New York
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Target’s problems are intensifying.
In the latest signal of trouble, the company reported sales dropped during its latest quarter, and Target cut its full-year profit guidance Wednesday. The company’s sales have stagnated for about four years, and Target said last month that it would cut 1,000 corporate employees, roughly 8% of its global workforce.
Target has proven over and over that it is poorly positioned to succeed in this uneven economy, selling the wrong mix of items for an increasingly frugal customer. Target specializes in cheap chic clothing and home decorations, but fewer customers believe they can find the best prices and deals there.
Shoppers, strained by inflation, have shifted their spending to essentials and value items. They’ve switched to Walmart, Amazon, TJ Maxx and other chains instead.
“Target is really struggling and does not seem to be able to climb out of the hole it has dug itself into,” Neil Saunders, an analyst at GlobalData Retail, said in a note Wednesday.
The company has also faced intense customer backlash for its retreat on some diversity initiatives.
Earlier this year, the company ended some of its DEI programs. The decision angered supporters of diversity and inclusion policies, who felt blindsided by Target. Customers online protested Target’s decision, and Target acknowledged its move hurt its sales.
Target may have just hit rock bottom. It has a new CEO coming in next year. But its turnaround can’t happen soon enough.
In August, Target CEO Brian Cornell announced he was stepping down after 11 years at the retailer. Some industry analysts believed Target should bring in an outside voice to lead the company, but it opted for an internal candidate. Cornell will be replaced next year by Michael Fiddelke, Target’s current chief operating officer.
Target’s stock slipped 1% during pre-market trading Wednesday. Shares have tumbled roughly 35% this year.
This is a breaking news story and will be updated.
