Target used to be the "golden child" of retail. You know the vibe—walking in for milk and leaving with a $200 cart full of throw pillows and seasonal candles you didn't know you needed. But lately, investors are looking at the ticker and seeing a whole lot of red. If you’ve been watching the charts, you’ve probably asked yourself: why is tgt stock falling while rivals like Walmart and Costco seem to be hitting new highs?
Honestly, it’s not just one thing. It is a messy combination of bad timing, shifting habits, and some internal fumbles that have really caught up with the bullseye.
The stock has taken a beating, dropping significantly over the last year. While the broader S&P 500 has been treading water or climbing, Target has been a downhill skier. We’re talking about a 27% slide in 2025 alone. Even now, in early 2026, the recovery feels more like a slow crawl than a sprint.
The Identity Crisis: When "Cheap Chic" Feels Too Expensive
Target's biggest strength has always been "discretionary" goods. Things like home decor, trendy apparel, and electronics. Basically, the fun stuff. The problem? When inflation hangs around like a bad smell, people stop buying the fun stuff.
Walmart wins on groceries. Costco wins on bulk essentials. Target sits in this middle ground where they try to be trendy, but in a 2026 economy where people are "trading down" to save a buck, that middle ground is a dangerous place to be.
- The Discretionary Drag: Roughly 60% of Target’s revenue comes from non-essentials. When your rent goes up and your car insurance spikes, you don't buy the new Threshold lamp. You buy eggs and gas. Target’s comparable store sales have reflected this, showing a steady decline for several quarters.
- The "Trade Down" Effect: We’re seeing a huge shift. Shoppers who used to spend freely at Target are now hunting for bargains at Aldi or loading up on Kirkland signatures.
- Price Perception: Even though Target has slashed prices on 3,000+ essential items recently, the "Tarzhay" brand might actually be hurting them right now. People perceive it as a place for a "treat," and right now, many Americans aren't in a treating mood.
Why is TGT Stock Falling? Look at the Margins
It’s not just about how much they sell; it’s about how much they keep. Target has been fighting a multi-front war on its profit margins.
Inventory management has been a nightmare. Remember the post-pandemic supply chain mess? Target got caught with way too much of the wrong stuff (think big furniture and patio sets) and had to practically give it away to clear the aisles. That kills profits.
Then there’s "shrink." That’s the industry term for theft and lost inventory. It’s been a massive headline for Target over the last year. Organized retail crime and shoplifting have hit them harder than some of their peers, leading to store closures in certain urban markets and expensive new security measures that eat into the bottom line.
The Political and Social Headache
You can't talk about Target's recent struggles without mentioning the "culture war" fatigue. In 2024 and 2025, the company found itself in the crosshairs of boycotts from both sides of the political aisle.
First, it was the backlash over LGBTQ-themed merchandise. Then, it was the backlash from the other side when they rolled back certain DEI (Diversity, Equity, and Inclusion) initiatives to try and stay neutral. It’s a classic case of trying to please everyone and ending up making a lot of people annoyed.
When people shop with their values, and those values are polarized, a mass-market retailer like Target gets squeezed. Whether the impact on the actual numbers is huge or just a rounding error, it creates "noise." And Wall Street hates noise.
New Leadership and the 2026 Turnaround Plan
There is a big change happening at the top. Michael Fiddelke, the longtime COO and former finance intern who has been with the company for over 20 years, is taking over as CEO in February 2026.
Internal hires are usually a sign of "stay the course," but investors are desperate for a fresh map. Fiddelke is stepping into a storm. He’s already announced a $5 billion capital expenditure plan for 2026.
What is that money actually for?
- New Stores: They aren't giving up on physical locations. They’re building more.
- Supply Chain AI: Trying to use tech to make sure they don't get stuck with 10,000 unsold air fryers again.
- Target Circle 360: Their paid membership program is trying to catch up to Amazon Prime and Walmart+. It’s a steep hill to climb.
Is the Dividend King in Trouble?
One reason people still hold the stock is the dividend. Target is a "Dividend King," meaning they’ve raised their payout for over 50 consecutive years. Right now, because the stock price is so low, the yield is hovering around 4.7% to 5%.
That’s a fat check for investors.
But a high yield is sometimes a "yield trap." If the company’s earnings don’t recover, that dividend becomes harder to pay. Most analysts think the dividend is safe for now, but the fact that people are even asking the question tells you everything you need to know about why the stock is struggling.
What Really Matters Moving Forward
The answer to why is tgt stock falling basically boils down to a lack of growth. Revenue was down about 1.5% in the last reported quarter. Compare that to Walmart, which is seeing mid-single-digit growth.
Target needs to find its "cool" again without being too expensive. They’re betting big on "Fun101" (their new merchandising strategy) and cultural exclusives like the Joanna Gaines collections or Taylor Swift-level mania items.
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Actionable Insights for Investors
If you’re holding TGT or thinking about buying the dip, here is the reality of the situation:
- Watch the Comps: The most important number for Target is "comparable store sales." Until that turns positive, the stock is likely to stay under pressure.
- Monitor the New CEO: Fiddelke’s first 100 days starting in February will be a massive signal. If he announces more layoffs or store closures, expect more volatility.
- The Value Play: At 12 to 13 times forward earnings, Target is objectively "cheap" compared to its history and its rivals. But cheap stocks can stay cheap for a long time if there's no reason for them to go up.
- Tariff Risks: With the trade environment in 2026 being... let's call it "unpredictable," Target's reliance on imported goods for its private-label brands is a major risk factor.
Target isn't going bankrupt. It’s still a massive, profitable company with a loyal fanbase. But the era of easy growth is over. To get the stock moving back up, they have to prove they can sell more than just essentials and that they can protect their stores from the rising costs of doing business in 2026.
Keep a close eye on the Q4 2025 earnings report coming out soon. That will tell us if the holiday season was a "Santa Rally" for Target or just another lump of coal.
Next Steps for Your Portfolio
Check your exposure to the "Consumer Discretionary" sector. If you are heavily weighted in retailers that rely on non-essential spending, you might want to look at "Consumer Staples" (the boring stuff like soap and toilet paper) to balance out the risk while Target finds its footing. Also, keep an eye on the 10-year Treasury yield; if rates stay high, dividend stocks like Target have to work much harder to keep investors from jumping ship to "risk-free" bonds.