Target profit plunges 90% as inflation-weary shoppers pull back

[mystery-ak]

Target profit plunges 90% as inflation-weary shoppers pull back
Tags:

    Target, business

Posted August 17, 2022 7:48 a.m. EDT
Updated August 17, 2022 10:45 a.m. EDT

By Chris Isidore, CNN Business

CNN — Target reported profit plunged 90% in the second quarter, falling far short of expectations, as inflation-weary customers pulled back on spending on nonessential items.

Retailers, including Target, have been forced to cut prices on general merchandise, such as clothing, electronics and home goods, because of excess inventory of goods. Consumers had to shift more of their spending to higher priced food and gasoline. But Target reported that its price cuts did little good: It ended the quarter with 1.5% more inventory than it had three months earlier and 36% more than it had a year ago.

The company said it reduced the amount of discretionary items it held in warehouses, but Target noted the sales on those items "put significant pressure on our near-term profitability."

Target's net income fell to $183 million last quarter, down from $1.8 billion during the same period a year ago. The company's revenue of $26 billion was up 3.5% from a year ago and roughly in line with forecasts.

After seven quarters of strong profit growth, this marks the second-straight quarter of plunging earnings at Target, although this decline was far more than the 40% drop in the previous quarter.

Target's disappointing results came in contrast to much stronger results at larger rival Walmart, which Tuesday reported profit was down only slightly from a year earlier. But Walmart also said it expects a 8% to 10% drop in annual earnings, although that was not as big a drop as it previous forecast.

Shares of Target fell 3% in premarket trading on the news.

https://www.wral.com/target-profit-plunges-90-as-inflation-weary-shoppers-pull-back/20420942/

[mountaineer]

I'm at least as wokeness-weary as inflation-weary. That's why I don't shop at Target.

[libertybele]

I still shop at Target; the quality of their paper goods is better and more affordable than Walmart and the local supermarket as well as cleaning supplies and some food items.  These days, I'm shopping where I can to stretch our dollars.

Losing 90% is huge and maybe they won't be around much longer along with most of the brick and mortar storefronts.

[catfish1957]

Slow  to responding to this thread, but one of the first vicitms of a deepening recession  are retail sales of middle America (Target,Walmart).

Watch for a 3Q and 4Q bloodbath.

When Americans start seeing their net worth evaporate from real estate losses,  the sphinter is really going to start puckering.

[GtHawk]

Slow  to responding to this thread, but one of the first vicitms of a deepening recession  are retail sales of middle America (Target,Walmart).

Watch for a 3Q and 4Q bloodbath.

When Americans start seeing their net worth evaporate from real estate losses,  the sphinter is really going to start puckering.

It's odd, just a day or two ago I swear I read where Wally's was actually doing better because of the economy and now this about how poorly Target is doing. I have always considered Target to be nothing more than a slightly upscale Walmart and unlike others I haven't really found their goods any better than Walmart's, especially considering they get the majority of their goods from the same manufacturers, and as a general rule their prices are a bit higher...at least where I am.

[libertybele]

Slow  to responding to this thread, but one of the first vicitms of a deepening recession  are retail sales of middle America (Target,Walmart).

Watch for a 3Q and 4Q bloodbath.

When Americans start seeing their net worth evaporate from real estate losses,  the sphinter is really going to start puckering.

We're starting to see a few new construction sites with homes not finished and just sitting; piles of lumber just sitting with weeds growing up.  This is never a good sign.  Prices are still rising along with inventory and home sales are stalled.  The realtors are hoping that people are waiting till the wintertime to come down and purchase.  Things are different this time around.  Many have flocked to this area and have purchased their homes already with some participating in bidding wars.  Building has stalled already. (Vacant land is still widely available).  This points to a cycle beginning that we've seen around here before; falling land prices, falling home values, foreclosures and people upside down on their mortgages.  With us in a recession and possibly (IMHO) heading for a depression, I don't know what we'll see happen next.