Target ‘s latest earnings disappointment suggests the retailer needs more time to stage a turnaround, but the U.S. consumer may not be able to wait that long. The Minneapolis-based company reported fiscal first-quarter results that missed estimates on the top and bottom lines, while also slashing its full-year financial guidance. Target CEO Brian Cornell mentioned declining consumer confidence and uncertainty around tariffs as some of the issues facing the Minneapolis-based retail chain during the quarter that ended on May 3. TGT 1D mountain Shares of Target fell Wednesday after the retailer’s earnings came in short of expectations. While it is difficult to break out the impact of strained consumers versus Target’s other issues, the latest earnings report could serve as an early sign that Americans are starting to pull back on spending, which accounts for a bit more than two thirds of the U.S. economy. Some recent data supports that theory. JPMorgan analyst Richard Shane said Wednesday in a note to clients that Chase data has shown a slowdown in spending in recent weeks. “In the most recent 30 days, there were 5 days where spending was more than 15 [basis points] above the [year to date] average and 15 days where spending was at least 15bps below the YTD average,” Shane said. The JPMorgan data is through May 13. And while Target’s stock is down more than 31% this year, the market at large doesn’t appear to be pricing in a serious slowdown in consumer spending. “We still have questions about the health of the consumer in the U.S. and whether the market has overshot pricing out the risks from recent tariff reversals,” Sean Simonds of UBS said in a note to clients. “Our models suggest more consumer discretionary downside momentum and relative outperformance coming from communication services and utilities.” To be sure, some of Target’s issues seem company specific. Wells Fargo analyst Edward Kelly wrote “there has been consumer pressure, but TGT looks to have underperformed.” And some of the slowdown in consumer spending could also be a function falling gas prices. But when one of the country’s largest brick and mortar retailers reports a year-over-year sales decline, it may be a sign that investors should take soft data like consumer sentiment more seriously. — CNBC’s Michael Bloom contributed reporting.
