Tariffs, Inflation Hit Target's Profit Forecast

Target has issued a warning regarding its profits being affected by tariffs and inflation. The retailer is shifting its sourcing to Central American countries to mitigate the impact. Despite a rise in holiday sales, Target faces stiff competition from major rivals and is discontinuing its quarterly guidance.

Retail giant Target has expressed concerns over the potential impact of tariffs on their first-quarter profit, citing uncertainties that could hamper their financial performance. The company is pivoting its sourcing strategy, aligning with countries such as Guatemala, as it emphasizes reducing dependency on China.

Tariffs introduced by the Trump administration on imports, particularly affecting goods from Mexico and Canada, are expected to drive up industry-wide prices including seasonal produce. The move has resulted in Target's shares dropping by 3.2% amidst general market concerns.

The Minneapolis-based retailer, challenged by fierce competition from Walmart and Amazon, has adopted strategies such as price cuts and exclusive deals to attract consumers. Despite seeing a 1.5% rise in holiday sales and outperforming earnings expectations, Target has scrapped its long-standing practice of issuing quarterly guidance due to 'elevated volatility' in business.

(With inputs from agencies.)