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Target Faces Sales Decline, Inventory Woes Under New CEO

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  Published in Business and Finance on Tuesday, February 3rd 2026 at 3:54 GMT by Channel 3000
      Locales: Minnesota, UNITED STATES

MINNEAPOLIS, February 3rd, 2026 - Michelle Gass, Target's recently appointed CEO, is inheriting a challenging landscape marked by declining sales, inventory issues, escalating retail crime, and persistent difficulties within the company's home city of Minneapolis. Just two years after navigating the initial pandemic-era disruptions, Target, like many retailers, is now battling a shifting consumer landscape and economic headwinds.

For nearly a year, Target has experienced a consistent decline in sales. This isn't a unique problem; numerous retail giants are reporting softer consumer demand. However, Target's situation is compounded by a significant build-up of excess inventory. The company is actively attempting to offload this surplus, resorting to discounts and promotions that, while attracting customers, are eroding profit margins. Gass highlighted during last week's earnings call that the current "impact of the inflationary environment with consumers cutting back on discretionary spending, especially on categories like home goods," is a primary driver of the downturn. The slowdown in home goods, a significant category for Target, reflects a broader trend of consumers prioritizing necessities over non-essential purchases as living costs rise.

Beyond macroeconomic pressures, Target is confronting a troubling rise in "shrink" - a retail industry term encompassing losses from theft, damage, and administrative errors. Gass specifically pointed to "higher shrink rates driven by organized retail crime" as a significant issue. This isn't simply petty theft; investigations indicate an increase in sophisticated, coordinated efforts to steal merchandise, impacting profitability and requiring increased security measures. Analysts predict that increased investment in loss prevention, including enhanced security personnel, surveillance technology, and supply chain adjustments, will be necessary to mitigate these losses, further impacting the bottom line.

Target isn't solely focused on damage control. The company is simultaneously investing heavily in improving both its physical stores and its online platform. This includes initiatives to streamline operations, reduce costs, and enhance the overall shopping experience. A renewed focus on private label brands, offering value alternatives to national brands, is also a key strategy. The hope is to attract price-sensitive consumers without sacrificing brand loyalty. Investments in fulfillment capabilities, like expanded same-day delivery options and improved in-store pickup, aim to compete with the convenience offered by online retail giants like Amazon. However, these investments require substantial capital outlay at a time when revenue is declining, creating a delicate balancing act.

The situation in Minneapolis adds another layer of complexity. Following the tragic murder of George Floyd in 2020 and the subsequent unrest, Target's headquarters area experienced significant damage and disruption. While the company has undertaken efforts to address the aftermath - including community investment and safety initiatives - the challenges persist. The area continues to grapple with issues related to public safety, homelessness, and economic recovery. Target's long-term commitment to Minneapolis remains a point of public and political scrutiny. Balancing the need to protect its employees and assets with the desire to be a responsible corporate citizen in a city facing deep-seated problems presents a unique set of hurdles.

Local Minneapolis officials are calling for greater collaboration between businesses, city government, and community organizations to address the root causes of the unrest and create a more stable environment. Some analysts suggest Target could consider relocating certain operations or reducing its footprint in Minneapolis if the situation doesn't improve. While Gass has publicly reaffirmed the company's commitment to its home city, the financial pressures are undeniable.

The next few quarters will be critical for Gass and Target. The company's ability to navigate these challenges - managing inventory, curbing retail crime, improving the shopping experience, and addressing the Minneapolis situation - will determine whether it can regain its footing and restore investor confidence. Analysts widely agree that Gass's leadership will be pivotal. Her success hinges not just on strategic decisions but also on her ability to effectively communicate the company's vision and build trust with both consumers and stakeholders. The retail landscape is fiercely competitive, and Target needs to demonstrate a clear path to sustainable growth to avoid falling further behind.