Target reported disappointing earnings that fell far below Wall Street’s expectations due to slower than expected demand. The company announced profits that missed forecasts by 20%, as well as revenues that came in under expectations for the first time in over a year. CEO Brian Cornell blamed the poor performance on a lack of discretionary spending by consumers and costs related to preparing for a port strike in October. The company’s Chief Operating Officer, Michael Fiddelke, expressed disappointment in the deceleration of demand and cost pressures that led to a lowering of profit and sales goals for the year. Despite feeling confident in its long-term outlook, Target shares dropped 15% in premarket trading.
The news from Target, coupled with other indicators like slower holiday hiring, could signal softer sales for the final calendar quarter. This comes as Walmart, Target’s rival, reported earnings and revenues that beat expectations, but noted that customers are still holding back for compelling deals due to rising food costs. Walmart’s Chief Financial Officer, John David Rainey, expects the holiday season to be consistent with this trend, with customers focused on price and value.
Overall, the retail sector faces challenges with consumer spending, leading to lower than anticipated earnings for companies like Target. Investors are closely watching for further updates, including earnings reports from companies like chipmaker Nvidia, to better understand the overall economic landscape heading into the holiday season.
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