Target Corp's shares fell 3.9% in early trading on Tuesday after the retailer reported second-quarter earnings that included a one-time tariff refund, while a Halloween costume controversy weighed on sentiment.
The S&P 500 was up 0.2% as broader equities showed modest gains. Target's stock had reached a 52-week high of $166.75 at the open before reversing course. The company's consensus price target on Wall Street remains around $162, below recent trading levels.
Target reported adjusted earnings per share of $4.11 for the quarter ended Aug. 19, more than double the year-ago figure. However, the results included a $994 million pre-tax tariff refund, equivalent to $1.65 per share. Excluding this one-time benefit, underlying earnings were far more modest, according to analysts.
CEO Michael Fiddelke struck a cautious tone, stating that the company still had "a lot of work to do" regarding its turnaround efforts. The remarks tempered investor enthusiasm despite the headline earnings beat.
The stock decline followed a weekend controversy involving Target's removal of a children's Halloween clown costume from its Hyde and EEK Boutique line after social media backlash over accusations the design referenced racist blackface imagery. The move renewed scrutiny of the retailer's Diversity, Equity and Inclusion policies amid broader sector concerns.
Retail sector anxiety remained elevated after Walmart's shares fell 1% the prior week, following a weaker-than-expected 2.6% comparable sales increase versus expectations of 3.5%. The mixed performance underscored challenges in consumer discretionary spending and competitive pressures in the retail space.
