Target's Plan For Holidays: Lots Of Gifts Under $25 As Consumers Are Cautions

Target said it is planning to manage its inventory very conservatively and offer thousands of must-have gifts under $25 for the holiday season as American customers are more careful with their spending.

The retailer has seen seven consecutive quarters of declines in customers' discretionary spending.

"They're managing their budget very carefully. It's certainly pressuring discretionary spending, " Chief Executive Officer Brian Cornell told CNBC. "You're buying less apparel, less items for your home, fewer toys."

Target expects adjusted profit in the range of $1.90 to $2.60 per share for the fourth quarter. Analysts estimated $2.22, Reuters reported, citing LSEG data.

The company posted a profit of $2.10 per share in the third quarter. The result beat analysts' estimate of $1.48 and Target's own forecast of up to $1.60.

Shares reacted with a jump of more than 10% in premarket trading in New York.

"This profit performance benefited from our team's commitment to efficiency and disciplined inventory management," Cornell said in the earnings statement.

Target maintained its forecast of a mid-single digit drop in sales in the fourth quarter.

Other big U.S. retailers, including Walmart, Macy's and The Gap, are scheduled to report earnings Thursday.

On Tuesday, the National Retail Federation released a survey predicting that spending by American consumers this holiday season will reach an all-time high. But the rate of increase is expected to be smaller than in the previous three years.

Consumers will spend a total of $957.3 billion to $966.6 billion in November and December, which would represent an year-over-year increase of 3% to 4%, the NRT forecasts. Sales for the period rose 5.4% in 2022, 12.7% in 2021 and 9.1% in 2020.