Target CEO Brian Cornell firmly rejected accusations of price gouging in the hypercompetitive retail industry during an interview Wednesday on CNBC’s “Squawk Box.”
During the discussion, Cornell was confronted with remarks from Democratic presidential candidate Vice President Kamala Harris, who recently supported a federal ban on “corporate price gouging” in the food and grocery industry. Harris cited concerns about companies overcharging consumers and contributing to higher household costs.
In response, Cornell pointed to the slim profit margins typical of retail, saying, “We operate on a shoestring profit.” He also highlighted the many options consumers have for finding competitive prices, from visiting brick-and-mortar stores to comparing prices online for everyday items.
The conversation followed Target’s latest earnings call, in which the company beat analysts’ expectations for earnings and revenue. Despite this, Target maintained a cautious outlook for the year, predicting that comparable sales could potentially only meet the lower end of their expected growth range of flat to 2%. However, Target did raise its earnings per share forecast from the previously estimated range of $8.60-$9.60 to a new range of $9-$9.70.
Amid persistent inflation and public frustration over high costs, Cornell noted that Target remains true to its core value of convenience. The company has cut prices on about 5,000 consumer staples, including essentials like diapers and peanut butter, in an effort to boost footfall and sales.
Cornell reiterated Target’s strategy to cater to budget-conscious consumers, a sentiment echoed by executives at other major retailers such as Home Depot and Macy’s, which have acknowledged a shift in consumer shopping behavior in recent financial updates.
In a related discussion, Walmart CEO Doug McMillon noted price cuts across categories, but noted persistent inflation in areas such as dry goods and processed foods. In a call to investors, McMillon expressed Walmart’s proactive stance against further price increases by suppliers, advocating for reduced prices to ease the burden on consumers.
These strategic pricing adjustments appear to be paying off for Target, with a 3% increase in store and online traffic, albeit with a slight decrease in the number of items per transaction compared to the previous year.
As retail executives like Cornell and McMillon navigate these tough economic times, their focus remains on delivering value to consumers struggling with tight budgets.
