Target CEO says shoppers are pulling back, even on groceries

Target CEO Brian Cornell says shoppers are pulling back, even on groceries, as they feel stressed about their budgets.

In an interview with CNBC’s Becky Quick that aired Thursday morning, he emphasized that the retailer has posted seven consecutive quarters of declining sales of discretionary items, such as apparel and toys, in terms of both dollars and units.

“But even in food and beverage categories, over the last few quarters, the units, the number of items they’re buying, has been declining,” he said in the interview.

With the comments, Target doubled down on a cautious outlook, as it gears up for the crucial holiday season. The retailer cut its full-year sales and profit expectations in August, despite a growing number of economists delaying or scrapping calls for a recession and government data showing that inflation is cooling.

The company will report earnings on Nov. 15.

Cornell said the company has faced a turnabout from previous holiday seasons. During the height of the pandemic, it didn’t have enough merchandise because of pandemic-related supply chain bottlenecks. Then, a year ago, it coped with too much of the wrong inventory.

“We’ve taken a much more conservative approach in planning inventory this year,” he said. “But we’re gonna lean into those big seasonal moments and play to win, when we know the consumer is looking for something that’s new, looking for affordability, looking for that special item for the holiday season.”

Over the past few years, Cornell said shoppers have typically sprung for more purchases during “seasonal moments” such as Halloween or Mother’s Day — a factor that could help in the coming months.

Cornell’s full interview with CNBC will air later Thursday as part of CNBC Evolve.