Target warned on Tuesday that uncertainty around tariffs would weigh on the retailer’s profit in the first quarter and doubled down on sourcing more of its products from countries including Guatemala.
Reuters
Target joined bellwether Walmart, as well as electronics retailer Best Buy in warning about expectations for the year. Sticky inflation and tariffs on imports proposed and implemented by President Donald Trump are expected to temper demand for non-essential categories such as home furnishings and electronics that make up more than two-thirds of Target’s sales.
Target shares were down 3.2% in afternoon trading on a day Wall Street’s main indexes fell on broader tariff worries. The retailer told reporters on Tuesday that the new tariffs on imports from Mexico and Canada – that took effect on Tuesday – are “new dimensions” which could result in increased industry-wide prices for seasonal produce such as avocados.
Target, like other retailers, depends on lots of vegetables and fruit like avocados from Mexico during winter, CEO Brian Cornell said.
“But if there’s a 25% tariff, those prices will go up … certainly over the next week,” he said on a CNBC interview earlier in the day, declining to say the degree of price hikes Target shoppers will see on its own shelves.
Target also said it would move more of its sourcing for its store brands, which include All in Motion and Cat & Jack, to countries in the Western Hemisphere like Guatemala and Honduras, and away from China where 30% of those products are made. It expects to further reduce that dependence to 25% next year.
“These things are unfolding so quickly. I think all of us are speculating and I think we will listen and learn and make sure we control the things we can control,” Cornell said.
Target forecast annual comparable sales to be about flat in the year through January 2026, compared to Wall Street’s expectations for a 1.86% rise. It expects earnings of between $8.80 and $9.80 per share, which were in line with estimates.
While the forecast excludes tariff impacts, it said that consumer stress and the noise surrounding tariffs hit February sales and could pressure first-quarter profits.
“As we turn the corner now there has been talk about the tariffs and uncertainty with economy … and while all those behaviors we have seen with the consumer (over the past year) are not changing, they are becoming more pronounced,” Chief Commercial Officer Rick Gomez said on a media call.
On Tuesday, Target also said that due to “elevated volatility” in its business, it would stop its decades-old practice of issuing quarterly guidance.
“Consumer spending trends are not yet back to normal today,” Chief Financial Officer Jim Lee said.
Target’s disappointing outlook may reflect the mood of shoppers who in January pulled back spending far more than expected and showed that they are much more worried about the impact of tariffs on their wallets.
The Minneapolis-based retailer has been facing competition from bigger rivals such as Walmart, Amazon, opens new tab and Costco, opens new tab who have used their scale to offer lower prices.
And while Target has tried to claw back some demand by cutting prices, ramping up promotions, and partnering with celebrities like pop star Taylor Swift to offer exclusive deals on products, analysts warn it may not have been enough to recapture market share.
“Walmart has been known to have a business that is growing margins and market share, something that Target has not been able to exemplify over the last few years, so the guidance is another point of frustration for investors,” said David Wagner, head of equities at Aptus Capital Advisors.
Still, Target’s holiday quarter comparable sales rose 1.5% and beat estimates as heavy discounts and promotions helped drive sales. Earnings fell 19.3% to $2.41 per share, but beat estimates of $2.27.
Online comparable sales rose 8.6% driven by higher sales of beauty, apparel, toys and sporting goods. But this also drove up costs of box shipping, or those made within one or two days, Target said.
Beware, UK retailers and brands aren’t doing enough to reduce the use of single-use plastic packaging, and consumers will vote with their purses if this goes on.
Image:Aquapak
New research shows 65% of UK consumers felt retail is falling short when it comes to cutting harmful plastic, with just 18% saying they are doing enough, according to sustainable packaging producer Aquapak.
The findings show that British shoppers want to see retailers take positive steps to reduce the impact of the packaging they use on the environment. Some 59% said they wanted to see the conventional plastic used in packaging replaced with an alternative material which can be recycled and doesn’t harm the environment.
Meanwhile, 57% said they should use more paper-based packaging which can go into kerbside recycling collections and 49% said that they should stop using traditional single-use plastic completely.
If such changes are not made, the findings suggest that consumers are happy to vote with their feet and purses.
Over the next 12 months, 56% of those surveyed said they will try and buy more products that do not use single-use plastic packaging, such as polyethylene bags. They are prepared to take even more extreme steps over the next three years, with 46% saying they will stop buying products that use single-use packaging and hard to recycle packaging altogether.
For retailers and brands facing environmental challenges throughout the supply chain, they should take heart from the fact that 32% of consumers said that they would be prepared to pay more for packaging which is 100% recyclable.Of these, 43% said they would pay 5% more.
Some 30% said they would pay more for clothing and accessories packaged in recyclable material, with 41% of these saying that would also be happy to pay 5% more.
Mark Lapping, chief executive of Aquapak, said: “We recognise that businesses have many challenges to deal with when it comes sustainability, whether it is carbon, water or biodiversity but it is important that they don’t just pay lip service to new technologies but opt for real change.
“The good news is that there is a commercially proven solution that will make their plastic packaging problems disappear. We have developed Hydropol which can be incorporated into paper to create planet-friendly wrappers for dry foods, snacks and confectionery, or used as film to make garment bags, providing an alternative to current packaging which is hard to recycle and inconvenient for consumers.”
Barbour International has collaborated with New York based lifestyle brand Saturdays NYC to create a three-piece capsule menswear collection for SS25.
The collection, made up of a lightweight wax jacket, a graphic sweatshirt and an oversized T-shirt, completes the Barbour International x Saturdays NYC collection available from 6 March through Barbour.com and selected stockists worldwide.
The collab link is inspired by Barbour International’s motorcycle heritage and Saturdays NYC’s city and surf roots. So the capsule collection “fuses both iconic brands seamlessly… present[ing] lasting quality through a modernised attitude”.
The key Lightweight Wax takes inspiration from Barbour’s original A7 jacket first introduced and created by Duncan Barbour in 1936, which became “synonymous amongst bikers back in the 1960s and 70s”. This reimagined style retains many of the original key details including the angled chest map pocket and robust functionality, we’re told. But it’s given a modern twist as it has been presented in a lighter-weight waxed cotton fabric. Finished with a dual branded logo and a shock-cord hem adjustment for more of a relaxed fit, this jacket is a synergy of both brands.
Featuring a checkered monochrome graphic the sweatshirt “adds a bold statement to a contemporary look” while the graphic T-shirt exhibits Saturdays NYC’s “illusional graphics, with a reference to Barbour International’s black and yellow colour scheme”.
Saturdays NYC said of the second-time collaboration: “Barbour International is a brand that has inspired us since we started designing and to continue this partnership is an exciting commitment to design and craftmanship.”
KMD Brands, owner of Rip Curl, Kathmandu, and Oboz, announced on Wednesday that Brent Scrimshaw will transition to the role of group chief executive officer and managing director, effective March 24.
Rip Curl
In his new role, Scrimshaw will work out of the Australia-headquartered company’s offices in Melbourne.
Outgoing KMD Brands CEO Michael Daly will step down March 25, and will remain on in a transitionary period with Scrimshaw until April 4. A sports apparel veteran, Scrimshaw has been a director of KMD Brands since 2017 and global CEO of marketing services company, Enero, since 2020. Before that, the executive had a 19-year career at Nike, serving as vice president, EMEA brand marketing and core category business, and vice president and chief executive of Western Europe.
“I’m energised by the opportunity that lies ahead as I step into the group CEO role,” said Scrimshaw.
“Having spent 30 years building brands around the world, I’m excited to enable a strategic focus on deepening our consumer connections through bold and innovative product, all while amplifying the unique identity of our iconic brands. I look forward to collaborating with our talented teams to unlock KMD Brands’ next phase of growth.”
Daly first announced his planned departure from KMD Brands in October last year. Less than one month later, former Rip Curl CEO Brooke Farris also stepped down from her role after three years leading iconic surfwear brand.
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