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In a fiercely competitive sector like retail, companies can’t afford to engage in price gouging, Target TGT+2.15% CEO Brian Cornell says.
“We’re in a penny business,” Cornell said during an appearance Wednesday on CNBC, following the retail giant’s strong quarterly earnings.
Cornell pushed back on claims that Target TGT+2.15% has raised prices to boost profits, and said that profits in the retail sector are already minimal, with every cent counting. Because shoppers have numerous options, including the “ability to shop in-store and online,” retailers have to be a lot more careful with pricing to avoid losing business, Cornell said. He did not address whether other retailers have engaged in price gouging.
Cornell’s comments came after Vice President Kamala Harris, targeting high grocery prices, said she would implement a federal ban on corporate price gouging if elected president.
Retail executives have pushed back in the days following that proposal.
“I thought we would’ve learned by now that price controls do not work,” Kellogg CEO Carlos Gutierrez, a former Secretary of Commerce, said Tuesday on CNBC. “They actually have the opposing affect. They create more inflation, they create shortages, they create a black market.”
Target beat Wall Street’s expectations in second-quarter earnings released Wednesday, partly driven by price cuts the retail giant implemented in May. At the time, Target said it would slash prices on almost 5,000 everyday items.