Target slashes prices on more than 3,000 products amid stiff competition

March 11 (Reuters) – Target said on Wednesday it was lowering prices on over 3,000 products across categories, including apparel, home goods and daily items, in a bid to shore up demand amid stiff competition from other retailers heading into the spring season.

Under new CEO Michael Fiddelke, the big-box retailer is undergoing a turnaround while navigating the ongoing macroeconomic uncertainty that has plagued several consumer-facing companies. 

Target, in particular, has lagged behind other retailers, including Walmart, pressured by weaker consumer spending on its higher-priced items. Walmart and U.S. grocer Kroger have also cut prices on essentials, including groceries, to lure in increasingly value-conscious shoppers.

Target’s forward price-to-earnings ratio for the next 12 months, a common benchmark for valuing stocks, was 14.88, starkly below Walmart’s 42.06, Costco Wholesale’s 46.07 and Kroger’s 13.60.

As Americans struggle to afford essentials due to inflation and delayed food stamp benefits, companies such as Procter & Gamble, Coca-Cola and PepsiCo have also lowered entry price points to safeguard their market share.

Target has begun rolling out price changes both online and in stores. It has priced down Listerine Alcohol-Free Extra Mild Mouthwash at $4.99 from $5.99, and Toddler Fleece at $10 from $12.

The company said price reductions across categories, including baby essentials, beverages and select food items, will continue through spring.

The retailer had lowered prices on thousands of items last year, ahead of the all-important holiday season, to tempt value-hunting shoppers.

“Target is lowering prices and introducing more newness to its assortment as it looks to drive store traffic and better compete with peers. This latest announcement is consistent with the company’s investor day, where management discussed how it would fund these investments while also growing margins this year,” said Arun Sundaram, analyst with CFRA Research.

Fiddelke told investors earlier this month that the company would spend more than $2  billion across the business this year, including $1  billion for new stores and remodels and another $1  billion on improving the overall guest experience.

Target has forecast annual sales and profit largely above estimates after beating holiday-quarter profit targets.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shinjini Ganguli)