Target CEO: Hiking prices will be “the last resort”
Target’s merchant team is weighing a range of scenarios as its faces “massive potential costs” from President Trump’s tariff hikes.
MINNEAPOLIS – Target‘s merchant team is weighing a range of scenarios as it faces “massive potential costs” from President Trump’s tariff hikes.
During yesterday’s investor call to review Target’s Q1 results, executives didn’t lay out a complete strategy, but they did share some of the adjustments the retailer is making as it anticipates low single-digit sales declines in every quarter of the current fiscal year.
Target’s merchants are engaged in contingency planning with its vendors to mitigate the cost of higher tariffs, according to chair and CEO Brian Cornell.
See also:
- Target aims to drive store traffic with weekly freebies and 10K new skus
- Target shed $1 billion in home furnishings sales in 2024
“And the difficulty level has been incredibly high, given the magnitude of the rates we’re facing and a high degree of uncertainty on how these rates and impacted categories might evolve,” he said.
He added, “We have many levers to use in mitigating the impact of tariffs, and price is the very last resort.”
Shifting assortments to minimize costlier goods is among the strategies. For example, Target is reworking Bullseye’s Playground at the front of the store, which typically includes a range of inexpensive seasonal home décor accents among its offerings. The section is now incorporating trending beauty items along with seasonal food and beverage items.
“We have made a commitment to keep those [retails] at $1, $3 and $5,” said Rick Gomez, EVP and chief commercial officer.
The company is also moving to “right-size” inventory after ending Q1 with inventories up 11%. Those actions include incremental markdowns and receipt adjustments during Q2. Target may also push back the timing on taking in deliveries.
The priority for in-stocks is to focus on top-selling items and peak shopping periods.
“In the back half of the year, we will be lapping easier comparisons from 2024 and expect to have inventory and receipt adjustment costs behind us,” said Jim Lee, CFO/EVP.
What's Your Reaction?
