Target CEO Brian Cornell was on CNBC today and offered up a cautious outlook for Q4.
He warned that sales of discretionary items have been falling for a number of quarters and that the trend may be worsening.
“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.
Retailers have been struggling to manage inventories throughout the pandemic. They were initially caught with too little during the goods buying spree during the pandemic but last year had too much.
“We’ve taken a much more conservative approach in planning inventory this year,” Cornell said.
The broader market is likely to cheer a slowdown in consumer spending as it could be a step towards Fed rate cuts. The latest US retail sales report was the catalyst to get 10-year yields to 5% but the market may be sniffing out an aberration.