Inflation-restricted customers avoided Target’s messy, understaffed stores.
On Wednesday morning, the Minneapolis chain said third-quarter profit just took another hit, deepening a slide that’s now stretched across three straight years — and customers fleeing the chain in droves are a big reason why.
It’s the 12th quarter in a row that sales have fallen. And, the retailer said it expects its sales slump to extend through the critical holiday shopping season.
To stop the bleeding, Target is throwing another $1billion at store remodels and new locations next year, bringing its multi-year store facelift tab to roughly $5billion.
Executives hope the investment will finally jolt the chain out of its prolonged funk — and independent analysts say it’s overdue.
‘Stores are not optimized for the consumer,’ Neil Saunders, a retail expert for GlobalData, said.
‘There are too many out of stocks, too much mess, not enough assistance at registers, so forth.’
Investors have punished Target’s stock recently, sending it down 43 percent over the past year. Shares are down nearly three percent before Wednesday’s Wall Street bell.
Target’s sales dropped again last quarter – and top executives said sales might continue to fall during the holiday season
Pressure to produce a turnaround now lands squarely on incoming CEO Michael Fiddelke, a 20-year company veteran who will take the reins from Brian Cornell on February 1.
The goal: restore Target’s image as a destination for affordable-but-stylish goods — a space Walmart has been dominating. In stark contrast to Target’s struggles, Walmart has been thriving and will report its latest quarterly results on Thursday.
He inherits a retailer battling stubbornly high inflation, thinning foot traffic, and a brand identity that’s lost its spark.
Target, meanwhile, has been hacking away at costs.
In October, the company said it would cut about 1,800 corporate jobs, roughly 8 percent of its white-collar workforce, to speed up decision-making and reignite growth.
But with sales shrinking, profit down 19 percent in the most recent quarter, and shoppers choosing other retailers, the turnaround Target needs is becoming more urgent by the day.
This is a breaking news story. Updates to come.
