Target CEO sounds alarm on customer behavior

Target (TGT) continues to feel the impact of several consumer frustrations, which recently contributed to weaker sales. Amid this startling trend, the retailer has conjured up a plan to win back customers.

In Target’s first-quarter earnings report for 2025, it revealed that while its comparable digital sales increased by 4.7% year-over-year, its comparable store sales decreased by 3.8%.

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Specifically, the number of transactions in stores dipped by 2.4%, while the average amount of money customers spent per transaction declined by roughly 1.4%.

The decrease in sales comes during a time when Target faces backlash and boycotts from consumers over its decision in January to scale back its diversity, equity, and inclusion policies. This includes withdrawing its participation in the Human Rights Campaign survey, which tracks LGBTQ+ corporate policies and practices.

Target also discontinued its three-year DEI goals and concluded its Racial Equity Action and Change initiatives, which involved advancing the careers of Black employees, implementing anti-racism training for team members, promoting Black-owned businesses, sourcing products from Black suppliers, and more.

After this decision was announced, Target’s foot traffic in stores started to suffer. According to a recent report from Placer.ai, Target’s visits during the first few months of 2025 fell by 4.1% year-over-year, and visits per location were down by 4.8%.

Targets has acknowledged it's operating in a challenging environment that has impacted sales.

Image source: Justin Sullivan/Getty Images

Target CEO addresses a major problem

During an earnings call on May 21, Target CEO Brian Cornell said that the company is “not satisfied” with its recent performance and emphasized that it is operating in an “exceptionally challenging environment” that has impacted foot traffic and sales.

He said several challenges had a negative impact on business, including inflation, tariffs, and Target’s recent decision to cut back DEI.

“For several years now, we’ve seen pressure in our discretionary businesses, as spending adjusted down from elevated levels during the pandemic and then moved further away in the face of historically high inflation in needs-based categories,” said Cornell. “On top of those ongoing challenges, we faced several additional headwinds this quarter, including five consecutive months of declining consumer confidence, uncertainty regarding the impact of potential tariffs, and the reaction to the updates we shared on Belonging in January.”

In order to combat these pressures, Cornell said Target will open a new Enterprise Acceleration Office to simplify how it operates. The company will also make several organizational changes to “bring even more clarity and speed” to how it conducts business and advances its strategy.

Target tackles a major customer concern to prevent more outrage

In addition, Target will work hard to prevent potential price increases in its stores that may stem from tariffs, which are taxes companies pay to import goods from overseas.

Recently, President Donald Trump imposed a 10% baseline tariff on all countries and paused reciprocal tariffs. When the pause on reciprocal tariffs ends in July, roughly 60 countries will soon see higher tariff rates. This move has caused increased anxiety among consumers who are worried about paying higher prices for goods.

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During the call, Cornell said that Target has been working “tirelessly” to mitigate the impact of tariffs, and the difficulty level is “incredibly high” due to the magnitude of Trump’s tariff rates.

“As a company that aims to deliver great products and outstanding value, we’re focused on supporting American families as they manage their budgets,” said Cornell. “We have many levers to use in mitigating the impact of tariffs, and price is the very last resort.”

Some of the efforts Target is taking to minimize the threat of tariffs include negotiating with vendor partners, reevaluating assortment decisions, changing country of production, tweaking order timing, and even adjusting prices where necessary.