Target is slashing prices to clear out amassed inventory ahead of the critical fall and holiday shopping seasons.
The bullseye logo on a sign outside a Target store is seen on Feb. 28, 2022. Target's first-quarter profit took a big hit from higher costs, despite strong sales growth. Target announced it is canceling orders from its suppliers, particularly in home and clothing, while slashing prices of goods in a bold move to clear out mounds of unwanted inventory ahead of the critical fall and holiday shopping seasons.
The actions come after a pronounced spending shift by Americans, from investments in their homes to money spent on travel, nights out for dinner and dressier clothes, a change that arrived much faster than major retailers had anticipated.The speed at which Americans pivoted away from pandemic spending was laid bare in the most recent quarterly financial filings from a number of major retailers.
“Retail inventories are elevated,” Michael Fiddelke, Target’s chief financial officer, told The Associated Press in a phone interview Monday. “And they certainly are for us, in some of the categories that we misforecast. We determined that acting aggressively was the right way to continue to fuel the business.”
Last month, Target forecast its full-year operating income margin rate would be in the 6% range. Target didn’t give a new full range prediction. It also said it secured additional space near U.S. ports to hold merchandise to allow for more flexibility.
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