Target profits disappoint as inflation forces shoppers to slash spending; stock dips 10%

Inflation is taking a bite out of Target’s bottom line as the “cheap chic” discount retailer revealed customers were buying fewer groceries and discretionary goods, sending its shares tumbling as much as 10%.

The Minneapolis-based retailer fell short of Wall Street estimates for the quarter on Wednesday — another blow for the company that has seen its stock price decline by more than 40% since it reached an all-time high in November 2021.

Earlier this week, Target announced a plan to gradually slash prices on 5,000 of the most frequently bought items in hopes of enticing inflation-weary customers back to their stores.

This followed its move in January, where it introduced “dealworthy,” a new line of 400 products starting below $1 and most products under $10.

Inflation has dampened consumer confidence, according to a Fed survey which found that more adults are feeling worse about their finances due to the rate of price increases on everyday household items.

Target said on Wednesday that it expects comparable sales in the second quarter will recover from its four straight quarterly declines, being flat to up 2%.