for its decision to join Tractor Supply, Walmart and Facebook parent Meta in backing away from DEI after Trump’s criticism of those policies.

Target has made other moves that customers and employees have said are out of step with the company’s image. It donated $1 million to the Trump Inauguration fund, its first donation to a presidential inauguration in at least a decade.

It is difficult to measure how much backlash to Target’s social and political stances contributed to sales declines, especially since the company’s annual revenue flattened out before the two controversies. However, Target said in May that customers’ reaction to the DEI decision hurt its sales.

Cornell also reached out to and met with civil rights leader the Rev. Al Sharpton for a meeting in April, a sign the company has paid attention to the risk of boycotts.

Shoppers once seemed to have a clear idea of what Target stands for — but that has changed among some, even in the company’s backyard. Twin Cities Pride cut ties with Target in January after the discounter’s DEI rollback.

Target used to give about $50,000 per year to the nonprofit and was one of its biggest donors, said executive director Andi Otto. But the company also contributed in many other ways. Target donated candy and supplies for the organization’s trunk-or-treat Halloween event. It helped stock the Rainbow Wardrobe, a gender-affirming closet that community members could shop for free, with clothing and personal care items.

“Target was always that phone call I could make and say ‘Hey, this is what I need from you.’ And they would show up every time,” Otto said.

Then came Target’s DEI decision. After a discussion with Twin Cities Pride’s board, Otto said he sent an email from the nonprofit that expressed disappointment in Target’s move and turned down future donations or sponsorships. To help close the gap, the organization put up a crowdfunding link and raised about $113,000 in total, he said.

Store traffic for Target has declined year over year nearly every week since the week of Jan. 27, days after the company’s DEI announcement, according to Placer.ai, an analytics firm that uses anonymized data from mobile devices to estimate overall visits to locations. Target traffic had been up weekly year over year in the four weeks before that.

The only exceptions to that were the two weeks on either side of Easter, when traffic rose less than 1% year over year, the firm’s data showed, a sign of the company’s strategy of driving sales with holiday and seasonal merchandise.

Michael Lasser, a retail analyst for UBS, said customers’ connection to the Target brand deepened loyalty through the years. Yet those same emotional ties have amplified reactions to the company’s decisions, he said.

“Target customers have such strong feelings about the retailer,” he said. “It can create more risk as these polarizing issues become front and center.”

The employee who left Target recently after about a decade with the company said the change in DEI policies was jarring for workers after they had seen the company take a more progressive stance on social issues.

“We had invested all of the time and energy into these programs,” he said. “And then that just disappears out of nowhere.”

The employee said the moves clashed with Target’s past positions, including taking a public stance on its website in 2016 about allowing employees and customers to use the bathroom and fitting room that aligned with their gender identity.

After George Floyd’s murder by police a short distance from Target’s Minneapolis headquarters, the company expanded its diversity goals for its workforce and suppliers. It gave $10 million to support social justice groups. And it distributed free T-shirts to its employees, including one with an all-caps message: “Target stands with Black families, communities and team members committed to using our size, scale and resources to help heal and create lasting change,” according to photos seen by CNBC.

Cornell and other top executives had been vocal in their support for diversity — which customers and employees said led to shock about its DEI rollback. In 2021 remarks, Cornell recalled thinking, “That could have been one of my Target team members” when watching the video of Floyd pinned to the ground.

On a store tour with reporters in December 2022, Chief Guest Experience Officer Cara Sylvester recounted Target’s commitment to having holiday items that reflected its customers. She said a mom wrote a thank you note to Target after her young Black daughter saw a ballerina Christmas ornament with the same skin color as her own.

That about-face on diversity issues has contributed to Target’s problems with loyal customers. And it’s just one challenge Cornell and his successor will have to resolve to bring back shoppers.

Otto, who was born and raised in Minnesota, said he grew up going to Target and would typically shop there four times each week. Yet he hasn’t shopped there since January, he said.

“The community right now feels like they were lied to,” he said. “And if Target wants to go back to the company we thought that they were, they are going to have to repair that damage.”

— CNBC’s Robert Hum, Nick Wells and Natalie Rice contributed to this report.