Target touts $5 billion investment plan as sales continue to decline

While Target turned in another lackluster quarter in Q4 of 2025, with comparable sales sinking 2.5% YoY, there’s hope on the horizon for the struggling mass retailer. The company is now forecasting a return to growth in 2026, as investments in stores and technology begin to pay off. It is forecasting net sales for the year to grow around 2% from 2025, and for every quarter of the year to deliver positive sales.

Behind this more optimistic projection is a $5 billion capex plan for the year, which is up more than a billion dollars from last year. Most of this investment will go into improving stores, including plans to open 30 new stores and remodel 130. In addition, $1 billion will support its food and beverage business, which is more than double what it’s invested in recent years, according to Target CFO Jim Lee.

The category has served as a “reliable growth engine” despite “a challenging top-line backdrop for the company overall,” he said, pointing to non-alcoholic beverages and candy as leading the positive trend.

Another $1 billion will go into improving the guest experience, which new CEO Michael Fiddelke listed among the company’s top priorities. He emphasized the importance of discovery, and noted that for many customers, their experience begins “on social and in search.” He added that Target’s scale would allow it to “invest at the top of the purchasing funnel,” including partnering with social media creators and investing in AI to make it more conversational.

The note of optimism couldn’t come soon enough. Two major investor groups sent letters this month pushing for changes at the company after a series of decisions damaged its reputation and dampened sales, including a pullback in DEI initiatives and a delayed public response to ICE raids at its stores in the Minneapolis area. The pushback comes even after Target announced plans to shake up its leadership team, including the promotion of Fiddelke to CEO.

The company also announced 1,800 corporate layoffs in October with the goal of streamlining its operations, which Fiddelke called a “a difficult but necessary step forward” in the earnings call.