To say that it was just a bit outside is an understatement:
Ouch. The excuses flew of course blaming the tariff war for cutting the outlook, warning in the conference call that price increases were a last resort, and that sales may continue to decline. Even the mainstream financial media like CNBC recognized how bad this report and outlook was:
I’m assuming that after five years of plenty, Target’s management team never prepared for another recessionary era ever again or do not understand the concept of margin compression like Walmart does.
The bigger picture however is reflected by this chart from the Federal Reserve FRED system:
The facts are that since the 1990’s, retailers have improved their inventory to sales ratio to about as clean as it ever can be outside of the post-pandemic shortages. The trade war threat is still hanging over their head but the reality to Target is pretty ugly.
It’s not just that much of what Target offers the consumer is overpriced, it’s a lack of variety and ability to offer options like Amazon or Walmart for warehouse or store to door delivery that is just as efficient.
Needless to say, the stock price is being hit again this morning, now trading below $95 per share and threatening to break down to levels unseen in over a decade.
Buckle up, because if Target Corporation keeps missing the “target” they may well find themselves on the same glide path as other famous retailers like K-Mart, Sears, Montgomery Ward, and Woolworth’s.
