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Target’s fiscal second-quarter earnings topped expectations and inventory levels improved, despite a soft forecast for the full fiscal year.
CEO Brian Cornell said Target’s sales and store traffic improved in July, but the company is wary of rising interest rates, the return of student loan payments this fall, and still elevated prices of everyday items.
‘“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials. So that’s absorbing a much bigger portion of their budget.”
Total revenue dropped about 5% from $26.04 billion a year ago, and comparable sales declined 5.4%.
Target has tried to bounce back from about a year of disappointing results, including excess inventory and higher levels of markdowns.
The company faced backlash in late May over its collection of merchandise celebrating Pride month, which had a material impact on sales.
Target’s profits rebounded in the fiscal second quarter, due to lower markdowns, cheaper freight costs, reduced supply chain and online fulfillment expenses, and increased retail prices.
The company has shaken up its product mix to lean into high-frequency categories like groceries and household essentials, and sales of beauty items and snacks, candy and beverages have driven revenue.
