Target (NYSE:TGT) stock is down about 2% today despite news that the retail giant will lower its prices on 5,000 products amid high inflation. Indeed, Target announced today it will cut prices on thousands of popular products as a means of bringing in more customers.
The Walmart (NYSE:WMT) competitor plans to direct its price cuts toward household essentials like meat, milk, bread, fruit and vegetables, coffee, pet food and more. The cuts will apparently save consumers millions of dollars on whole, according to Target. It has already cut prices on 1,500 items so far, with plans for “thousands more price cuts” to hit through the summer.
“Target routinely adjusts its prices to ensure it is competitive within the markets it does business,” Target said.
Target isn’t the only retailer slashing prices lately. Indeed, the likes of Walmart and discount grocery chain Aldi have each cut prices recently as elevated inflation continues to put undue pressure on U.S. households.
Household spending has slowed in recent months, as a result of higher prices.
“The softer pace of spending is due in part to consumers being selective and prioritizing retail purchases,” said Jack Kleinhenz, Chief Economist at the National Retail Federation.
That said, Kleinhenz acknowledges that “consumers remain willing to spend, keeping the economy afloat despite fatigue from stubbornly high inflation for services and higher interest rates.”
Reasonably so, retail sales are still up 3% year-over-year (YOY). Walmart also recently indicated that U.S. shoppers are returning to stores, as evident from its higher full-year forecast and better-than-expected earnings results last week.
This puts all the more pressure on Target, which has experienced financial duress of late.
5 Things to Know About TGT Stock as It Cuts Prices
- Target’s price cuts will span both national brands as well as its own private brand.
- The discounts come in addition to planned price cuts for Memorial Day, May 27.
- Investors are eagerly awaiting Target’s first-quarter earnings results, due this Wednesday, May 22.
- After Walmart’s breakout earnings performance, many analysts believe Target may also have enjoyed a surge in retail activity.
- Target stock is up 10% so far this year, slightly trailing the S&P 500 and Nasdaq Composite, which are respectively up 12% and 13.8% year-to-date (YTD).
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
