Target reveals it has the same problem as Wal-Mart

Consumers are once again feeling cautious in the face of ongoing household budget pressures.

By Forbes Digital Aug 21, 2013 1:41PM

Target (TGT) Wednesday morning missed the mark on its quarterly sales and offered a disappointing outlook for the rest of the year. In essence, the figures reinforce the message given a few days ago by its top rival, Wal-Mart (WMT), that America is again cutting back on what it spends in the face of an uncertain economy.

For the all important back-to-school shopping period, Target expects to earn 55 cents to 65 cents a share in its third quarter. Analysts thought Target would earn at the top of that range, 88 cents a share. (Adjusted earnings should be 80 cents to 90 cents a share, excluding items related to an expansion in Canada.)

Looking further ahead, Target expects adjusted earnings to be near the low end of its previous forecast range, $4.70 to $4.90 a share. Once fully reported, Target should should make closer to $3.75 to $3.95 a share. "For the balance of this year, our U.S. outlook envisions continued cautious spending by consumers in the face of ongoing household budget pressures," says CEO Gregg Steinhafel.

That pressure already showed up in Target's second quarter. Profit dropped 13.2% to $611 million, 95 cents a share, a penny below Wall Street estimates.

Revenue inched higher by 2% to $16.8, less than the $17.3 billion analysts forecast. Comparable store-sales rose 1.2%.

In response to the dismal numbers, Target shares are down over 3% in afternoon trading. 

Of course, Target and Wal-Mart haven't been the only retailers reporting a drop in consumer spending. For example, another Middle America staple, Macy's (M), gave disappointing second-quarter results. The slowdown in shopping is the result of higher payroll taxes and weak wage gains since the recoverys' start. Thinking into the immediate future, it'll be interesting to watch if it hurts even the dollar stores. The first glimpse will be available Thursday when Dollar Tree (DLTR) reports its quarterly results, then again on Sept. 4 when Dollar General (DG) reports.

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97Comments
Aug 21, 2013 2:43PM
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The economy is not recovering like the Media & Washington say.  If Target & Wal-Mart  are suffering which cater to low to middle class people that is your indicator that things are not as rosy as they say.
Aug 21, 2013 2:33PM
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It's NOT higher payroll taxes and weak wage gains limiting discretionary spending in most average households and below including our own, its Inflation and extorionistic fuel prices. Taxes went up $9 a week, and pay increased $.50 an hour, but after emptying our wallets at the gas station and market, there is nothing left. No movies, no restaurants, and no vacation. It's INFLATION and GAS prices dammit. 
Aug 21, 2013 2:46PM
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Most Americans no longer have anything left to spend. Oil companies are the worst but Americans have been duped in the name of record profits and bail outs. When we have nothing left to spend because of stagnant and lower wages there will be no more record profits for anyone. We reap what we sow corporate America

Aug 21, 2013 3:29PM
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Target will be earning less money than they expected. Sounds about the same as the average American worker.
Aug 21, 2013 3:37PM
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Why is the price of gas not looked at as part of the equation?  Over the last few years, any time it looks like the US is about the rebound, some BS story about shortages is made up by oil, gas prices suddenly rise, and the world is sputtering again.  Sadly, the Arabs aren't even to blame.  It's the Oil Pigs and their Congress slaves do nothing to prevent it (cause they all make $$$ off it via their investments).  Why does the US continue to provide legal loopholes for US oil companies to pay no taxes? 
Aug 21, 2013 3:38PM
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The only ones making money anymore are the drug dealers. 
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When all these big corporates fail and go out of business in here in the US, millions will lose jobs. The big box stores put all the mom and pops outta business. If there isn't any money to shop big box and big corporates, there isn't any money anymore. Gov and the elite are blind to that light coming thru the tunnel at em. When it hits, it will be a whole new world after picking up all the pieces.  The rich have the most to lose since they have long taken everything away from all the people so they the rich will miss things the most, lose the most and crash the hardest in the end. No amount of money saved up or stuffed away will help them because if it all crashes down around them, money won't be worth anything. People will start bartering and trading work and goods.

Aug 21, 2013 3:15PM
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 TARGET IS A LOT BETTER THAN ANY WALL MART STORE WILL EVER BE!!!!!!!!!!!!!

Aug 21, 2013 2:59PM
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LOOK at the Dow Intraday Stock Chart. Is there ANY doubt that the Fed and it's member banks are FORCE-Stabilizing the Index using OUR money? I don't want an artificial bunch of business platforms that won't hire America-- surviving. I WANT THEM ALL GONE. So we can recover. You and I are watching TERRORISM. Sell your stocks, close the banks, end the Fed and GET RID of Wall Street!!!
Aug 21, 2013 4:50PM
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Hey raymagnumx

 

"The economy is not recovering like the Media & Washington say.  If Target & Wal-Mart  are suffering which cater to low to middle class people that is your indicator that things are not as rosy as they say."

 

You're right of course, but the round-heeled media HAVE to go along with the party line. God, the $hit the media spews out now, is even worse, and more dishonest than it was in the 60s, 70s, and 80s.

Aug 21, 2013 4:42PM
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Hey Someone,

 

There's also another axiom, I think from P. T. Barnum, "There's a sucker born every minute." But you know how it is, people would rather believe fairy tales than face up to the truth. But considering that most of the last generation has been taught to believe in fairy tales [the government is your friend, we need taxes, the people in power know what they're doing, etc.] you really can't blame EVERYBODY. But I'll say this, WHEN  things start crashing down, not civilization, but the whole corrupt system in this country and others, A LOT of people are in for a HUGE shock.

Aug 21, 2013 4:34PM
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It's been almost five years now and half of you folks (or at least 47%) still believe in a slogan; "hope and change".......Do you get it now?  The man is a charlatan, a community organizer who has no clue how to govern.  The GDP has risen an average of approximately 1% over the last nine months and real unemployment (the U6 rate) is almost 15% and you blind sheep keep sucking down the elixir that the snake oil salesman sold you.  Worse yet, you bellied up to the bar again for the same elixir rebranded with a different name, "forward"; seriously?

 

Have you people never heard of the old axiom, "fool me once, shame on me.......?

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EVERYTHING has went up in price and seemingly every year! Price of gas, rents, food, paper and household goods, toys, clothing, restaurants, TAXES, and still no jobs. I haven't been able to find a job for 8 years telling them abt my BSMA or my MSPA or leaving both out. Now there are 9 million PLUS unemployed, dropped from the rolls, but still unemployed no less. How many millions are underemployed because there isn't any career employment? My husband makes the same flat rate commission rate that he made years ago. No increase in pay for him .........  Let us put Obamacare ordering everyone to BUY insurance to stop all spending and put everyone out of business, repo cars, watch Wall Street crash and hey with everything out of business, no taxes are being paid in... guess the ball will bounce back won't it?
Aug 21, 2013 3:20PM
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There is only one cure, one, repeal the fed reserve act and put us back on the gold standard and at least we will know what we are worth.

 

 

Aug 21, 2013 3:07PM
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It's the Dollar stores like Aldi,  99 cent,  Family Dollar and Dollar General that are hurting the big box stores.       The big box stores are getting beat by the army of these little stores that are now everywhere.
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Main Street has always known this. But you say housing is skyrocketing! Yeah? Maybe for rental investors, not homeowners.

Don't forget that a lot of people are going to start working less hours, 28, 29.5 hours per week. They don't have the money to buy things they want, just necessities.

Aug 21, 2013 3:37PM
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No, Wal-Mart has far more problems than Target.
Aug 21, 2013 3:59PM
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Discount retail would love to blame its "dismal" performance (assuming you can call a profit of $611 Million dismal) on a lack of consumer confidence, when an it is just as likely that the analysts overestimated future performance to bolster the stock price.

p.s. Would love to see this data reported side by side with big oil profits over the same period. And unless I'm mistaken, housing sales (i.e. money invested in family homes) is up....substantially.  

Aug 21, 2013 5:49PM
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"Target reveals it has the same problem as WalMart?"  What a stupid headline!  I thought perhaps Target was failing to stock its shelves or that OSHA was after them or that people are sick of WalMart or that their stores were aging (and that's FOUR things, not just one problem). 

Last I checked Target has items on its shelves, OSHA wasn't heavily fining them, people still shopped there and their stores are much nicer than Walmarts!

If only I could afford to shop at Target!

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