Target(US:TGT) Zhi Tong Cai Jing·2025-08-20 12:37Core Viewpoint - Target's Q2 performance exceeded expectations, but the stock price fell sharply due to disappointment over the internal CEO succession plan, with Michael Fiddelke set to take over in February 2024 [1][2]. Financial Performance - Target reported Q2 revenue of $25.2 billion, a year-over-year decline of 0.9%, which was better than the market expectation of $24.9 billion [2]. - Net profit decreased to $935 million, with earnings per share at $2.05, slightly above the expected $2.03 but down from $1.19 billion and $2.57 per share in the same quarter last year [2]. - The company reaffirmed its full-year guidance, expecting low single-digit percentage declines in sales and adjusted earnings per share between $7 and $9 [3]. Leadership Transition - Michael Fiddelke, currently COO, will become CEO in February 2024, with a focus on revitalizing sales and regaining market share lost to competitors like Walmart and Amazon [1][4]. - Fiddelke's previous roles included CFO and COO, giving him extensive experience across various business areas [4]. Market Challenges - Despite improvements in sales across six product categories, consumer spending remains cautious, impacting overall performance [3]. - The company faces challenges from new U.S. tariff policies, which have a more significant impact on Target compared to competitors like Walmart [5]. - Target is expanding its supplier base to mitigate tariff impacts, with price increases being a last resort [6]. Customer Trends - Store traffic has been declining since late January, with a 1.3% drop in customer transactions and a 0.6% decrease in average transaction value compared to the previous year [6]. - Online same-store sales showed a positive growth of 4.3% year-over-year, indicating a shift in consumer purchasing behavior [6]. Non-Retail Growth - Target's non-retail revenue grew by 14.2% year-over-year, driven by advertising, membership programs, and third-party transactions [7]. - Fiddelke noted that retail sales improved from Q1 to Q2, although still in negative growth, with all major product categories showing improvement [7].