TARGET AT CROSSROADS: Q1 EARNINGS CALL RECAP
What Brands Need to Know from Q1
Target’s Q1 2025 earnings call came at a time when the retail giant is facing a complex mix of internal transformation and external pressures. In a recent DIGITS webinar, founder Dave Glaza was joined by Target strategist Chris Thron and Genesis VP of Food & Beverage Matt Adelmann to dig into the numbers, the tone from leadership, and what it all means for CPG brands.
What Happened in Q1?
Target reported a 3.8% comp decline. Store traffic is falling while digital saw some bright spots. The panel noted that results were a bit worse than expected but not entirely surprising based on the broader trends DIGITS has seen across $6 billion in Target sales they support.
Key themes from the earnings call included economic headwinds, operational challenges, and leadership’s attempts to stabilize performance. But what caught attention most was what wasn’t said, including less focus than expected on in-store execution and inventory health.
Comparing Target and Walmart
The discussion highlighted the contrast between Target and Walmart’s post-COVID trajectories. During the pandemic, Target’s comps skyrocketed up to 20%, but sustaining that growth has proven difficult. Walmart, by contrast, has shown steadier quarter-over-quarter growth and seems to have clawed back share.
Target’s challenge may be less about decline and more about normalization after a COVID-era boom. The business jumped $20 billion nearly overnight, and the systems, inventory models, and store execution may still be catching up.
What’s Working at Target
Despite the headlines, there are bright spots. Digital is a clear win, with growth in Drive Up orders and Circle 360 membership. However, there’s still work to do in recapturing impulse and discovery in a digital experience. The panel also pointed out Target’s strength in launching influencer-backed brands like De Soi, Bero and Cloud Popcorn.
Innovation is another area of focus. After a period of complacency, Target teams are reengaging and pushing for freshness in assortments across categories.
What Needs Fixing
Instocks were flagged as the most urgent issue. Poor shelf availability is impacting guest experience and vendor confidence. But beyond that, the cost and complexity of doing business with Target were front and center.
Matt shared that, for many vendors, it’s nearly seven times more expensive to work with Target than with Walmart. That cost is not just dollars but also time, process inefficiencies, and outdated systems. Chris highlighted issues with the new Circle system, which auto-applies deals but limits vendor control and impacts offer effectiveness.
Strategies for Brands in 2025
Brands cannot afford to sit on the sidelines. Now is the time to invest in Target. The team shared several tangible takeaways:
- Drive Innovation: Buyers are hungry for something new. Work closely with them to bring fresh ideas that clearly outperform what’s on shelf.
- Invest in Retail Media: Being on shelf isn’t enough. Use paid search, social, and Target’s platforms to create demand and win share.
- Prioritize Share Growth: Even if total comps are down, winning relative to competitors is key.
- Bring Partnership Ideas to Target: Q4 may bring more openness from Target leadership to vendor-led plans and investments.
What Comes Next?
The newly announced “Acceleration Office” within Target may signal change ahead. The panel hopes this initiative listens to vendors and focuses on the basics: inventory, store operations, and system improvements.
The group agreed that Target is in a lull, not a decline. The brand, culture, and shopper loyalty are still strong. What’s needed now is a return to the fundamentals that made Target great—and the courage to speak up, innovate, and execute better.
Watch the Full Webinar: Want to hear the full conversation, complete with data visuals and panelist banter? Head to the DIGITS YouTube Channel to watch the recording.
Have thoughts or questions? Connect with Dave, Chris, or Matt on LinkedIn to keep the conversation going!
Source: Target’s Q1 2025 Earnings Call
Dave Glaza, Founder & CEO of DIGITS, remains committed to bringing digital capabilities to physical stores!
LinkedIn: https://www.linkedin.com/in/
