Nov. 21 - Slow consumer spending in the U.S. and expansion into Canada cut Target's profits nearly in half. Fred Katayama reports.
Tighter spending by consumers hurt Target in the third quarter just as it hurt archrival Wal-mart. The discount retailer's comparable sales inched up less than a percent, and its CEO characterized consumer spending as "constrained." The results reflected the national slowdown in consumer spending. Canada also took a big bite out of Target's earnings. Costs related to its expansion up north helped slice profit nearly in half. Seasonal markdowns ahead of the holiday sales season and the need to clear excess inventory in Canada also cut into profitability. The performance of its Canadian operations led Target to cut its full-year forecast. That pushed investors to sell the stock, which is up 13 percent this year. With holiday sales competition expected to be particularly fierce this year, like many big retailers, Target is opening its stores on Thanksgiving day.