Target’s latest earnings report has some concerning takeaways for other retailers ahead of the holidays.
Transcript:
Conway Gittens: I’m Conway Gittens reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.
Wall Street has its eyes on geopolitical tensions between Ukraine and Russia and that is resulting in some market volatility on Wednesday. Bitcoin is making fresh record highs and the price of gold is up.
Turning to other headlines, we’re getting mixed signals from retailers as they face their most important time of the year: holiday shopping season.
Target sounded the alarm, saying consumers are still being picky and choosy about what they buy and what they’re willing to pay. That is in stark contrast to Walmart who said customers are spending more compared to the same time last year.
Target’s warning comes amid a terrible earnings update. Third-quarter profits missed estimates by the biggest measure in two years. Sales were weaker than expected even though the retailer has been slashing prices on thousands of products for months.
The company’s chief operating officer told investors people just aren’t buying what they don’t need and are still price conscious. “It’s disappointing that a deceleration in discretionary demand combined with cost pressures have caused us to take our guidance back down after raising it last quarter.”
Target also has an inventory problem. It bought a lot of goods in anticipation of the port workers’ strike, but with that strike short lived and shoppers dragging their feet, Target is now oversupplied. This likely means one thing for Target shoppers: even bigger holiday discounts as Target turns to deeper price cuts to save the holidays.
That’ll do it for your Daily Briefing. From the New York Stock Exchange, I’m Conway Gittens with TheStreet.
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