Target’s second quarter sales were hit by inflation and a negative reaction by some customers, widely publicized on social media, to its Pride merchandise.

The Minneapolis retailer expects high interest rates, which makes credit cards more expensive to use, and higher prices on food to continue to put a strain on customers and on Wednesday, the chain cut its profit and sales expectations for the year. In lowering its forecast, Target also cited the end of the student loan moratorium, which had provided one-time college students a little more financial breathing room.

Profit came in above expectations, however, as the Minneapolis chain brought inventories closer in line with cautionary spending on discretionary items by customers.

Shares rose 8% in pre-market trading before the opening bell Wednesday despite trimming profit expectations for the year.

Target is among the first major U.S. retailers to report quarterly financial results and the impact of rising prices and elevated interest on its customers will get a lot of attention ahead of a raft of quarterly reports from companies like Walmart other retailers.

CEO Brian Cornell said higher high prices for food and household essentials are taking a bigger chunk out of the paychecks of customers, who have also pulled back on buying some goods in favor of travel or spending time out of the house in other ways.

“Guests are out at concerts,” Cornell told reporters on a media call Tuesday. “They’re going to movies. They’ve seen ‘Barbie.’ They’re enjoying those experiential moments, and they’re shopping very carefully for discretionary goods.”

Other retailers are seeing the same thing

Home Depot, the nation’s largest home improvement retailer, said Tuesday that sales continued to decline after surging in recent years. Sales of big-ticket items, those that may require financing, were particularly hard hit.

Industry analysts will be eager to see if the same forces are impacting other retailers reporting earnings this week, including Walmart, the nation’s largest, on Thursday. Macy’s, Kohl’s and Nordstrom post quarterly results later this month.

This week, the U.S. reported that Americans increased their spending last month, but higher interest rates are weighing on economic activities that are highly dependent on credit, like sales of homes, vehicles, furniture and electronics.

Target faced a unique problem during the most recent quarter, becoming one of the companies that was targeted for its LGBTQ+ support, in particular, its displays of Pride Month merchandise. It pulled some items in particular regions and made other changes after encountering hostility from some customers who confronted workers and tipped over displays. Company executives said this week that it couldn’t tease out how much the negative reaction had on its business, but once it made the changes, those incidents subsided. Overall sales improved in July from June.

Cornell said that the company has learned from the backlash and said it will be more thoughtful in merchandise offerings for its heritage months, which celebrate various ethnic and marginalized groups.

“We’ll continue to celebrate Pride and other heritage moments, which are just one part of our commitment to support a diverse teams and guests, ” Cornell told reporters. “However, as we navigate an ever changing operating and social environment, we’re applying what we’ve learned to ensure we’re staying close to our guests and their expectations of Target.”

Target earned $835 million, or $1.80 per share, in the quarter that ended July 29. That compares with $183 million, or 39 cent per share, in the year-ago period.

Sales fell nearly 5% to $24.77 billion as shoppers focused more on groceries than discretionary items. Business in the quarter was also hurt because results were being compared with heavy discounting in the year-ago period that was meant to clear unwanted inventory.

Analysts had been expecting profits of $1.43 per share on sales of $25.18 billion, according to FactSet.

Inventory at the end of the second quarter was 17% lower than last year, reflecting a 25% reduction in discretionary categories like fashion and home furnishings.

Comparable sales — those from stores or digital channels operating for the past 12 months — fell 5.4% in the latest quarter. In the first quarter, sales were unchanged.

Target now expects comparable sales in a wide range around a mid-single digit decline for the remainder of the year. It also now projects full-year adjusted earnings per share of $7 to $8, compared with the prior range of $7.75 to $8.75. Analysts were expecting $7.72 per share for the year, according to FactSet.

For an economy heavily dependent on tourism, Maui has come to rely on platforms like Airbnb to generate revenue.

But as the island looks to recover from the deadliest wildfire in modern U.S. history, the booking site has fallen short in consistent communication, guests and hosts say, potentially costing both those groups thousands of dollars as a result.

Airbnb has invoked its “extenuating circumstances” policy for all of Maui, meaning hosts and guests with eligible stays can cancel without a penalty and receive a full refund.

In his most recent emergency proclamation, Hawaii Gov. Josh Green said all non-essential travel to West Maui “is strongly discouraged through the month of August.”

The duration of Airbnb’s policy is not as clear. One guest shared correspondence from Airbnb showing the company’s policy initially only covered from Aug. 9 to Aug. 11, but then extended it to Aug. 10-Aug. 17.   

According to Airbnb, information on the application of its extenuating circumstances policy is provided to hosts and guests directly through their individual Airbnb accounts. Reservations scheduled further into the future may also become eligible under the policy, depending on circumstances, the company says.

An Airbnb spokesperson declined to comment.

Dashed vacations and mounting financial losses

For Wisconsin resident Sebastian Flores and his family, the idea of fulfilling a long-planned family vacation this November to Lahaina in West Maui, the area most affected by the wildfires, was quickly cast aside as they began to understand the scope of the disaster.

Airbnb instructed Flores to contact his host to request a full refund because, he was told, the company’s extenuating circumstances policy would not apply for a November trip. Flores said he attempted to contact the host more than a week ago, and has tried two or three times since, with no response. 

Flores said Airbnb also indicated it would contact the host on his behalf, but that it had also been unable to reach her.

NBC News contacted a property manager associated with the booking but did not receive a response.

The situation in Maui is complicated by the fact that hundreds are said to remain missing, while cell sites for communication remain down.

Flores remains understanding and sympathetic, but frustrated. 

“It’s not about the money,” he said. “It’s about doing the right thing. And if people in Hawaii are requesting tourists not to go there, it’s a no-brainer to cancel or find somewhere else to go.”

Other larger hotel chains, as well as Vrbo, which is owned by the travel company Expedia Group, have implemented policies allowing guests to cancel stays booked through Aug. 31 without penalty.

An Expedia Group representative said it was waiving cancellation policies for conventional lodging bookings to Maui through Aug. 31.  The representative also said it was applying an extenuating circumstances exception for eligible Vrbo reservations in Maui, though the rep said that due to the “ever-changing situation” it is not able to provide a date range for how far out the policy would be in effect. She said guests must first reach out to hosts about a refund, and that Vrbo can provide “further support” if the host is not reachable or does not offer an acceptable resolution.

“Vrbo will provide refunds,” the rep said in an email. “We will support those with upcoming travel to Maui and ensure they are able to come to a reasonable resolution with the host as needed.”

A spokesperson for Marriott, which owns the Westin, Sheraton and Ritz-Carlton brands, said affected bookings for properties in West Maui have waived cancellation fees through Aug. 31. 

In a statement, Choice Hotels, which has one Ascend Hotel Collection-branded property on Maui, said guests may modify upcoming reservations without penalty.

Meanwhile, Airbnb hosts and guests alike say they continue to get mixed messages from the platform.

One Airbnb host, who declined to be identified so as not to jeopardize his business, said the application dates of Airbnb’s extenuating circumstances policy have been “moving targets” and that the company’s inconsistent responses are putting “financial stress” on Maui’s host community.

Difficulty offering housing for locals

On Tuesday, Airbnb announced it was officially partnering with state officials to offer 1,000 housing units to individuals displaced by the wildfire.

For Airbnb host Stephanie Pytlinski, that was the clearest piece of information yet from the platform about making units available. Pytlinski owns four properties on Maui and is agreeing to refund anyone with an upcoming Airbnb booking, even as far out as January 2024. It’s a decision she says is costing her approximately $18,000.

When Pytlinski saw earlier news that Airbnb was working with state officials to make units available, she reached out to the company to let them know her condos could house some of the affected families.

“A lot of people want to help and give their homes to people desperately in need, but we also need some kind assurance that they’re from Lahaina,” Pytlinski said.

Other Airbnb guests say they continue to encounter difficulties accessing refunds for stays that they booked beyond Aug. 31.

Danica Ratkovich of California had booked a stay in a resort in Lahaina for five that was slated for Sept. 1 through Sept. 10 — but she has so far been unable to secure a refund, even though the resort she is staying at said 30% of its staff lost homes and family members in the disastrous fires.

An email from Ratkovich’s destination, Maui Resort Rentals, dated Aug. 13 and obtained by NBC News, said the resort was currently “severely limited in staff support and currently unable to immediately advise on cancellations, refunds or rescheduling.”

According to Airbnb’s website, if it determines that a “Travel Issue,” like an uninhabitable destination, has disrupted the stay, “we will provide a full or partial refund.”

Ratkovich said she reached out to Airbnb and was told by a support chat staff member that her reservation did not apply for the extenuating circumstances policy because she was planning to arrive after Aug. 17. NBC News could not confirm this statement by Airbnb because Ratkovich said she was told it over the phone. Ratkovich said Wednesday she has been trying to “give the resort space to deal with the overwhelming situation,” but intended to call Airbnb Wednesday and try the resort again on Thursday. 

“It is heartbreaking that we are being told by the media and the resort that Maui needs these spaces and all resources for locals,” Ratkovich said.

“We are trying to cancel and open up these needed resources for the locals,” she said.

When Jeff Foose welcomed Lucy, a Boston terrier, into his family in 2014, protecting her health was a big concern. His veterinarian recommended pet health insurance from a company called Trupanion, and Foose bought in. He appreciated that the company’s policy promised it would never raise his premiums by more than 20% a year.  

That pledge didn’t last long. Trupanion has raised Lucy’s premiums by well over that limit in some years, his documents show, and Trupanion just told him that he and other pet owners in New Jersey could see their premiums rise 33.6% this year. Making matters worse, Foose said he can’t change insurance carriers because Lucy has a skin condition that a new insurer would likely not cover.  

Seattle-based Trupanion, the leader in the pet insurance field, says it must raise premiums because vet costs are rising. Foose is unhappy. “It makes me crazy when someone sells me something and they make an embedded promise they don’t keep,” he told NBC News.

Some 5.4 million pet insurance policies were in force across the U.S. in 2022, up over 21% from a year earlier, according to the North American Pet Health Insurance Association. Trupanion insured 1.5 million pets as of December 2022, its financial filings state, roughly triple the number it did in 2018. 

Since 2018, the number of insured pets in the U.S. has risen almost 23% a year, on average. Roughly 80% of insured pets are dogs, with cats making up the rest. As pet insurance has increased in popularity, consumer criticisms have risen as well. They fall into three main categories, veterinarians say — long waits for claims reimbursement, denial of claims for pre-existing conditions and premium increases. 

Jeffrey Foose’s Boston terrier, Lucy.Courtesy Jeffrey Foose

Costs of goods and services are up everywhere and pet care is no exception. Government data shows the costs of veterinary services rose 10.6% in July, year over year.

Trupanion’s recent increases well exceed that rate, regulatory and customer documents show. Victoria Boyd, for example, shares her Las Vegas home with two cockapoos, one Shih Tzu and a Labrador retriever, and said the cost of covering their veterinary care with Trupanion is becoming a financial burden — approaching $400 a month. Like Foose, Boyd says she would have a hard time getting coverage on one of her dogs from a new insurer because of a pre-existing condition.

In just two years, the cost of insuring one of her cockapoos has risen 57%, from $77.94 to $122.11, Boyd’s documents show. In June, her monthly premium covering her Lab, Chance, rose 38% from 2022. Boyd said she has never filed an insurance claim on Chance.

Victoria Boyd with her cockapoos, Zuko and Sandy.Courtesy Victoria Boyd

A customer of Trupanion since 2017, Boyd said she was a fan of the insurer at first. “Their rates were great before and the positives of Trupanion are direct pay to vets and no payout limits for condition or ailment,” Boyd told NBC News. But now, she said, “it feels like a bait and switch — you got me in at these great rates and I’m almost trapped.”

Margi Tooth, Trupanion’s president, said she was disappointed by Boyd’s view. “I think we work very hard to ensure that we’re explaining our value proposition,” she said. The company’s price hikes are the result of vet cost inflation, Tooth said, and the rising costs of care in a customer’s specific region.

Tooth did not say why Trupanion had raised Foose’s premiums above the cap stated in his policy. She did say, “If there were ever any changes to a customer’s policy, the coverage, the benefits, the pricing, everything is always detailed in an annual summary and will provide information related to the changes in our coverage.”

Companies offering pet insurance are overseen by state regulators, and some of the rate increases recently requested by Trupanion are far higher than the overall inflation rate. In June, the company asked the Florida insurance regulator for a 48.9% price increase on top of a 14% hike that the regulator approved in February. Earlier this year in California, Trupanion asked for a 28% rate increase; the regulator approved only a 12% rise. 

Victoria Boyd’s Labrador retriever, Chance, and her Shih Tzu, Deacon.Courtesy Victoria Boyd

In its SEC filings, Trupanion says if state regulators delay its price increases, the company’s financial condition could be adversely affected. Bradley Safalow, an analyst who covers Trupanion at PAA Research, said he believes Trupanion will continue to face regulatory opposition to its price increases and he is betting its stock price will decline. Policyholders in California account for almost 20% of the company’s revenues, Safalow noted. 

NBC News compared prices among five big pet insurance providers — Embrace, Figo, MetLife, Pets Best and Trupanion. The same dog breed, age and size was used for each quote, aiming for 90% coverage and a low deductible of $200 to $500. Trupanion’s rate came in three to four times the costs of the other four providers on both a 3-year-old and a 6-year-old male Jack Russell terrier mix.  

Asked what accounted for the price differences, Laura Bainbridge, Trupanion’s head of corporate communications, said, “Products are not comparable across pet insurance. Trupanion is going to generally offer the fewest exclusions — covering conditions that a pet may be predisposed to.” 

Tooth said the company’s product is a good value because it does not have limits or caps on coverage as other offerings do and it pays the vet directly. “You’ve got lifetime coverage that covers the unexpected,” Tooth said. “It’s built for the life of your pet.” 

Still, Kevin Brasler, executive editor of Consumers’ Checkbook, an independent organization that helps consumers shop for the best prices on goods and services, said, “Pet insurance is a really expensive product. It seems inexpensive at first when you’re only paying $40 a month. But a lot of things have to go wrong with your pet to make pet insurance a good deal.” 

Trupanion has generated losses since its inception and last December reported an accumulated deficit of $172 million. It has funded its operations by issuing shares and borrowing. 

The company’s stock has been volatile; soaring to $122 in 2021, it recently traded around $30. 

New customers come to Trupanion from its website and referrals, but much of its business comes from veterinarians who recommend its products to their customers, as Foose’s vet did. 

Jeffrey Foose’s family with their Boston terrier, Lucy.Courtesy Jeffrey Foose

Frances Wilkerson is a longtime veterinarian who reviews pet insurance offerings on her website Pet Insurance University. Unlike other review sites, Wilkerson is an independent assessor who says she receives no commissions or other pay for her research. She said more regulation, especially on pricing, is needed to protect buyers of pet insurance.  

“I would really like consumers to have some clarity on what’s the maximum their premium can increase every year,” she said.  

Darryl Rawlings, Trupanion’s founder and CEO, said his company doesn’t project how much premiums will rise because it’s an unknown. “We’re not trying to predict what’s going to happen in veterinary medicine 5 to 10 years down the road,” he said. “What we’re trying to do is understand the cost and project it out over 12 to 18 months so we can price our members appropriately.” 

Until recently, industry regulations have been sparse. Last year, the National Association of Insurance Commissioners, a group of state overseers, drafted a “Pet Insurance Model Law” to “promote the public welfare by creating a comprehensive legal framework” covering sales of the product. Now, some states are implementing new rules. 

One is Maine, whose insurance department recently advised pet insurers that they can no longer defer the effective date of a new policy for days or weeks. Such delays were designed to prevent customers from submitting a claim for an accident that has already occurred, for example. In July, Trupanion sued the Maine insurance superintendent seeking a so-called declaratory judgment that would allow the company to continue deferring new policies’ effective dates.

Emily Brill, founder and publisher of The Canine Review, an independent news service covering the pet industry, said other states are likely to follow Maine’s lead on so-called waiting periods, a source of considerable consumer complaints. “As more states want to get rid of waiting periods on accidents and put huge restrictions on all kinds of waiting periods, it’s sending insurers into panic mode,” Brill said. Trupanion is more vulnerable than other insurers, she added, because the company’s premise is to provide coverage that has no limits or exclusions. “If they start not covering everything, that’s a problem because it messes with their formula.”

Trupanion’s pricing has come under scrutiny in California. Last year, the state’s insurance regulator alleged Trupanion’s underwriting unit, American Pet Insurance, had violated state laws by charging different premiums to customers based on the sales method the customer used to buy the policy. The notice said the company had violated California law requiring that an insurer charge an insured “the lowest premium for which the insured qualifies.” Trupanion settled without admitting to any wrongdoing. 

Regarding Trupanion’s price increases, Brasler, of Consumers’ Checkbook, said, “It’s hard to know whether they’re doing it because it’s a money grab or if their risk has gone up. The feedback is at least they pay claims — it’s not like they’re rejecting tons of claims. Still, I wouldn’t buy pet insurance,” he added.