Target said Wednesday that its customers reduced spending on groceries and home goods as concern about high prices persisted last quarter.
The retailer said in its latest earnings report that overall customer traffic fell 1.9%, while the average amount that customers spent on those visits also dropped 1.9%. The company’s stock declined Wednesday morning as its profit missed Wall Street’s expectations for the first time since November 2022.
The Target earnings come amid broader concerns that U.S. consumers may be getting more discerning with their money, as savings dwindle, debt grows and prices remain high. Some CEOs of major consumer brands have warned about spending declines, though others, like executives at Sweetgreen and Delta Air Lines, have still seen growth.
On a call with reporters, CEO Brian Cornell said the company’s results reflect “continued soft trends in discretionary categories.’
He said the company wants to make sure it offers customers value and communicates that in a clear way. Target sought to get ahead of Wednesday’s report by announcing earlier this week that it would be cutting prices on thousands of items throughout its stores, including groceries and other staples.
Target remains more associated with discretionary purchases than with groceries: It only gets about 20% of its sales from food compared with rival Walmart, which draws about 60%.
As a result, it is more affected by any pullback in spending.
And even though inflation has recently shown signs of further slowing, the official 12-month rate remains above 3%, above the Federal Reserve’s 2% target.
