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To say that Target earnings were a disappointment is an understatement — they were weak enough to affect other retailers that have not even reported results yet. That’s because they confirmed investors’ biggest fears about the consumer.

Target

(ticker: TGT) is falling more than 24% at recent check after a big earnings miss. And that was enough to drag down almost the entire sector on Wednesday morning — including retailers that haven’t reported their earnings yet, such as

Kohl’s

(KSS),

Best Buy

(BBY),

Urban Outfitters

(URBN), and

Dollar General

(DG).

Of course, it’s not fair to blame Target alone, as it is hardly the only retailer that had a poor fiscal first quarter. Just yesterday

Walmart

(WMT), the world’s largest retailer, tumbled after its downbeat results. Those came after a whole host of lackluster reports from e-commerce companies, from behemoth

Amazon.com

(AMZN) to

Etsy

(ETSY).

However, the problem is that Target confirmed what no one wanted to be true: The retail consumer is in trouble.

Retail sales data show that consumers are still spending — but in one sense they have to, since inflation has forced them to spend more just to buy the same goods and services they did a year ago. In addition, spending on experiences over shopping has been a priority for many Americans, after Covid-19 put so many of those activities on hold.

Yet Target’s results showed the market several things. First, Walmart’s bad quarter was not solely the fault of management missteps. Second, that weak results aren’t just an e-commerce problem. Third, that shoppers’ spending on discretionary items has fallen fairly consistently. Fourth, even consumers with higher incomes are pulling back in reaction to inflation.

Target has been a huge winner throughout the pandemic, so before today’s report, investors were hoping that it could once again deliver a big beat, providing evidence that the problems at other retailers were specific to them. Now, however, it’s hard to deny that problems such as inflation, supply-chain constraints, and higher labor and transportation costs are broad-based across the industry.

Write to Teresa Rivas at teresa.rivas@barrons.com