(Reuters) – Target Corp said on Wednesday it was aiming for second-quarter profit below Wall Street expectations and warned of a drop in sales over the period as inflation pushes consumers to avoid non-essential purchases such as the electronic devices and household items that the American company distributes.
The title of the distribution group fell by around 3% in the forefront of trading. The action of its big rival Walmart lost about 1%.
For the current quarter, Target expects adjusted earnings between $1.30 and $1.70 per share, below consensus at $1.93.
Comparable sales are expected to fall between 1% and 5% (“low-single digits”) while the consensus was for an increase of 0.25%, according to data from Refinitiv.
“Right now, (the American consumer) is spending more due to inflation, saving less and delaying major purchases,” Christina Hennington, the group’s chief growth officer, told a news conference.
The company also said theft and organized crime could reduce its profitability in 2023 by more than $500 million compared to last year.
Target is looking to refocus on household essentials and groceries to address the drop in purchases caused by runaway inflation and higher interest rates.
The company nevertheless maintained its full-year profit forecast for 2023 after doing better than expected in the first quarter. The company benefited from stable demand for beauty products and household essentials, as well as its own brand products.
The caution displayed by Target comes the day after the announcement by the main American chain of DIY stores, Home Depot Inc., of a downward revision of its annual sales forecast.
Walmart will release its quarterly results on Thursday.
(Report Ananya Mariam Rajesh and Aishwarya Venugopal in Bangalore; French version Victor Goury-Laffont, edited by Blandine Hénault)
Source: Challenges en temps réel : accueil by www.challenges.fr.
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