People can anticipate to pay greater costs within the coming days for produce corresponding to strawberries, bananas and avocados which might be imported from Mexico as President Trump’s tariffs go into impact on Tuesday, in keeping with Goal’s chief govt officer.
The Minneapolis-based retailer warned that new tariffs and financial uncertainty would strain its first-quarter earnings, as customers proceed to tug again on spending.
Goal CEO Brian Cornell expressed issues concerning the affect of rising duties, notably on key grocery gadgets, and cautioned that the yr forward could be difficult for the retailer.
Costs may enhance over the subsequent couple of days for seasonal produce corresponding to avocados as the corporate trusted Mexico “for a significant amount of supply” for these classes, Cornell instructed CNBC.
Cornell mentioned Goal depends closely on Mexican produce through the winter months, and the tariffs may drive the corporate to lift costs on vegatables and fruits as quickly as this week.
“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he instructed CNBC in an interview after Goal launched its fourth-quarter earnings.
“If there’s a 25% tariff, those prices will go up,” Cornell added.
The retail large’s outlook got here as new 25% tariffs on imports from Mexico and Canada took impact on Tuesday, alongside a doubling of duties on Chinese language items to twenty%.
Goal’s warning aligns with that of fellow retail chief Walmart, which has additionally voiced issues about persistent inflation and the chilling impact of tariffs on client demand.
Non-essential classes corresponding to residence furnishings and electronics — comprising greater than two-thirds of Goal’s gross sales — have already seen weakened demand, a pattern that would worsen within the coming months.
Regardless of these challenges, Goal’s inventory rose about 1% in premarket buying and selling after it posted stronger-than-expected vacation quarter earnings.
The retail chain reported a 1.5% rise in comparable gross sales for the quarter ending Feb. 1, surpassing analyst estimates of a 1.3% enhance.
Earnings per share fell 19.3% to $2.41, although they nonetheless exceeded Wall Road expectations of $2.27.
For the complete yr by way of Jan. 2026, Goal initiatives comparable gross sales to be flat — falling wanting analysts’ common expectation of 1.86% progress, in keeping with information compiled by LSEG.
The corporate’s earnings forecast of $8.80 to $9.80 per share was largely in keeping with estimates.
Cornell emphasised that the retailer’s annual forecast doesn’t but account for the complete affect of the tariffs, as a lot of the financial uncertainty continues to unfold.
Nevertheless, he acknowledged that gross sales in February had already felt some affect from the “noise surrounding the levies.”
“We will continue to monitor these trends and will remain appropriately cautious with our expectations for the year ahead,” Goal Chief Monetary Officer Jim Lee mentioned in a press release.
The retailer additionally pointed to shifts in client conduct which have performed a task in shaping its monetary outcomes.
Foot visitors at Goal shops dropped 6.1% from late January by way of late February, in keeping with Placer.ai.
Whereas the corporate didn’t attribute the decline to any single issue, some trade analysts have recommended that backlash from the retailer’s determination to finish its variety and inclusion (DEI) initiatives in January could have performed a task.
Goal didn’t touch upon this subject in its earnings name.
Sure classes carried out strongly through the vacation quarter, together with magnificence, attire, toys, and sporting items.
Nevertheless, residence decor and furnishing gross sales have been destructive, reflecting customers’ reluctance to spend on discretionary gadgets.
The corporate additionally famous an 8.7% enhance in digital comparable gross sales, pushed by an increase in one- to two-day field shipments, which elevated success prices.
