Target is expecting a tough year with little growth as consumers continue to be stressed from higher prices across their budgets.

The new tariffs on Canadian and Mexican goods, plus a doubling of the tariff on goods from China, will add cost to the supply chain.

CEO Brian Cornell said on CNBC he expects fruits and vegetable prices to be higher in days, even though the Minneapolis-based retailer will do its best to mitigate the impact on the consumer.

The added cost pressure comes after a holiday quarter that met diminished expectations, but saw more profitable in-store sales decline. Overall sales, buoyed by a nearly 9% increase in digital revenue, were up 1.5%.

Target executives predict flat comparable sales for 2025, after seeing an uneven February.

Overall markets are down, and Target stock was down 2.8% in late morning trading after fluctuating greatly throughout the day.

Fourth-quarter profits were down 20% to $1.1 billion, although the year-ago quarter saw an extra week.

Target did not break out what the comparable earnings would be for the quarter, but it said the profit margin thinned because of greater costs for digital fulfillment, supply-chain challenges and deep discounting.

Diluted earnings per share were down 19.3% to $2.41, which was above analysts diminished expectations of $2.25.

“As we look ahead, our continued investments in digital capabilities, stores and supply chain — combined with a focus on newness, value, speed and reliability — will further differentiate our one-of-a-kind physical and digital shopping experience,” Cornell said in the earnings report.

Cornell doubled down on that message during Target’s annual Investors Day presentation Tuesday morning in New York City.

The holiday quarter, which ended Feb. 1, was buoyed by sales of apparel, toys and sporting goods. But the quarterly profit slipped from 26.6% in 2023 to 26.2%. Higher costs tied to digital fulfillment, supply-chain expenses and promotional markdowns weighed on profitability.

Target, like Walmart, was cautious on its guidance for the coming year because of global economic uncertainty. Company officials forecast flat comparable sales and overall revenue growth of about 1%.

Officials continued to see people spending for special events. Like on Black Friday and Cyber Monday, Target saw record performance around Valentine’s Day, said Chief Financial Officer Jim Lee.

However, the rest of the month was slow as a stressed consumer continues to navigate sticky inflation and the specter of higher prices as Trump increases tariffs on China, as well as imposing new ones on Mexico and Canada.

“Looking ahead, we expect to see a moderation in this trend as apparel sales respond to warmer weather around the country, and consumers turn to Target for upcoming seasonal moments such as the Easter holiday,” Lee said

While Target remains optimistic about its omnichannel investments and cost-saving initiatives — which have generated over $2 billion in efficiencies over the past two years — analysts say the retailer faces headwinds as it balances promotions, inflationary pressures and competition in a tightening consumer market.

For the full year, Target reported a modest 0.1% increase in comparable sales, with net sales down 0.8% to $106.6 billion. Adjusting for the extra week in 2023, Target executives said annual sales were slightly higher. Adjusted earnings were $8.86, compared with $8.94 in fiscal year 2023, leaving the Minneapolis-based retailer at the high end of analysts' predictions.

©2025 The Minnesota Star Tribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.