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Target (TGT) easily beat Wall Street earnings projections for the company’s fiscal first quarter with a report yesterday May 16 after the close with a report of $2.05 a share. Analysts were looking for $1.80 a share. Earnings were down, however, 6.2% year-over-year.

But like Home Depot yesterday, Target warned that consumers are hesitant to make discretionary purchases. The company said that second-quarter earnings would be in a range of $1.30 to $1.70 a shared. (Just a note: That’s a huge range for earnings only a quarter out.) Wall Street analysts had been projecting earnings of $1.96 a share. The company continued to project full-year earnings per share in a range of $7.75 to $8.75 vs. the $8.36 analyst estimate.

“We came into 2023 clear-eyed about what consumers are facing with persistent inflation and rising interest rates,” said Target CEO Brian Cornell on a conference call. “We were determined to build on our guests’ trust by unifying as one team to deliver affordable joy each and every day as consumers and businesses navigate a third straight year of dynamic challenges.”

In other words, things aren’t about to get a whole lot easier quickly for retailers.

Target called out “softness” in sales of discretionary merchandise such as apparel and home goods. Digital comparable sales dropped 3.4% from a year ago. The company did not buy back any shares in the quarter. repurchased none of its shares in the quarter, either.

In its earnings release, Target estimated that inventory shrinkage-—mostly the theft of merchandise-—would clip profits by a whopping $500 million this year. CEO Cornell said the problem of organized retail crime is getting worse, is nationwide, and runs across merchandise departments.

For the quarter net sales were up 0.6% year-over-year to $25.3 billion vs. Wall Street estimates for $25.18 billion. Gross Profit Margin rose to 26.3% vs. 25.7% a year ago and estimates for 26.52%

Target shares were up 2.58% at the close.