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Target Corporation (NYSE:TGT) announced on Monday that it will lower everyday regular prices on approximately 5,000 frequently shopped items across its large assortment.
The retailer has already reduced prices on about 1,500 items, with thousands more price cuts planned to take effect over the course of the summer. Categories with price cuts include milk, meat, bread, soda, fresh fruit, vegetables, snacks, yogurt, peanut butter, coffee, diapers, paper towels, pet food, and more.
Target (TGT) noted that it routinely adjusts its prices to ensure it is competitive within the markets in which it does business. Target (TGT) also maintained that the new price reductions are on top of the retailer’s everyday low prices. The new pricing strategy will be watched closely by other retailers such as Walmart (WMT), Costco (COST), Dollar General (DG), Dollar Tree (DLTR), and Kroger (KR).
“We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more,” stated Target (TGT) Executive Vice President Rick Gomez.
Target (TGT) is scheduled to announce its Q4 quarterly results before the opening bell on Wednesday. Following a strong Q4 report, the company expects a softer Q1 with an anticipated 3% to 5% decline in comparable sales. On Wall Street, Citi recently upgraded the retailer to a Buy rating from Neutral. Analyst Paul Lejuez noted that Target has become one of the sector’s winners by emphasizing value and has the potential to enhance its EBIT margin. Wall Street is generally bullish on the stock, with sell-side analysts giving it a Buy rating and Seeking Alpha’s Quant Rating system assigning it a Strong Buy rating. Seeking Alpha author Ling Ya Luo recently highlighted the uncertainty surrounding TGT management’s focus on revenue growth and operating margin due to potential short-term challenges, which could impact Target’s top line and margins. However, improved operating margins could enhance the company’s ROIC and stock valuation, per Luo.
Shares of Target (TGT) inched up 0.17% in premarket trading on Monday. The stock is more than 12% higher on a year-to-date basis.
