New York (CNN) shoppers back down at target, Home Depot and other major chains as they face pressure from rising prices and borrowing costs.
Target’s total sales rose 0.5% over the fourth quarter from last year, the company said Wednesday. But digital sales have slumped, the company told shoppers Declined on discretionary purchases in what CEO Brian Cornell called a “very difficult environment” for consumers.
the goal (TGT) Sales at stores open for at least one year increased 0.7%, and the company said customers were spending more on food and essentials. Earnings fell 5.8% in the quarter.
It’s the latest retailer to say shoppers have backed away from items like clothing and home goods and switched to groceries and essentials. Low- and middle-income consumers have been pressured more by higher prices.
This hurts the target because the chain relies on impulse purchases and shoppers fill their carts with items that catch their eye as they browse stores, said Neil Saunders, retail analyst at GlobalData.
“The carefree shopping trip has been replaced by more focused tasks as people set budgets and are less willing to deviate from them,” he said in a note to clients.
Theft is on the rise
Target also warned that losses from shoplifting and organized retail crime will reduce its profitability by more than $500 million this year compared to last year.
Retailers in some areas of the country said petty shoplifting, as well as organized groups that steal merchandise and resell it online, hurt their business. Target and other chains have sealed products to deter shoplifting.
But Target is one of the few chains to put an estimate on its losses, known in retail as “shrink.” Shrink also comes from employee theft, unwanted products, and other errors.
The retail business contraction was $94.5 billion in 2021, up 53% from 2019, according to the National Retail Federation’s annual survey of about 60 member retail firms.
But the impact of shoplifting on retail losses may be exaggerated in some cases.
Walgreens said it saw losses spike during the pandemic and cited organized retail crime in its decision to close five stores in San Francisco in 2021. But it has recently backtracked.
“We probably cried a lot last year,” a Walgreens executive said in January about shrinking numbers.
Target stock is down slightly during pre-market trading on Wednesday.
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