Jennifer Saibil, The Motley Fool

Fri, Jun 6, 2025, 12:53 PM4 min read

• Target is facing many challenges in the near term, and sales are declining.

• With tariff uncertainty and economic pressure, its struggles may not ease within the next 12 months.

• Target is a Dividend King with 53 years of dividend increases.

• 10 stocks we like better than Target ›

It's been a difficult few years for Target (NYSE: TGT) shareholders. The cheap and chic U.S. retailer has lost some of its cachet as pressured consumers hold off on discretionary purchases, saving their paychecks for the weekly Costco Wholesale run or other essentials shopping.

But there's still a lot to love about Target. Let's see where it is today and where it might be in a year from now.

Target was on top of the world when its digital channels took off early in the pandemic, but it's slipped since then as it deals with one challenge after another. Most of its woes center around its business model as a hub for discount discretionary shopping, with a focus on apparel and home improvement. That's in contrast to retailers like Walmart and Costco, which are usually described as Target's competitors but actually are different in their focus on grocery and essentials.

Target is still a huge force in U.S. shopping, with nearly 2,000 stores and $106 billion in trailing-12-month sales. But it's barely growing or reporting declines, souring investor sentiment.

In the fiscal 2025 fiscal first quarter (ended May 3), sales dropped 2.8% from last year, with comparable sales (comps) down 3.8%. The bright spot continues to be digital. Digital comps were up 4.7% from last year, driven by a 35% increase in same-day delivery, powered by the company's membership program. Loyal customers are counting on Target for speed and convenience, which should give investors some confidence in the chance for the comeback.

It doesn't look like things are going to get much easier for Target in the near future, and investors shouldn't expect a huge rebound over the next 12 months. There's still talk of stubborn inflation and a recession, stagflation, and whatever other way economists are describing current macroeconomic conditions. On top of that, Target has faced challenges for its political positions, and the challenges are further eroding consumer and investor confidence.

There's also the tariff issue, which continues to change and remains uncertain. CEO Brian Cornell explained that Target has many ways to mitigate the impact of tariff increases. Its scale gives it leverage with suppliers, and it has the resources and flexibility to change production and work with its vendors. "Price is the very last resort," he said.