Inflation crashed Target’s growth in Q2 as shoppers traded down to balance the family budget.

This week, the popular retailer reported a comparable sales growth of 2.6% for Q2, down from 8.6% last year. In addition, comparable store sales and same-day services (Order Pickup, Drive Up and Shipt) fared worse, rising 1.3% and 11%, respectively, compared to 8.7% and 80% last year.

Target’s growth suffered from a couple of factors. One is the “trading down” effect, where consumers shun the more expensive brands for the less expensive brands and private label products, staying with essentials like groceries, as was the case in Walmart. Another factor is the continued liquidation at fire sales of excess inventory in discretionary categories.

Both factors took their toll on the company’s operating margins, which stayed barely in the black for the quarter. “Target’s earnings report was disappointing as the company’s extreme efforts to clear inventory and receipts ahead of back to school and holiday had a more profound impact on the company’s gross margins than the company had previously telegraphed to the street,” Chelsea Waiter, Portfolio Manager at EFG New Capital, told International Business Times in an email. “In comparison to Walmart, Target was much more aggressive in clearing inventory, as management made the strategic decision to take a significant one-time hit rather than continue to grapple with extended supply for multiple more weeks/months/quarters.”