How does Target’s declining sales trend show up in a horizontal analysis of its income statement?

Target Corporation (NYSE: TGT) recently reported another year of declining sales and profits. For fiscal 2025 (the 52 weeks ended January 31, 2026), full-year net sales fell about 1.7 percent to $104.8 billion from $106.6 billion in the prior year, and net earnings dropped from $4.1 billion to $3.7 billion. The company noted that this was the 11th quarter in the past 13 in which it has posted either declining or roughly flat sales growth.

New CEO Michael Fiddelke, who took over from longtime CEO Brian Cornell, told investors that Target expects to grow net sales in every quarter of fiscal 2026, as the company works to win back guests and return to its “Tarzhay” heritage of affordable style. Investors reacted favorably, with Target’s stock jumping more than 4 percent in pre-market trading on the news. The year-over-year changes Target reported are a clear real-world example of horizontal analysis: comparing each line of the income statement to the same line in the prior period to see both the dollar change and the percentage change over time.

Note: The comparative income statement below has been adapted and condensed for educational use and should not be used for investment decisions. Dollar amounts are in millions except per share data. Target’s complete, unabridged financial statements can be found on its investor relations website.

Target Corporation

Condensed Comparative Income Statement

(in millions, except per share data)

Note: The condensed financial statements above can also be downloaded in Excel format for enhanced readability and accessibility. The statements should not be used for investment decisions; they have been adapted for educational purposes.

View a quick tutorial video about financial statement analysis and then answer the following questions.

Discussion Questions

Using Target’s comparative income statement above, complete the horizontal analysis by calculating the dollar change and percentage change for each line item. Then consider the following open-ended questions.

1. Target reported declining sales in 11 of the past 13 quarters. What are some possible business reasons a large retailer might see sales decline over multiple periods, and what would you want to examine in its financial statements to better understand why?
2. Horizontal analysis reports both the dollar change and the percentage change for each line item. Why is it usually important to look at both of these numbers rather than just one of them?
3. Target’s operating income fell by a larger percentage than its net sales. What does that suggest about how the company’s costs behaved during the year, and why might operating income be more sensitive than sales to a downturn?
4. Even though Target’s full-year results showed declines, management told investors it expected sales to grow in every quarter of the upcoming year. How useful is one year of horizontal analysis for predicting what happens next, and what other information would you want before relying on that kind of forecast?
5. If you were a member of Target’s board of directors, which line items in the horizontal analysis would concern you the most, and why? Which items might you view as less important for long-term performance?