Target's new profit outlook precipitated concerns about the impact of tariffs on consumer spending and retail performance. The large retail behemoth said tariff uncertainty, inflation, and shifting consumer purchasing habits would hit its profits in the coming months.

The firm believes revenues will be unchanged until January 2026, below the estimated growth of 1.86% by analysts, according to data from LSEG. Target is expected to make between $8.80 and $9.80 a share, matching Wall Street's estimate of $9.31. The firm did note, however, that such figures don't include the impact of tariffs on consumer behavior or supply chains.

Consumers are getting more frugal with money, with consumers buying less because of worries about the economy. In January, spending fell more than anticipated, with more concerns about inflation and trade policies. Tariffs on foreign-made goods suggested and implemented by then-President Donald Trump have dampened demand, especially for discretionary items like home items and electronics that make up over two-thirds of Target's revenues.

Target's warning follows a similar conservative forecast from Walmart, another retailing giant, for next year. The volatile economic environment and increasing costs are making it harder for retailers to forecast consumer trends with certainty.

Target Chief Financial Officer Jim Lee identified these issues. He stated, "We will monitor these trends and will be conservative with our expectations for next year."

The firm also reported that there were fewer Target shoppers, who visited its stores less often, down 6.1% between January 27 and February 23, based on Placer.ai figures. Sales online increased 8.7%, though increasing expenses in accelerating deliveries held back profits further.

While it recorded a 1.5% increase in comparable sales in the holiday quarter, beating expectations, Target's overall tone is somber, mirroring the rest of the retail industry's inability to weather economic headwinds.