That dynamic has only been intensified in recent months as inflation jumps sharply, and the latest financial report from Target underscore the challenges.
Target reported Wednesday that its profit tumbled 52% compared with the same period last year in an environment of rising costs for things like fuel, and also a lightening quick return by consumers to more normalized spending. Purchases of big TVs and appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that must be marked down to sell.
Target’s quarterly financial report comes a day after shares of rival Walmart tumbled about 17% for similar reasons after it posted quarterly results. Both companies missed profit expectations by a wide margin. Shares of Walmart fell another 8% over the week.
Shares of Target Corp. plunged 25%, the biggest one-day sell-off since the Black Monday market crash of 1987.
What hasn’t changed is the willingness of Americans to spend, even with inflation hovering near four-decade highs. Target said that revenue rose 4% to $24.83 billon in its most recent quarter, which was a little better than expected.
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