Core Viewpoint - Target Corporation reported a third-quarter profit that exceeded expectations but experienced disappointing sales, leading to a reduction in its full-year earnings outlook as it approaches the critical holiday season [1]. Financial Performance - The company reported third-quarter adjusted earnings per share of $1.78, surpassing the analyst consensus estimate of $1.72 [2]. - Quarterly sales amounted to $25.27 billion, reflecting a 1.5% year-over-year decline and falling short of the expected $25.337 billion, attributed to a 1.9% decrease in merchandise sales [3]. - Third-quarter operating income was $900 million, down 18.9% from the previous year, with an operating margin rate of 3.8%, compared to 4.6% in the same period last year [7]. - Gross margin for the third quarter was 28.2%, slightly lower than last year's 28.3%, primarily due to higher markdowns [7]. - The company tightened its 2025 adjusted EPS outlook to $7.00–$8.00, down from $7.00–$9.00, and below the $7.36 consensus estimate [9]. Debt and Cash Position - Long-term debt and other borrowings increased to $15.366 billion at the end of the third quarter, compared to $14.346 billion in the previous year [8]. - Cash and equivalents at the end of the quarter were $3.822 billion, up from $3.433 billion a year earlier [8]. Sales and Digital Performance - Non-merchandise sales rose nearly 18%, with significant growth in Roundel, memberships, and marketplace [6]. - Digital sales grew by 2.4%, driven by over 35% growth in same-day delivery through Target Circle 360 [6]. - Comparable sales decreased by 2.7% in the third quarter, with a comparable store sales decline of 3.8%, partially offset by a 2.4% growth in comparable digital sales [6]. AI and Technology Initiatives - Target is expanding its partnership with OpenAI, introducing a new Target app within ChatGPT that offers curated recommendations and checkout options [4]. - The company is utilizing ChatGPT Enterprise across its headquarters, with 18,000 employees using the platform to enhance workflows and support tools [4]. - AI is increasingly influencing supply-chain forecasting, store operations, and digital experiences [5]. Outlook and Strategy - For the fourth quarter of 2025, the company maintains its expectation of a low-single-digit decline in sales [10]. - The company is focused on strengthening merchandising authority, enhancing the shopping experience, and leveraging technology for improved operational efficiency [11].