Wendy's, Target announce new deals to boost consumer spending

As consumer spending is under pressure while inflation remains sticky, more companies are looking for strategies to get customers back in their doors. Wendy's (WEN) announced a new $3 breakfast combo meal, which will debut on Monday. Meanwhile, Target (TGT) announced it will slash prices on five thousand items.

Yahoo Finance's Seana Smith and Madison Mills discuss whether these measures will be successful among consumers looking to manage their budgets and cut back on spending.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

And speaking of the consumer slow down Wendy's debuting its new $3 breakfast combo meal on Monday.

This is the latest sign that some chain restaurants and retailers could be sensing a consumer slowdown.

Now, this comes also after Target announced price cuts on 5000 items.

Earlier this hour, we spoke with D A Davidson managing director, Michael Baker about those price cuts and what it could mean for the retail companies outlook is target's reduction of prices for 5000 items bullish or bearish for the stock.

We think it's a positive.

I I think the key right now is for them to get customers uh in, in the door.

Uh and, and, and win back some traffic and win back some market share.

So, so we think it's the right thing to do and and should pay back, uh pay off, uh you know, with positive problems later in the year.

So a positive sign for the stock, but I have to wonder whether or not that's going to be true long term for a company like Target, it feels like they're in this difficult position where they're not necessarily the high end consumer or the low end.

And as we've been talking about with a lot of the economist in particular who come on our show, we are starting to see signs that were in a K shaped recovery.

So like the letter K, you got one end going up one and going down.

Where does target fall if that is the economic situation that we're in and we, some of these other names fall.

A Wendy's and mcdonalds may be benefiting from some consumers trading down.

Maybe they're capitalizing off of that with something like this $3 combo meal.

But where do these middle tier retailers?

And I think more and more retailers are coming around to the fact that inflation likely is going to remain sticky from these levels.

Yes, it has eased quite a bit off of the peak levels that we saw not too long ago.

So that of course, is good news here for many of these retailers.

But when you take a look at the performance of target overall and you compare it to what we have seen in Walmart.

Target is more exposed to the consumer discretionary spend, which is why it has been under more pressure than its rival, Walmart, Walmart, much more exposed to staples there.

So it's been able to weather what has been a tougher macro picture now for quite some time also, they are really buying in, they're luring some of these larger or the higher income consumers are starting to trade down to Walmart.

That is a trend that will be interesting what we hear from Cornell tomorrow just about whether or not that is also a trend here at target that they are seeing.

But again, the consumer is weak, not exactly anything new when you take a look at these earnings reports that we're getting out.

Also squaring that with the recent econ data or sentiment data that we have been getting out consumer sentiment most recently falling many consumers there referencing sticky inflation as a huge headwind here for spending going forward.

So I think that's why we've talked to strategist time and time again saying that the discretionary sector could be under a bit of pressure here, at least in the short term as we do see more of this rotation out and we do see more broadening here of market participation as well.