Target CEO Brian Cornell disputed the claim that retailers are going after prices because of corporate greed, after Vice President Kamala Harris proposed the first federal ban on price gouging in the food and grocery industry.
Cornell University argued Wednesday that in an industry as competitive and with razor-thin profit margins as retail, there is no room for price gouging.
“We’re in the penny business,” he said. During an interview on CNBC’s “Squawk Box.” “It’s a very competitive field.”
He pointed to other industries, such as technology, that have much higher profit margins than retail.
Harris argues that food suppliers and grocers are helping to keep prices artificially high, even as production costs begin to fall, thus encouraging inflation to remain rigid.
But Target’s CEO countered that customers are still suffering from inventory shortages at grocery stores, which is why affordable big-box retailers like Target and Walmart dominate.
Cornell said Target made the changes to appeal to “consumers who are carefully managing their budgets.”
The Minnesota-based retailer has slashed prices on about 5,000 everyday items, including bread, soda, paper towels and pet food, and introduced a new basics line this year with most items priced under $10.
While retail rivals including Home Depot and Macy’s reported disappointing earnings this week, Target raised its full-year profit outlook after better-than-expected revenue.
Cornell said shoppers have more ways than ever to compare prices, including across brick-and-mortar stores, e-commerce sites and social media stores.
Customers can also check product prices on their mobile phones while they are in a physical store.
Harris has faced backlash from critics who worry the ban will spark a resurgence of inflation and cause shortages.
Former President Donald Trump slammed Harris for her price-gouging plans, saying she had gone “full-on communist.”
And while he did not mention Harris by name, Chicago Federal Reserve Bank President Austan Goolsbee (a “good friend” of Harris’ who served as director of economic advising under President Barack Obama) said he was skeptical of a ban on price gouging.
Target said Wednesday it now expects full-year earnings per share in the range of $9.00 to $9.70, up from its previous range of $8.60 to $9.60.
Customer traffic across Target’s stores and websites increased 3%, even though shoppers were adding fewer items to their carts than they did last year.
Target shares surged 12.3% after the company released its earnings on Wednesday.
