Tariffs and Consumer Trends Shape Target's Economic Forecast

Target revised its full-year sales forecast below estimates due to tariffs and consumer spending issues, impacting first-quarter profits. New tariffs on imports from Mexico, Canada, and China raise goods prices. Target faces patron backlash for ending diversity initiatives, affecting foot traffic. Despite these challenges, holiday quarter results exceeded expectations.

Target announced a cautious full-year sales forecast on Tuesday, citing concerns over tariffs and consumer spending that could affect first-quarter profits. The retailer, along with Walmart and Best Buy, highlighted the impact of President Donald Trump's tariffs, causing rising prices and tempering demand.

New 25% tariffs on imports from Mexico and Canada took effect, alongside increasing duties on Chinese goods to 20%, affecting seasonal produce like avocados. This situation prompts Target's CEO Brian Cornell to express concerns over supply chain reliance on Mexico.

Target's outlook mirrors consumer sentiment, with January showing unexpected spending cutbacks. Backlash over ending diversity initiatives contributed to decreased foot traffic. However, the holiday quarter saw a triumph boosted by discounts and online sales, chiefly in beauty, apparel, toys, and electronics categories.

(With inputs from agencies.)