Target sees profit boost on fewer discounts, Pride backlash hurts sales

target-sees-profit-boost-on-fewer-discounts,-pride-backlash-hurts-sales
Target sees profit boost on fewer discounts, Pride backlash hurts sales

Target (TGT.N) announced a reduction in its full-year sales and profit expectations, despite exceeding Wall Street estimates for quarterly profit. The company benefited from fewer discounts and better-stocked store shelves. However, its second-quarter sales dropped 5% due in part to the backlash against its Pride merchandise in May. Target was forced to remove some items from transgender designer Erik Carnell’s Abprallen brand due to customer-employee confrontations and incidents of Pride merchandise being thrown on the floor.

CEO Brian Cornell acknowledged the challenges faced by the company and promised to be cautious with its partnerships while still celebrating heritage moments. Target did not provide the exact financial impact of the backlash, stating that it cannot be separated from the overall macroeconomic pressure. Sales were softer in June as consumer spending remained strained, but they improved in July. Cornell noted that food and beverage, as well as household essentials, were absorbing a larger portion of consumers’ spending.

Despite the sales decline, shares of Target rose 6% in morning trading. This was attributed to a decrease in inventories and a 25% drop in discretionary items. Target has been trying to balance its merchandise by adding more daily-use products as consumers prioritize necessary items amid rising prices. Analysts believe that without the backlash and inventory issues, the stock would be trading even higher.

Target executives expressed a cautious approach for the second half of the year, despite the beginning recovery of consumer confidence. The company now expects annual comparable sales to decline in the mid-single digit range, compared to its previous forecast of a low-single digit decline to a low-single digit increase. The adjusted profit per share for 2023 is expected to be between $7 and $8, compared to the previous range of $7.75 to $8.75.

In the quarter ended July 29, Target earned $1.80 per share on an adjusted basis, surpassing expectations of $1.39. Walmart (WMT.N), Target’s bigger rival, is set to report earnings on Thursday.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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