Target is having a solid year as far as sales are concerned, but its profit dropped nearly 90% after being forced to slash prices to clear unwanted inventories of clothing, home goods, and electronics.
According to reports, Target had already warned in early June that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans.
On Wednesday, Target shares dropped almost 4% before the opening bell.
Economic experts said retailers were blindsided by the lightning-fast switch from spending on goods for the home, like TVs and small kitchen appliances, to dinners out, movies, and travel.
The expert added that the shift is surging inflation.
The latest data shows that Target’s profits tumbled 52% in the first quarter compared to the year-ago period.
In the second quarter, Target reported a net income of $183 million, or 39 cents per share, for the three months ended July 30.
The numbers are considered far short of the per-share profit of 79 cents that Wall Street had expected.
The data also shows that it is down from the $1.82 billion the company earned last year in the same period.