Analysts are expecting mixed results when the company reports earnings on Wednesday, with possible short-term victories that wouldn't entirely fix the retailer's longer-term struggles.
"While we think near-term results have improved very modestly, Target's longer-term competitive positioning remains challenged," Truist Securities retail analyst Scot Ciccarelli said in a note last week.
Target has reported declining comparable sales in five of the past eight quarters. Foot traffic to its stores also fell by more than 3% in the second quarter compared to the same period last year, according to Placer.ai.
But not everyone is counting Target out yet.
"I am definitely out of consensus on this one," Jefferies retail analyst Corey Tarlowe told Business Insider. "I think that this is still a very good business, contrary to popular opinion."
Tarlowe pointed to Target's large sales volume in categories like groceries and beauty, and said that it provides a solid foundation for the rest of the business.
He was also forgiving of Target's uneven execution across different locations.
"It's the same for a lot of stores," he said. "Eventually they will get to a place that's much more consistent and steady."
Business Insider saw this mixed performance in visits to three stores across the US earlier this year.
The shopping experience varied between the locations: One seemed well-stocked and fairly busy with customers, another showed some signs of low foot traffic, and a third seemed to be understaffed and had lots of locked-up products.
A Target in Wisconsin showed what the chain is capable of
The Target store in Wisconsin was well-stocked when Business Insider visited.Dominick Reuter/Business Insider
One location in Madison, Wisconsin, serves families from surrounding neighborhoods and students from the nearby University of Wisconsin — two audiences that are Target's bread and butter.
If the company is going to get any store right, this should be one of them.
Shoppers seemed to be having the kind of experience Target's execs call the "Tarzhay" effect, where they go in for one essential and walk out with a basket of fun things too.
Shelves at a store in Ventura, California, hinted at low foot traffic
The toy displays at Target in Ventura, California, were well stocked.Katherine Tangalakis-Lippert
Merchandise was well-organized, but summer items located toward the back of the store appeared untouched.
In a few sections, such as furniture, several items were out of stock.
Some of Target's biggest challenges were on display at a Washington, DC store
Most Apple items in this case were out of stock at a Washington, DC Target.Alex Bitter/Business Insider
At a small-format store in Washington, DC, some of the chain's biggest challenges were on display.
Items like men's socks, deodorant, and laundry detergent were locked behind glass doors, and when Business Insider tried pressing a call button for access, an employee showed up only about half the time.
During one visit, Business Insider saw a customer wandering around as she looked for an employee who could help her buy a gift card — something that Target's self-checkout stations can't sell.
And while most products were in stock, some areas had bare shelves, such as a locked case for Apple accessories and the kitchen appliance department.
Target's earnings will show whether the retailer has made improvements
Target will report its latest earnings results on Wednesday.Scott Olson/Getty Images
The three locations don't suggest an existential crisis for Target, but the assortment wasn't especially exciting, and prices weren't meaningfully better than those at a competitor. Target also recently said it would stop matching prices against any retailer other than itself.
Target has acknowledged its own challenges and announced last quarter the creation of a new enterprise acceleration office headed by its chief operating officer, Michael Fiddelke.
Wednesday's financial results will mark the first report on Fiddelke's progress.
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Dominick Reuter is a senior retail reporter for Business Insider, primarily covering Walmart, Target, and Costco. His stories tend to focus on issues and trends that affect employees and customers.Prior to joining BI in 2019, Dominick worked for more than a decade as an independent photojournalist covering a wide range of stories for global wire services and newspapers, including Reuters, the Wall Street Journal, and Agence France-Presse.Dominick studied photojournalism at Boston University and later earned a Masters in business and economics journalism from Columbia University.If you're an employee or customer with a story to share, please contact me via email or text/call/Signal at 646-768-4750.
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Alex Bitter is a senior retail reporter covering the gig economy, food, and retail. His work focuses major gig delivery and ride-hailing apps, including Uber, Lyft, DoorDash, Instacart, and Walmart's Spark. He is interested in everything from what it's like to work on the apps to the companies' business strategies.Some of his recent stories feature gig workers who have been deactivated on the apps, DoorDash hiring traditional employees to make deliveries, gig workers' use of bots, and gig work expanding into new professions, such as nursing.Alex has also written about Aldi's US expansion, Starbucks' turnaround efforts, and the fallout from Kraft-Heinz's budget cutting. Convenience store chain Sheetz ended its "smile policy" after his reporting.Before joining Insider in September 2020, he wrote about consumer and retail companies for S&P Global Market Intelligence. He's a graduate of the University of Hawai'i at Mānoa and grew up on the Big Island.Alex lives in the Washington, DC, area, where you can find him studying ancient coins or searching for Civil War artifacts with his metal detector in his free time.Got a tip? Reach out at abitter@bjinnox.com or via encrypted messaging app Signal at +1 (808) 854-4501.
