Target missed its mark in the first quarter of this year.
The company is feeling the pinch as high prices on essentials keep consumers’ wallets tight. The Minneapolis-based retailer reported another tough quarter, with revenue and profits falling short of expectations.
Target’s comparable sales, which include stores and digital channels open for at least a year, dropped 3.7 percent in the three months ending May 4, marking the fourth consecutive quarter of decline. Revenue fell 3.1 percent to $24.53 billion, just above Wall Street’s forecast of $24.52 billion. Net income was $942 million, or $2.03 per share, slightly missing analysts’ projections by three cents, according to the Wall Street Journal.
Shares plummeted nearly 9 percent in premarket trading and were trading down around 6.7 percent midday, reflecting investor unease over the continuing sales slump.
Services Inflation Hurting Goods Sales
High inflation has been a persistent issue under President Biden’s administration, driving up the costs of groceries and household essentials by 20 percent to 30 percent compared to pre-pandemic levels. Recently, inflation has also been pushing up the prices of services, including travel and entertainment, hitting Target’s sales of home goods, furniture, and apparel hard.
Target appears to be weathering the inflation storm worse than its competitors. Indeed, consumer spending has been rising even while Target’s sales fall, suggesting the company is losing market share. Walmart, the nation’s largest retailer, saw a 3.8 percent rise in comparable store sales. Amazon and Costco are also doing well.
Looking forward, Target expects comparable sales for the current quarter to range from flat to a 2 percent increase, which would be its first positive movement in over a year. For the full year, the company projects earnings per share to fall between $8.60 and $9.60, with comparable sales growth capped at 2 percent.
“We haven’t seen a significant change in consumer behavior for the last few quarters, and we still see a very resilient consumer and expect that to continue over the balance of the year,” Cornell said.
Cornell said that the resilience of U.S. consumer spending “gives some optimism.”
Go Woke, Go Broke
Target has been sharply criticized in recent years for embracing a woke agenda and leftwing views of sex, including prominently displaying children’s apparel promoting transgender ideology as part of its celebration of so-called “Pride month.” The company recently decided to limit its “Pride themed” merchandise this year, restricting apparel to adult sections and selling them in only around half of its stores, after sales took a hit because of customer backlash against the promotion of transgender ideology.
Pride Month has been observed annually in June as a commemoration of the history and achievements of America’s gay community. It originated from theStonewall riots, which took place in New York City’s Greenwich Village in June 1969 and are often described as a pivotal moment in U.S. gay history. In recent years, however, the event has moved away from its original focus on gay men and lesbians to include a broader array of so-called “LGBTQ+” issues and to promote visibility and acceptance of transgenderism and radical leftwing views of human sex and sexuality.
Target has offered “Pride themed” items in the month of June for many years, usually without provoking customer backlash. But in recent years, the company extended its offerings to include items critics say promoted transgenderism to children, sparking calls for boycotts and outraging shoppers.