US Markets
Thursday, November 2nd, 2023 1:47 pm EDT
Key Points
- Shoppers are cutting back on spending, even on groceries, due to budgetary concerns, as highlighted by Target’s CEO Brian Cornell.
- Target has experienced seven consecutive quarters of declining sales in discretionary categories, including apparel and toys, as well as a decrease in the number of items purchased in food and beverage categories.
- Target has adopted a cautious outlook for the crucial holiday season, adjusting its inventory planning approach to address previous challenges and focusing on key seasonal moments to offer new, affordable, and special items to meet consumer demands.
In a recent interview with CNBC, Target’s CEO Brian Cornell discussed the challenges the retailer is facing as consumers appear to be scaling back their spending, even on groceries, due to budgetary concerns. Target has experienced seven consecutive quarters of declining sales in discretionary categories like apparel and toys, both in terms of dollars and units. Even in the food and beverage categories, the number of items customers are purchasing has been on the decline.
Despite signs of an improving economic outlook and moderating inflation, Target has remained cautious about its performance. In August, the company lowered its expectations for full-year sales and profits. This caution comes as the crucial holiday season approaches, with Target set to report its earnings on November 15.
Target has faced inventory challenges in recent holiday seasons, initially struggling with supply chain disruptions during the peak of the COVID-19 pandemic and then dealing with an excess of the wrong inventory a year ago. To address these issues, the company has adopted a more conservative approach to inventory planning for this year’s holiday season.
Cornell emphasized that Target aims to focus on key seasonal moments and offer new, affordable, and special items to meet consumer demands. In recent years, consumers have shown a willingness to make more purchases during events like Halloween and Mother’s Day, which could potentially benefit the company in the upcoming months.
Overall, Target is preparing for a more cautious approach in light of consumer spending trends, but remains determined to meet consumer needs during the holiday season with a focus on strategic inventory management.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/02/target-ceo-says-shoppers-are-pulling-back-even-on-groceries.html
