Target CEO Brian Cornell said the results show “continued soft trends in discretionary categories.”
Target Shares Tumble 10 Percent
CNBC reports Target Shares Tumble 10% as Consumers Buy Fewer Groceries and Home Goods
Earnings per share were $2.03 vs. $2.06 expected.
Target on Wednesday posted a year-over-year sales decline and missed Wall Street’s earnings estimates, as consumers fatigued from high prices bought both fewer discretionary items and groceries.
On a call with reporters, CEO Brian Cornell said the company’s results reflect “continued soft trends in discretionary categories.”
Target also announced Monday it was cutting prices on thousands of everyday items, including milk, bread, paper towels and diapers.
The cheap chic retailer has been particularly hurt by the dynamic because it gets less of its sales from food than rival Walmart, which draws about 60% of its U.S. sales from groceries. That compares with roughly 20% at Target.
Comparable sales, also called same-store sales, tumbled 3.7%, as shoppers bought beauty items but less of other discretionary categories like apparel and home. Discretionary merchandise wasn’t the only part of the store under pressure. Sales in frequency categories, food and beverage and beauty and household essentials, declined by low single digits, Chief Growth Officer Christina Hennington said on a call with reporters.
Are Consumers About to Throw in the Towel?
We had an advance hint at Target weakness,
On May 16, I commented Retail Sales Fall Flat, Are Consumers About to Throw in the Towel?
Nominal retail sales were flat this month but real sales fell 0.3 percent because the CPI rose 0.3 percent.
Eventually, consumer spending will give way. Whether the time is now remains to be seen.
Real vs Nominal Advance Retail Sales Percent Change From Year Ago
On a year-over-year basis, real retail sales have been negative 12 out of the last 15 months.
The vaunted consumer is much less than portrayed.