TLDR
- New CEO Michael Fiddelke is cutting prices on more than 3,000 products by 5%–20%, covering apparel, home goods, baby essentials, and food.
- Target’s full-year net sales for 2025 dropped 1.7% to $104.8 billion, with revenues falling for five straight quarters.
- Fiddelke has unveiled a $6 billion budget for 2026, including $5 billion in capital expenditures — a third more than last year.
- The new strategy targets “busy families” and includes an inventory overhaul, store remodels, faster delivery, and more AI use across ~2,000 stores.
- Analysts say price cuts alone won’t be enough, and the broader turnaround will take time to show results.
Target’s new CEO is wasting no time. Michael Fiddelke, who took over last month, announced this week that Target will cut prices on more than 3,000 products — his first major move since stepping into the top job. The reductions range from 5% to 20% and cover apparel, home goods, baby items, and pantry staples. Cuts are set to hit registers later this month.
It’s a familiar play. Former CEO Brian Cornell used price cuts repeatedly during his tenure, including a round covering 5,000 items in 2024. That move briefly returned Target to same-store sales growth, but the bounce didn’t stick. Analysts are watching closely to see if this time is different.
CFRA analyst Arun Sundaram said the cuts are “a step in the right direction,” but added they alone won’t bring customers back. “The winning playbook is broader than simply lowering prices,” he noted.
The backdrop is tough. Target’s revenues have fallen for five straight quarters. Full-year net sales for 2025 came in at $104.8 billion, down 1.7%. Operating income has dropped for three consecutive periods. Meanwhile, Walmart and Costco have delivered total returns of more than 200% over five years — a period in which Target’s total returns have shrunk more than 20%.
A $6 Billion Bet on a Turnaround
Fiddelke isn’t just cutting prices. At his first investor day on March 3, he laid out a plan backed by $6 billion in total spending for 2026. That includes $5 billion in capital expenditures, roughly a third more than last year.
He’s earmarked $1 billion to restock products faster and remodel stores, over $1 billion for groceries, and $1 billion in additional operating expenses. He also wants to use AI more across Target’s roughly 2,000 locations.
Investors responded positively when the plan was unveiled — TGT stock rose 6% that day.
Fiddelke said sales will grow in every quarter this year and projected an adjusted operating income margin of 4.8% for 2026, up 20 basis points from last year.
Winning Back the “Busy Family”
The new strategy has a clear target customer: what Fiddelke calls the “busy family.” Chief merchandising officer Cara Sylvester said the discounted items are products this group actually uses — spring apparel, bedding, shoes, baby gear, and everyday essentials.
Target also plans to double down on private-label brands and trusted national names like Bugaboo and Doona. The goal is a more curated, style-meets-value shopping experience.
Michael Ashley Schulman of Cerity Partners described the pace as “aggressive but realistic,” provided store execution and supply chain hold up. “Retail turnarounds rarely get a second shot,” he said.
Jay Woods of Freedom Capital Markets added that any benefits from the back-to-basics strategy will be gradual.
Target’s adjusted operating income margin forecast of 4.8% for 2026 compares to Walmart’s expected margin of up to 4.4% for the same period.
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