Target CEO Brian Cornell weighs in on price gouging

There is no room for price gouging in an ultra-competitive business like retail. Aim Chief Executive Officer Brian Cornell said Wednesday.

In an interview on CNBC’s “Squawk Box,” the retail chief disputed the campaign’s arguments accusing supermarkets of price gouging. He said retailers have to respond to customers or risk losing business.

CNBC’s Joe Kernen asked her about it, referencing comments by Democratic presidential candidate Vice President Kamala Harris, asking whether Target or its competitors ever profit from price gouging. Last week, Harris proposed the first-ever federal ban on “price gouging by companies in the food and grocery industries,” claiming that some companies are overcharging and fueling household inflation.

“We’re in a penny stock business,” Cornell responded, pointing to the thin profit margins in the retail industry. He described the many places customers can go to check for lower prices or find merchandise elsewhere, from going into stores to scrolling through their phones to compare prices for a gallon of milk at different retailers.

Target’s retail chief made the comments after the discount chain beat Wall Street expectations for profit and revenue on Wednesday but took a cautious stance on its full-year outlook. He said he expects comparable sales, which strip out the impact of store openings and closings, to be at the low end of his range, from flat to up 2%. He did raise his profit outlook, however, saying he expects adjusted earnings per share to be between $9.00 and $9.70, up from previous forecasts of $8.60 and $9.60.

Inflation and consumer outrage over high prices continue to threaten companies like Target. A wide range of retailers, including Home deposit, Walmart and Macy’shave reported over the past two weeks that cautious consumers are being more selective about where they spend.

Cornell said on “Squawk Box” that the retailer is trying to appeal to “a consumer who manages their budget carefully” and said “value is in our DNA.”

Target is one of the consumer brands that has responded to shoppers’ concerns by lowering prices. It lowered prices on about 5,000 everyday items, such as diapers and peanut butter, to try to boost traffic and sales. Others, such as McDonald’sThey have launched affordable meals.

So far, those discounts have shown signs of resonating at Target: In the quarter, customer traffic at Target’s stores and website rose 3%, even as shoppers put slightly less in their shopping carts than they did a year ago.

Walmart Chief Executive Doug McMillon said last week that prices have come down across many merchandise categories, but said inflation “has been most persistent” in aisles that sell dry goods and processed foods.

On an earnings call with investors, he said some brands “are still talking about cost increases and we’re fighting that aggressively because we believe prices need to come down.”