Target’s had a…we have to say it…target on its back since it rolled back its DEI initiatives, triggering a social media boycott and 11 straight weeks of declining foot traffic as of April 22. And now the company has missed the earnings bull’s-eye.
On Wednesday, Target announced on an earnings call that it earned $23.85 billion in revenue, missing analyst expectations by nearly half a billion dollars, and down 2.8% YoY. Comp sales fell 3.8% as compared to a year ago.
Customers went to the store less and bought less on each trip. In-store foot traffic dipped 5.7%, the number of transactions both in-store and online dropped 2.4%, and the amount customers spent decreased 1.4%. Target now expects total sales to fall in the low single digits this fiscal year, reversing its earlier projection of 1% growth.
The company blamed uncertainty around tariffs, backlash to its canceled diversity initiatives, and depressed consumer sentiment for its bad quarter.
This is a classic case of a “cyclical retailer” feeling the heat of economic uncertainty—when the economy is good, Target booms. But when times are bad, consumers will head to alternatives they think are cheaper, like Walmart. And right on cue, Walmart is eating Target’s lunch. The megastore recently reported that it saw increased spending on groceries from households earning over $100,000 a year. Even the rich are looking for deals on eggs.
Target’s adjusted earnings per share were down nearly 36% from a year ago, to $1.30, 21% below expectations. Margins were squeezed by supply chain costs, digital fulfillment expenses, and heavier-than-usual markdowns. And the stock is down nearly 30% this year.
Guess that red bull’s-eye logo is a target of a different kind these days.
This report was originally published by CFO Brew.
This story was originally featured on Fortune.com
