Target executives issued a weak forecast Wednesday in recognizing that elevated prices continue to have a "meaningful impact" on family budgets and savings.
Target Chief Growth Officer Christina Hennington told analysts on an earnings call that one in three Americans maxed out or is nearing the limit on at least one of their credit cards."
"For these reasons and more, we remain cautious in our near-term growth outlook," Hennington said. She projected that discretionary spending "will continue to remain pressured in the short term" but will "normalize over time."
A customer at the self-checkout lane at a Target store in the Queens borough of New York, on May 16, 2023. (Bing Guan/Bloomberg via Getty Images / Getty Images)
Sales at Target stores open for at least a year dropped 3.7% during the three-month period ending May 4 "as consumers continue to spend cautiously, particularly in discretionary categories," Target COO Michael Fiddelke said.
During the second quarter, the retailer projected sales would recover from back-to-back declines, but only modestly increase to a range from flat to 2%.
Target reported adjusted earnings per share of $2.03, missing Wall Street estimates.
Its total revenue was $24.53 billion, down 3.1% percent from the same time a year ago, though slightly better than the $24.52 billion Wall Street expected.
Shopping carts sit inside a Target store on August 16, 2023 in Chicago, Illinois. (Scott Olson/Getty Images / Getty Images)
The release of Target's quarterly results comes shortly after Walmart CFO John David Rainey highlighted in the Arkansas-based retailer's earnings how "many consumer pocketbooks are still stretched."
Walmart's earnings topped Wall Street expectations, though the company recognized that consumers are still spending more of their paychecks on non-discretionary categories rather than general merchandise.