Target's 3Q profit drops 52% as shoppers force discounts

NEW YORK (AP) — Target reported an uptick in third-quarter sales but profits tumbled 52% after it was forced to cut prices on clothing and other goods to entice Americans squeezed by inflation.

The Minneapolis retailer voiced caution about its sales and profit during the fourth quarter and the critical holiday shopping season.

Target also said that will be slashing expenses with a goal of saving $2 billion to $3 billion over the next three years. Those cost cuts will not include layoffs or hiring freezes, executives said.

In what could be an ominous sign, sales and profit trends weakened significantly in the weeks leading up to the end of the quarter on Oct. 29 as customers waited for deals or traded down to private brands, said Chairman and CEO Brian Cornell.

“It’s an environment where consumers have been stressed," Cornell said. ”We know they are spending more dollars on food and beverage and household essentials. And as they are shopping for discretionary categories ... they are looking for that great deal."

Cornell said that mindset will continue through the holiday shopping season.

Shares of Target Corp. slid 14% before the opening bell and it dragged down other major retailers as well. Macy's and Kohl's fell 3% to 5%. Even Walmart, which topped profit expectations and raised it expectations for the year when it posted quarterly earns Tuesday, fell 2%.

Target has taken a bigger hit than its rival Walmart and the disappointing performance comes after a streak of stellar quarterly profit and sales results.

The disappointing quarter follows Target’s nearly 90% tumble in profit in second quarter and a 52% drop in the first. In early June, Target warned that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift...