Target is bracing for a brutal holiday shopping season

Target will do everything short of handing out cookies as customers arrive this holiday season — and it probably still won’t be enough to reverse declining sales.

That's because upper-middle-class American shoppers are increasingly skittish and uncertain. This same customer has historically relished Target’s mix of discretionary style, décor, kids’ gear, beauty, and “cheap but not like Walmart cheap” everyday essentials. But they're not feeling so confident now, and nowhere is their hesitation more visible than in Target’s results.

And even Target's management, as it made clear in quarterly earnings released early Wednesday, expects the tough trends to continue. Target stock fell about 3.5% in premarket trading Wednesday.

A grim Q3 is set to become a grim Q4

Through the back-to-school and Halloween season, Target's sales fell 1.5% versus last year. Same-store sales dropped almost 3%. Overall store traffic slid over 2%. Digital comps rose just 2.4%, mostly because of same-day fulfillment and a massive push into Target Circle 360 — not because people are confidently filling carts again. In tandem, earnings per share fell hard, and operating income cratered nearly 20%.

The twist? Target is responding with one of the most aggressive holiday pushes in its history, rolling out 20,000 new holiday items — twice as many as last year — while also slashing prices across food, basics, and seasonal décor. There are Thanksgiving meals for four under $20, turkeys at 79 cents a pound, and "thousands of trend-right gifts starting at $5, plus thousands of toys under $20."

It’s a full-scale retail intervention designed to inspire consumers clearly spooked by inflation, tariffs, the effects of a record government shutdown, and the rising cost of maintaining their cozy, candle-scented lifestyle.

But even Target’s management doesn't think it will be enough

Instead, they’re expecting a low-single-digit sales decline through the all-important holiday season. The payoff for the merchandising blitz, the steep discounts and "trend-right" displays, will likely be just another quarter of falling sales.

The company’s second-quarter earnings call helps explain why. Executives repeatedly described the consumer as “volatile” and “choiceful.” The bright spots came only from more narrow, hype-driven categories — trading cards, Nintendo, and the revamped “Fun 101” hardlines business (which includes toys, electronics, and books).

Still, these same discretionary categories remain tough. At the same time, tariffs forced costly order cancellations, and in management's own description, maintaining “merchandising authority” is only getting harder.

Meanwhile, the larger economic trends are clear

Recent data releases show the American middle- and upper-middle-class squeezed on all sides. White-collar layoffs are piling up, with October alone seeing 153,000 job cuts — the highest October tally since 2003. What hiring growth remains is limited to non-discretionary sectors like healthcare and education. Restaurant visits are falling except among the wealthy. Even McDonald’s reports double-digit drops from lower-income customers and flat traffic from the middle class.

Not coincidentally, alongside those trends, household debt keeps rising: Credit-card balances perch at a record $1.23 trillion, serious delinquencies are up 80% from a year ago, and car loans are now so expensive that one in five borrowers pays more than $1,000 a month. These larger forces have Target’s core customers quietly but clearly cutting, trading down, pulling back — exactly the kind of “choiceful” behavior management foresees ensuring a rough holiday sales season.

So Target is left fighting an uphill battle. It’s doing everything it can to spike traffic and sales. But the broader economic trends of 2025 mean that, like Target's own core shopper, the retailer is fighting not to win, but just to lose a little bit less ground.