Target revised its full-year guidance downward after a disappointing second quarter, the retailer’s CFO, Michael Fiddelke, said during the company’s Q2 earnings call on August 16. Its revenue and sales both dropped 4.9% in Q2 2023, and same-store sales were down 5.4%. The company revised its adjusted earnings per share guidance for the year to $7–$8, down from $7.75–$8.75.
Chairman and CEO Brian Cornell cited lower consumer demand for discretionary items as one reason for the sales slump. While categories like food and beverages and essentials grew, chief growth officer Christina Hennington said discretionary categories like apparel, home goods, and hardlines declined. Beauty products were also a growth category; the Ulta ministores within some Target stores performed well.
Backlash to Target’s Pride merchandise, as well as dissatisfaction with the store’s response, also played a role in the weak performance. Same-store sales slipped in May and June, Cornell said, but recovered in July, when Pride Month ended.
Some customers harassed staff in response to the Pride merchandise, Cornell said. Employees “began experiencing threats and aggressive actions that affected their sense of safety and well-being while at work,” he said, leading the company to remove some of the more controversial items from stores.
“The reaction is a signal for us to pause, adapt, and learn,” Hennington said.
Retail crime also affected Target this quarter. In the first five months of the year, Cornell said, the company saw a 120% increase in thefts that included violence or threats.
News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.