"Target Corp. said consumers pulled back on their spending in recent weeks, sapping sales and profits in the latest quarter and putting a cloud over its holiday season," the Wall Street Journal reports.
Target said that "total revenue of $26.5 billion grew 3.4 percent compared with last year, reflecting total sales growth of 3.3 percent and a 9.5 percent increase in other revenue. Operating income was $1.0 billion in third quarter 2022, down 49.2 percent from $2.0 billion in 2021, driven primarily by a decline in the Company's gross margin rate."
Same-store sales were up 2.7 percent.
E-commerce sales were up 0.3 percent.
The Associated Press offers this analysis:
"What has become clear is that spending by the American consumer is shifting, with many trading down to cheaper options, and to stores where they think they can save money. That was evident at Walmart, which reported better-than-expected earnings Tuesday. One factor: more than 50% of Walmart’s U.S. business comes from groceries; that number is 20% at Target. With inflation all around, households take care of needs like food and shelter first."
And, the Journal writes, "Target executives lowered their financial goals for the holiday quarter and said they are prepared to offer deep discounts in the coming months to clear out unwanted inventory and attract shoppers."
Target CEO Brain Cornell said that "it’s an environment where consumers have been stressed … We know they are spending more dollars on food and beverage and household essentials. And as they are shopping for discretionary categories ... they are looking for that great deal.”
- KC's View:
The National Retail Federation (NRF) has been forecasting that holiday retail sales during November and December will grow between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion … but that just seems really optimistic to me. Maybe they have tio trade in optimism because of what they do, but that kind of increase only seems likely if it is almost completely attributable to inflation. In which case, it won't really be good for most retailers at all.