Target warned on Tuesday that uncertainty around tariffs would weigh on the retailer’s profit in the first quarter and doubled down on sourcing more of its products from countries including Guatemala.
Reuters
Target joined bellwether Walmart, as well as electronics retailer Best Buy in warning about expectations for the year. Sticky inflation and tariffs on imports proposed and implemented by President Donald Trump are expected to temper demand for non-essential categories such as home furnishings and electronics that make up more than two-thirds of Target’s sales.
Target shares were down 3.2% in afternoon trading on a day Wall Street’s main indexes fell on broader tariff worries. The retailer told reporters on Tuesday that the new tariffs on imports from Mexico and Canada – that took effect on Tuesday – are “new dimensions” which could result in increased industry-wide prices for seasonal produce such as avocados.
Target, like other retailers, depends on lots of vegetables and fruit like avocados from Mexico during winter, CEO Brian Cornell said.
“But if there’s a 25% tariff, those prices will go up … certainly over the next week,” he said on a CNBC interview earlier in the day, declining to say the degree of price hikes Target shoppers will see on its own shelves.
Target also said it would move more of its sourcing for its store brands, which include All in Motion and Cat & Jack, to countries in the Western Hemisphere like Guatemala and Honduras, and away from China where 30% of those products are made. It expects to further reduce that dependence to 25% next year.
“These things are unfolding so quickly. I think all of us are speculating and I think we will listen and learn and make sure we control the things we can control,” Cornell said.
Target forecast annual comparable sales to be about flat in the year through January 2026, compared to Wall Street’s expectations for a 1.86% rise. It expects earnings of between $8.80 and $9.80 per share, which were in line with estimates.
While the forecast excludes tariff impacts, it said that consumer stress and the noise surrounding tariffs hit February sales and could pressure first-quarter profits.
“As we turn the corner now there has been talk about the tariffs and uncertainty with economy … and while all those behaviors we have seen with the consumer (over the past year) are not changing, they are becoming more pronounced,” Chief Commercial Officer Rick Gomez said on a media call.
On Tuesday, Target also said that due to “elevated volatility” in its business, it would stop its decades-old practice of issuing quarterly guidance.
“Consumer spending trends are not yet back to normal today,” Chief Financial Officer Jim Lee said.
Target’s disappointing outlook may reflect the mood of shoppers who in January pulled back spending far more than expected and showed that they are much more worried about the impact of tariffs on their wallets.
The Minneapolis-based retailer has been facing competition from bigger rivals such as Walmart, Amazon, opens new tab and Costco, opens new tab who have used their scale to offer lower prices.
And while Target has tried to claw back some demand by cutting prices, ramping up promotions, and partnering with celebrities like pop star Taylor Swift to offer exclusive deals on products, analysts warn it may not have been enough to recapture market share.
“Walmart has been known to have a business that is growing margins and market share, something that Target has not been able to exemplify over the last few years, so the guidance is another point of frustration for investors,” said David Wagner, head of equities at Aptus Capital Advisors.
Still, Target’s holiday quarter comparable sales rose 1.5% and beat estimates as heavy discounts and promotions helped drive sales. Earnings fell 19.3% to $2.41 per share, but beat estimates of $2.27.
Online comparable sales rose 8.6% driven by higher sales of beauty, apparel, toys and sporting goods. But this also drove up costs of box shipping, or those made within one or two days, Target said.
Adidas AG expects higher profits in 2025 as the German sports brand expands its lineup of retro sneakers, which have fueled renewed momentum in global sales.
According to a statement released Wednesday that builds on January’s preliminary fourth-quarter earnings report, the company projects an operating profit of €1.7 billion ($1.81 billion) to €1.8 billion this year. While this falls short of analysts’ €2.07 billion average estimate, Adidas is known for its conservative guidance, having raised its outlook three times last year.
The recent strong performance highlights the company’s recovery under CEO Bjørn Gulden, now in his third year leading the brand. The former Puma SE CEO is credited with managing the fallout from Adidas’ terminated partnership with rapper and designer Ye, formerly known as Kanye West. Investors have responded positively to Gulden’s back-to-basics approach, which focuses on sportswear and pragmatic product development. He aims to narrow the gap with Nike Inc., which, despite its struggles, remains the industry leader.
Retro sneakers drive Adidas’ revival
Demand continues to surge for retro sneaker models, including the Samba and Campus, which have helped revive the brand after a series of challenges in recent years. Adidas has also introduced additional throwback styles, such as the SL72 running shoe and Tokyo trainer, catering to the growing appetite for vintage designs.
Due to the sustained popularity of these models, Gulden has postponed the re-release of the 1970s-era Superstar basketball shoes, aiming to prevent oversaturation in the three-stripe sneaker market.
Beyond lifestyle footwear, Adidas is also seeing strong demand for its sports gear, particularly the Predator football boots and the Adizero running shoe franchise, the company said.
Adidas expects currency-neutral sales to grow at a high-single-digit rate in 2025, which is in line with analyst estimates. Excluding the now-defunct Yeezy franchise, the brand anticipates double-digit growth.
The company reported a 16% sales increase in Greater China and a 25% surge in Europe during the fourth quarter. North American sales rose 15%, marking a significant gain in a region long dominated by Nike, where Adidas has previously struggled.
Adidas completed the sale of its remaining Yeezy inventory in the fourth quarter, generating €650 million in revenue during 2024. The final sales occurred over two years after the brand severed ties with Ye.
Adidas shares have climbed about 32% over the past year, outperforming both Nike and Puma.
UK-based global fashion retailer END. has promised a breathless celebration for its 20th anniversary and core to its mission is maintaining collaborations with long-standing brand partners. One of its biggest associations is with sportswear giant Adidas so the pair are now exclusively ‘Tying the Knot’ as part of those anniversary celebrations.
As an ode to the “essence of love and partnership”, both END. and Adidas “merge classic Adidas silhouettes with refined co-branded details in their latest execution of the Superstar Vintage and Japan OG”.
With minimal exteriors (in sleek black leather and white lace uppers), a “subtle yet meaningful touch” is embossed on the underside of the tongue with the classic phrase of ’something old, something new, something borrowed, something blue’.
For the campaign, the pair have embarked on a journey to Berlin documenting five couples from diverse backgrounds to frame the collaboration “in a modern context of love and understanding of beauty within each relationship”.
The couples “navigate and redefine sneaker culture through storytelling and innovation, with a shared commitment to quality, heritage and progressive design”.
The END. x adidas ‘Tying the Knot’ collection launches Friday (7 March) at END. stores and online priced from £125 to £150/€139 to €175.
Applications have been opened for round two of ScaleUP, the incubator programme for ‘global majority’-owned brands that’s run by the (Fashion) Minority Report (FMR) in partnership with ASOS.
The previous incubator’s winners were Isabelle Pennington Edmead and Taideux
Global majority refers to people of African, Asian, indigenous, Latin American, or mixed-heritage backgrounds who comprise 85% of the world’s population. And ScaleUP is designed to help bridge the gap between the fashion industry and those brands that “continue to face barriers in accessing the fashion market and scaling up their business operations”.
The programme provides successful candidates with support including insight and guidance from industry experts, mentorship, wholesale opportunities, the opportunity to pitch for funding help in developing a long-term strategy.
Applications for ScaleUP will be open until 3 April. They’ll be reviewed and shortlisted by a panel of judges including Daniel Peters, FMR founder; ASOS’s creative EVP Vanessa Spence, and its partner brand director Shazmeen Malik; plus the BFC’s Head of designer initiatives and education, Katie Rawle, with more judges to be announced soon.
The inaugural programme debuted in 2023 and FMR and ASOS have learnt from that experience saying that this year “every brand selected as a finalist will be supported in scaling up their business through masterclasses in marketing, finance and wholesale”.
Meanwhile the overall winning brand will receive an investment of £20,000 and their collection will be sold on ASOS.com, with a second place winner receiving £10,000 to scale up their brand.
The 2023 launch programme saw 100 applications with11 applicants being shortlisted and six brands receiving expert guidance and mentoring.
The two final winners of the first programme were womenswear specialists Isabelle Pennington Edmead and Taideux. The latter has already launched on ASOS.com, while Isabelle Pennington Edmead will launch this spring.
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