😬 Target Just Said the Quiet Part Out Loud

On Wednesday morning, Target dropped its earnings report and with it, a word that perfectly captures 2025's consumer mood: "choiceful."

Author

Jason Paloma
November 21, 2025 • Estimated Reading Time: 17 minutes

😎 Market Vibes

😬 Target Just Said the Quiet Part Out Loud

On Wednesday morning, Target dropped its earnings report and with it, a word that perfectly captures 2025's consumer mood: "choiceful."

The retailer slashed its full-year earnings guidance to $7-$8 per share, down from the previous $7-$9 range. Comparable sales dropped 2.7% - steeper than the 2.1% analysts expected. Customers made fewer trips, spent less when they did show up, and traffic fell 2.2% while transaction amounts dropped 0.5%.

Chief commercial officer Rick Gomez explained the vibe: "Guests are choiceful, stretching budgets and prioritizing value. They're spending where it matters most, especially in food, essentials and beauty" - and hunting for deals on everything else.

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☀️ Meanwhile, Lowe's Proves It's Not All Doom

Same day, different story.

Shares rose more than 4% after the report, a stark contrast to Target's performance.

So what's the difference? Lowe's is going after professional contractors - the folks who spend money regardless of how consumers feel. The retailer spent billions acquiring Foundation Building Materials and Artisan Design Group to strengthen its draw among pros, and that strategy is paying off.

CEO Marvin Ellison acknowledged the challenges: "Affordability and uncertainty in the broader economy continue to weigh on consumer confidence, particularly when it comes to larger discretionary purchases". But unlike Target, Lowe's has a customer base that can't postpone fixing leaky roofs or broken HVAC systems.

Still, even Lowe's trimmed its annual adjusted earnings forecast and now expects comparable sales to be flat year-over-year - not exactly a victory lap, but better than the alternative.

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🚫 Consumer Discretionary: The Sector Nobody Wants

Target and Lowe's aren't outliers - they're symptoms of a much bigger problem.

Let's look at the carnage:

Even with Amazon and Tesla propping up the numbers (they make up about 45% of the sector's weighting), the other 48 consumer discretionary stocks are showing alarming losses across retail, apparel, and leisure.

The Consumer Discretionary Select Sector SPDR Fund (XLY) slipped 2.3% in early November and has dropped 1.4% over the last month - nearly double the broader S&P 500's decline.

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🛍️ The "I Need It" vs "I Want It" Economy

What's driving all this pain? Simple: consumers are tapped out.

The preliminary Michigan Consumer Sentiment index declined to 50.3 from 53.6 as of early November, falling short of expectations. The US Economic Optimism Index dipped to 43.9 - marking the third consecutive month below the 50-point benchmark.

When people feel broke, they buy groceries and toothpaste. They don't buy new clothes, remodel their kitchens, or splurge on discretionary purchases. Target's customers are "prioritizing value through spending where it matters most, especially in food, essentials and beauty".

The September sales data from Target tells the story perfectly: Sales in both August and October were about flat, but September sales fell about 4% year over year. When discretionary spending dips, it dips hard.

Gomez and incoming CEO Michael Fiddelke also pointed to challenges like the pause of SNAP benefits during the government shutdown, which hit lower-income shoppers particularly hard.

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🎯 Target's Hail Mary: AI, Price Cuts, and $5 Billion in Hope

So what's Target doing about it? Everything.

The retailer cut prices on 3,000 food and household products last week, including a Thanksgiving meal for four under $20. They're increasing capital expenditures by 25% to $5 billion in fiscal 2026 to remodel stores and refine merchandising.

And in a move that feels very 2025, Target announced a partnership with OpenAI to let customers shop Target products directly through ChatGPT, launching next week in beta.

Will any of this work? Incoming CEO Michael Fiddelke - who officially takes over in February - better hope so. He's inheriting a retailer that analysts say "may have hit rock bottom".

Last month, Target announced it would cut 1,800 corporate jobs - its largest layoff in a decade - to streamline operations. The company is also tweaking its online fulfillment strategy at stores to free up employees' time for stocking shelves and helping customers.

But none of that changes the fundamental problem: consumers are choiceful, budgets are stretched, and Target hasn't figured out how to convince people they're the best place to spend those limited dollars.

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🎁 The Holiday Season That Nobody's Excited About

Both retailers are bracing for a weak holiday season.

Target is sticking with its guidance of a low single-digit sales decline in Q4, despite the all-important shopping season ahead. The company is featuring thousands of gifts starting at $5 and thousands of toys under $20 to drive traffic.

Lowe's is in the same boat, expecting comparable sales to be flat year-over-year, though CEO Marvin Ellison noted that November sales started positive despite hurricane comparison headwinds.

Here's the thing about holiday forecasts: retailers always try to sound optimistic. When they're telling you November and December will be "challenging," that's retail-speak for "buckle up, it's going to be rough."

Incoming Target CFO Michael Fiddelke summed up the uncertainty perfectly: "I think we've learned over time that in times of volatility it's best for us to be positioned cautiously".

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🎬 The Bottom Line

The great retail reckoning of 2025 is here, and it's forcing a brutal question: are you selling things people need, or things they want?

Target is firmly in the "want" category - and paying the price. Lowe's straddles both, with enough "need" (leaky roofs, broken appliances) to keep it afloat while discretionary spending craters.

Consumer discretionary remains the worst-performing sector in November, and there's no sign of that changing anytime soon. When consumer sentiment is at near-pandemic lows and budgets are stretched thin, retailers selling non-essentials are in for a long winter.

Target's new CEO has his work cut out for him. AI shopping assistants and store remodels are nice, but they don't solve the core problem: customers have less money to spend, and when they do spend it, they're going somewhere else.

As for the holiday season? Let's just say "choiceful" isn't the kind of word you want to hear heading into the most important quarter of the retail calendar.

🔥 What’s Heating Up This Week

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✌️ Thanks for vibing with us.

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