Target's Traffic Is Up 7.2% — and the Holiday Quarter Will Test the Turnaround

Target stores drew 7.2% more chain-wide visits in the third quarter, a 5.9% jump on a same-store basis, according to foot traffic firm Placer.ai — some of the strongest year-over-year gains in retail right now.

The numbers matter because Target is nearly three fiscal quarters into a major turnaround under new CEO Michael Fiddelke, and the traffic data is the clearest signal yet that his early bets are working. Roughly half of shoppers now visit Target twice a month or more, and nearly one in eleven comes in five times or more, Placer.ai found.

Advan Research puts the picture in competitive frame: Target's third-quarter foot traffic rose 4.7% year over year, versus 1.7% at Walmart. Both retailers report quarterly earnings next week, and analysts are watching closely.

What's actually driving the visits?

Mizuho analyst David Bellinger told Business Insider the early wins came from obvious fixes: "They picked off some of the easiest, low-hanging fruit to begin with."

That fruit included tighter store operations and an initial refresh of categories like food and beauty, Bellinger said. Target also leaned hard into viral cultural moments — the 30th anniversary of Pokemon had shoppers lined up outside its stores.

But the harder work hasn't started. "The real parts of the store that Target needs to fix, they haven't touched yet, so that's mainly home and apparel where you get better margins," Bellinger said. "If those categories turn, then the Target turnaround is fully in force."

There's a catch, though. Bank of America analyst Chris Nardone wrote in a note earlier this week that Target's past strength in home and apparel may be hard to replicate because Walmart has become a more formidable competitor in those categories.

What does the macro mean for the holidays?

A recent bump in inflation, paired with stalling wage growth, could point to a dicey road ahead for retailers of all stripes. Jefferies analyst Corey Tarlowe told Business Insider that Target has positioned itself well anyway, having been proactive about offering strong value for shoppers' dollars.

"If we are in an environment where, let's say, the consumer needs to turn a little bit more toward a value focus, Target plays well into that," Tarlowe said. He added that the company has been regaining its trademark balance of affordability and style — the formula that once defined the chain.

Some investors have flagged an apparent slowdown in traffic growth in October. Bellinger attributes that to an exceptionally strong September, plus tougher year-ago comparisons that are just now kicking in.

The first Fiddelke holiday quarter

With this being Fiddelke's first holiday quarter as CEO, sticking the landing matters more than usual. On that front, the operational groundwork looks done.

"They definitely have a lot of momentum going into the holiday. The stores are a lot cleaner. They're a lot sharper. Better staffed. So it seems like they're on pace for a good holiday," Bellinger said.

Target's chief merchandising officer Cara Sylvester laid out the merchandising strategy at a media briefing last month: a high-cadence approach designed to keep shoppers coming back repeatedly through the season rather than front-loading everything in November.

"It's one thing to set product in November and then forget about it and have it sell down. We want to have that consistent newness," Sylvester said. "Right up until the end."

For practitioners, the read is straightforward. Traffic is the leading indicator, and Target's is beating the sector. Whether the turnaround graduates from cheap fixes to the margin-rich home and apparel businesses — against a stronger Walmart — is what next week's earnings and the holiday stretch will start to answer.