Target (TGT) shares tumbled nearly 10% after the retailer unveiled second-quarter results and announced that longtime insider Michael Fiddelke will take over as CEO on February 1.
Fiddelke, currently chief operating officer and a 20-year company veteran, will succeed Brian Cornell, who moves into the role of executive chair.
The leadership choice disappointed investors who had hoped an outsider might inject fresh perspective into a company that has struggled with stale merchandise, inconsistent store execution, and declining sales. “Target needs a kick in the ass,” one retail expert remarked, capturing Wall Street’s skepticism about whether continuity is the right formula for a turnaround.
Earnings themselves were not disastrous. Revenue dipped less than 1% from last year to $25.2 billion—better than analysts expected—and adjusted earnings per share edged past forecasts at $2.05. Same-store sales fell 1.9%, but that was an improvement from the 3.8% drop in Q1, with in-store traffic recovering and online sales rising modestly. June and July outperformed May, signaling momentum heading into the back-to-school season.
Target pointed to stronger operational execution, including better shelf availability and an enthusiastic consumer response to categories like trading cards, which are up nearly 70% year-to-date. The company reaffirmed its 2026 earnings outlook, avoiding another guidance cut. Still, Target’s decision not to repurchase shares in Q2 left investors wanting more, though the dividend yield now sits at a hefty 4.7%.
Walmart (WMT) Misses Earnings for First Time in Three Years
Walmart stock dropped more than 4% after the company reported second-quarter earnings of $0.68 per share, missing Wall Street’s $0.74 estimate. It was the retail giant’s first earnings miss since 2022.
The disappointment overshadowed otherwise strong fundamentals. Revenue rose almost 5% to $177.4 billion, topping expectations, while U.S. same-store sales grew 4.6%, beating forecasts. Sam’s Club performed even better, with comps up 5.9%. E-commerce sales surged 26%, and international operations, led by China and Mexico, posted double-digit constant-currency growth.
Tariffs were the main culprit behind the miss. Walmart said costs are climbing week by week as it replenishes inventory at post-tariff prices. The company has responded by expanding its Rollback program—now covering more than 7,000 items, including a 30% increase in discounted grocery products. Management insists the strategy is keeping customers engaged across income levels, but investors worry that aggressive discounting could weigh on margins.
Despite the earnings miss, Walmart raised full-year sales guidance, now expecting growth of up to 4.75%. It also nudged its earnings outlook slightly higher, underscoring management’s confidence in momentum heading into the holiday season.
The disappointment overshadowed otherwise strong fundamentals. Revenue rose almost 5% to $177.4 billion, topping expectations, while U.S. same-store sales grew 4.6%, beating forecasts. Sam’s Club performed even better, with comps up 5.9%. E-commerce sales surged 26%, and international operations, led by China and Mexico, posted double-digit constant-currency growth.
Tariffs were the main culprit behind the miss. Walmart said costs are climbing week by week as it replenishes inventory at post-tariff prices. The company has responded by expanding its Rollback program—now covering more than 7,000 items, including a 30% increase in discounted grocery products. Management insists the strategy is keeping customers engaged across income levels, but investors worry that aggressive discounting could weigh on margins.
Despite the earnings miss, Walmart raised full-year sales guidance, now expecting growth of up to 4.75%. It also nudged its earnings outlook slightly higher, underscoring management’s confidence in momentum heading into the holiday season.
Retail’s Diverging Paths
The back-to-back reports from Target and Walmart underline the widening gap between the two retailers. Walmart is gaining share with consistent traffic growth, booming e-commerce, and pricing power, while Target is still working to regain its footing.
Target’s bet on an insider CEO signals continuity at a time when many investors wanted disruption. Walmart, meanwhile, stumbled on profit but continues to flex its scale and low-price strategy to solidify its lead in the sector.
The back-to-back reports from Target and Walmart underline the widening gap between the two retailers. Walmart is gaining share with consistent traffic growth, booming e-commerce, and pricing power, while Target is still working to regain its footing.
Target’s bet on an insider CEO signals continuity at a time when many investors wanted disruption. Walmart, meanwhile, stumbled on profit but continues to flex its scale and low-price strategy to solidify its lead in the sector.
Conclusion
The retail landscape remains defined by cautious consumers, tariff pressures, and fierce competition. Walmart is positioning itself as the value leader while navigating rising costs, and Target is banking on a trusted veteran to engineer a turnaround. Whether Michael Fiddelke can revive Target’s brand and store experience will be the question hanging over investors as the crucial holiday season approaches.
The retail landscape remains defined by cautious consumers, tariff pressures, and fierce competition. Walmart is positioning itself as the value leader while navigating rising costs, and Target is banking on a trusted veteran to engineer a turnaround. Whether Michael Fiddelke can revive Target’s brand and store experience will be the question hanging over investors as the crucial holiday season approaches.
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