Target Faces Tough Holiday Sales as Profits Fall and Consumers Cut Back Spending
Target Holiday sales: Target’s holiday season outlook appears gloomy as the retail giant reported a sharp decline in third-quarter profits and warned of continued sales weakness in the coming months reflecting wider concerns about strained consumer spending across the U.S.
The company, which saw its CEO resign in August and later announced plans to cut around 1,800 corporate jobs in October, said Wednesday that it expects sales to remain soft through the holiday shopping period as households continue struggling with affordability challenges.
For the quarter ending November 1, Target posted a profit of $689 million, or $1.51 per share, down from $854 million ($1.85 per share) in the same period last year and below analysts’ projections of $1.71 per share. Total sales declined 1.5% to $25.27 billion, while comparable sales covering stores and online platforms open for at least 13 months fell 2.7%, marking the third straight quarter of decline.
The retailer now anticipates that comparable sales will continue to drop by low single digits in the next quarter. Target also downgraded its full-year earnings forecast from a previous range of $7 to $9 per share to a lower estimate of $7 to $8 per share.
In an effort to attract budget-conscious shoppers, Target plans to reduce prices on thousands of essential goods, including food and beverages. The company is also preparing a $5 billion investment plan aimed at long-term recovery, which includes new store openings and upgrades to digital infrastructure and fulfilment capabilities.
Shares of Target slipped around 1% on Wednesday following the earnings announcement.
Chief Commercial Officer Rick Gomez noted changing consumer priorities this season, pointing out that shoppers spent on candy and costumes for Halloween but cut back on decorations. He added that this trend may continue into Christmas, saying consumers are likely to focus on “what goes under the tree versus what goes on the tree.
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