NEW YORK — Target said Tuesday that consumer confidence is declining and warned about the impact of tariffs. This is the latest in a series of red flags about the health of US shoppers and the economy.
The company said its sales declined in February and it expects sales only to grow around 1% this year.
Last month, sales were “soft” as cold weather impacted clothing spending. But “declining consumer confidence impacted our discretionary assortment overall,” Jim Lee, Target’s chief financial officer, said in a statement. The majority of Target’s merchandise is discretionary, such as clothing and home goods, and the company is highly exposed to any slowdowns.
Target also said that “tariff uncertainty” will impact its profit this quarter. Target’s (TGT) stock rose very slightly in premarket trading because investors predicted Target’s quarter would be even worse than it was.
Although Target expects those trends, which are weighing on customers’ confidence, to moderate, the company said it remains “appropriately cautious” about 2025.
Target’s sluggish results come after Walmart, America’s largest retailer, warned recently that 2025 would be a rockier year. Walmart said it expected sales to slow down amid concerns about inflation and tariffs.
Consumer confidence last month registered its biggest monthly decline since 2021 as inflation fears creep back.
A global trade war is also breaking out, adding to economic worries.
President Donald Trump’s blanket 25% tariffs on Mexico and Canada took effect on Tuesday. Trump also doubled the tariff on all Chinese imports to 20% from 10%. Those import taxes sit atop existing tariffs on hundreds of billions in Chinese goods. China and Canada immediately retaliated with tariffs on American goods.
The Trump administration said the tariffs were necessary to stem the flow of fentanyl into the United States. But the tariffs threaten to raise the prices Americans pay for a wide array of goodsthat are imported from the three nations, which collectively import more than 40% of all US goods by value.
Backlash to Target’s DEI pullback
Target is also under pressure from consumers frustrated by its shift away from diversity, equity and inclusion (DEI) efforts.
Days into the Trump presidency, Target announced it was eliminating hiring goals for minority employees, ending an executive committee focused on racial justice and making other changes to its diversity initiatives. Target said it remained committed to “creating a sense of belonging for our team, guests and communities” and also stressed the need for “staying in step with the evolving external landscape.”
Target’s retreat sparked anger from progressive customers and boycott calls, particularly from Black consumers.
Rev. Jamal Bryant of New Birth Missionary Baptist Church in Stonecrest, Georgia, has called for 100,000 people to begin a 40-day boycott of Target on Wednesday to coincide with the start of Lent. Participants are encouraged to purchase products from Black-owned businesses during this period.
There are signs that the blowback from Target’s move is impacting the company.
Customer visits to Target, Walmart and Costco have slowed over the last four weeks, but they have dropped the most at Target, according to Placer.ai., which uses phone location data to track visits. The slowdown could also be attributed to weather, economic conditions and other variables, Placer.ai cautioned.
During the week of February 17, the latest week available, foot traffic to Target dropped 7.9% and 5.2% to Walmart. Foot traffic to Costco, which has stood by its DEI policies, increased 4.8%.
The data “shows a clear drop in traffic in late January into mid-February following the company’s step back from DEI,” Joseph Feldman, an analyst at Telsey Advisory Group, said in a note to clients last week.
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