Target in downtown Minneapolis

Target sales continued to decline in the third quarter, emphasizing pressure on incoming CEO Michael Fiddelke to guide the retailer back to growth and through its many issues, including boycotts inspired by the retailer’s DEI rollback.

In Target’s third-quarter earnings call Wednesday, executive leadership described a retailer struggling with sales in the gaps between seasonal traffic drivers. Its growth in food and beverage as well as in hardlines could not offset a continued decline in discretionary categories.

Third-quarter net sales were $25.3 billion, a 1.5% drop from the same period last year. Comparable sales dipped 2.7%. But digital comparable sales continued to grow, at 2.4%, led by an increase in same-day delivery of about 35%. For the fourth quarter, Target is maintaining guidance of a low single-digit decline in sales. It lowered its full-year profit guidance.

Fiddelke restated the three priorities he has laid out as the defining goals of what will in February become his top-level leadership: reestablish Target’s merchandising authority; recapture the joy of the shopping experience; and use technology for more efficient operations.

Target plans to invest $5 billion into new stores and remodels next year. That amounts to about $1 billion more than this year. The new capital will also enhance technology and digital fulfillment capabilities.

To improve the shopping experience, Target is also partnering with OpenAI. ChatGPT will allow Target customers to buy multiple items per transaction, including fresh food products, and offer drive-up or pick-up options. “Guests tell us what they want, or even what they’re trying to solve for, and OpenAI will offer personalized recommendations,” Fiddelke said.

Fiddelke also described new AI tools meant to facilitate the trend savviness of the retailer’s merchants, who source and buy the products that appear on Target shelves. An internal AI platform is intended to help the company react to emerging trends faster, he said—capturing, for example, color, material, and product details for quicker delivery of on-trend products.

Simulated, AI-driven “synthetic audiences” will preview products before their launch, he said, to “refine products, promotions, and messaging with incredible speed and efficiency.”

Fiddelke repeated prior company statements about recent layoffs, too, which impacted about 1,800 corporate roles last month, mostly at the leadership level. “I want to make it clear that it wasn’t about cutting costs,” he said. The restructuring was meant to create “greater agility” and improve clarity on who makes decisions.

The company also described moves to deliver “newness” and affordability going into the holiday season. Chief commercial officer Rick Gomez announced more than 20,000 new products, more than twice as many as last year, with more than half exclusive to Target. The season will also see lower prices on thousands of food, beverage, and essential items.

Gomez echoed Fiddelke’s point about faster decisions made among company merchants. “We’ve been modernizing how our cross-functional teams support all buying decisions at Target—what we refer to as our merchant roundtable,” he said, “to clarify roles, streamline accountability, and empower teams to make bold, data-driven decisions.”

Fiddelke noted shifting responsibilities among its stores, too. Locations with larger backrooms are set to take on more fulfillment orders, hopefully to free up staff at other stores for customer service. Fiddelke described continued improvement of on-shelf availability of products.