Target Faces Sluggish Spending While Walmart Posts Stellar Quarter

Target has reported sluggish sales and declining profits in the fiscal third quarter as inflation-weary customers cut back on apparel and other non-essential purchases, Anne D’Innocenzio reported for the Associated Press (AP).

The weak August-to-October period for Target contrasted sharply with the stellar third-quarter results of low-cost rival Walmart. I Photo: Mike Mozart Flickr

The Minneapolis-based retailer fell short of Wall Street expectations for the quarter, and its profit and sales outlook for the final three months of the year also disappointed industry analysts.

Costs related to a US dockworkers’ strike in October further weighed on Target’s performance at a time when Americans are spending more selectively, the company said.

“We encountered some unique challenges and cost pressures that impacted our bottom-line performance,” Target Chairman and CEO Brian Cornell stated.

The weak August-to-October period for Target contrasted sharply with the stellar third-quarter results of low-cost rival Walmart, which reported strong sales on Tuesday and released optimistic holiday season projections.

Walmart’s scale makes it a tough competitor on price. The retailer operates nearly 5,000 stores in the US, generating annual sales of $611.3 billion in the year ending January 31, 2024.

In comparison, Target operates 1,900 stores and reported sales of $107.4 billion for the same period. Even when Target’s prices match or undercut Walmart’s, the company has long struggled with the perception of being more expensive, said industry analyst Neil Saunders.