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.
So they had their CEO come on and complain that the reason “line go down” is “people no buy” so investors won’t think it’s management’s fault?
Something something no one wants to eat anymore.
Yes. Either that or everyone involved from shareholders to board is dumb as a rock. Knowing rich people are not special, but just got lucky, I am not ruling out either option.
I mean, do you think there are obvious actions that management has done that have caused it? Target’s margins are about 3%, so they’re not exactly extorting consumers for their own profit. It’s a grocery store. It’s not a particularly complicated business. Consumer grocery spending probably is more related to the general consumer economic environment than anything that Target does or doesn’t do.
I mean, I think anyone making decisions at a multi billion dollar corporation that they themselves are pocketing millions of that money instead of letting it be reinvested in the business and workers, should be fully to blame for their companies tanking profits.
Executive salaries are a pretty small portion of business expenses. As per Target’s 2022 data, their selling, general, and admin expenses were about 19.76 billion dollars. Of that, the CEO’s pay was $17.7 million, or 0.09%, and actually decreased from the year before. Sure, it’s a lot of money, but it’s pretty average for Fortune 500 CEOs, and nullifying his pay would make essentially no difference. If you were to slash his pay to 0, you could give everyone else an annual raise of $40, representing an hourly raise of about two cents.
They are still in charge of the company. If I am in charge of the fruit stand and all the fruit goes rotten, I’m responsible. I don’t say “people just aren’t hungry”, I mismanaged something, and should suffer the consequences. They were steering the ship, it’s their fault the business is tanking. Earn the golden parachute you have and take the damn blame.
Okay, but we’re talking about lower consumer spending, not fruit rotting on shelves.
And again, his pay has actually decreased in recent years, even more so when you account for inflation, so you might even say that he’s suffering some consequences. I’m not saying that Target is perfect or anything, but sometimes the business environment simply changes despite what leadership does. No amount of good management would have made it be a good time to be a candlemaker or horse carriage operator in the 1930s. Consumer disposable income obviously isn’t exactly the same thing as technological obsolescence, but regardless, Target isn’t Walmart and isn’t trying to be Walmart, nor is it capable of being a better cheap grocer than Walmart is. They’re fundamentally aiming at a slightly different target market, and sometimes the economic wind simply isn’t blowing your way.
And you are missing the point of my comments, idgaf about money, they are skirting RESPONSIBILITY. They were driving, they are responsible for the decisions that are making it hard for target to weather the current economic times. Poor management, and this interview was done to deflect that responsibility.
Target is not at all primarily a grocery store. They chiefly sell home goods and clothing, which they were known for long before they added the somewhat limited grocery section.
Sure, I’ll admit that’s bad wording on my part. I don’t think it really changes my point though. If anything, since a lot of the things Target sells aren’t strictly necessities like groceries, you’d expect a greater decline in those kinds of non-essential purchases when consumers are in tighter financial environment.
I’m not sure of the changes in their sales categories. You’re right about their overall margins being 3-4%, according to their 2022 financial statement. Here’s how their sales break down by category… about 20% food. I suppose ‘beauty and household essentials’ would be things a grocery store also sells such as cleaning supplies.