Target Continues To Slide With Wells Fargo Downgrade

This audio is auto-generated. Please let us know if you have feedback. Target may be struggling more than many observers realize and could be facing “a sustained period of comp and traffic weakness,” Wells Fargo analysts led by Edward Kelly warned in a Wednesday research note.
Link: Wells Fargo downgrades Target amid signs the worst isn’t yet over | Retail Dive

In this kind of environment, Target is at somewhat of a strategic disadvantage.

  • Wide inventory selection.
  • Without a consistent “value” message, it means their merchandisers and inventory planners need to guess right every single time.
  • This means continues markdowns are coming.
  • What happens if supply chain problems return? Target’s supply chain is kind of “just in time” and as a result is sensitive to disruption.

Target has a world-class management team so this is not a long-term issue, but in the short to medium term Target has a serious problem on its hands if the economic road is bumpy instead of being predictable.

Target’s rise from 2013 since Brian Cornell took over has been all up. Mixed they will need to learn to adjust to.

I continue to believe that there largest challenge is “everyday low prices” from competitor narratives. Target management has their work cut out for them in the next 18 months but I wont bet against them yet.

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In an unpredictable market it’s hard to be Target. You can’t rely on inventory forecasting because the consumer keeps changing.

It’s still a great business with a great experience. They may need to ship more eCommerce from DCs in the short term if they can’t allocate properly.

A few key people at Target IT were ex Tesco, but I think have retired (Mike McNamara) or moved on since they joined

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