Target said yesterday it will reduce prices and cancel orders in order to reduce an excessive amount of inventory.
Retailers are finding that American pandemic-related spending habits are declining much faster than they had anticipated. Last month, Target reported its fiscal first quarter profit fell by 52% as compared to the same period last year.
According to The Associated Press, “Sales of big TVs and small kitchen appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that it said must be marked down to sell.”
Target said it is planning for growth in areas such as groceries, household essentials and beauty products.
The retailer also plans to improve growth in its “upstream supply chain” by adding five distribution centers over the next two fiscal years.
Target gave no details on how deep the discounts would be or when it would occur.
But, Target, like other retailers is facing another challenge with the cost of fuel and transportation. Target said it will take “pricing actions to address the impact of unusually high transportation and fuel costs.”
Brian Cornell, chairman and CEO of Target said, “Target’s business continues to generate healthy increases in traffic and sales, despite sustained volatility in the macro environment, including shifting consumer buying patterns and rapidly changing operating conditions.
Since we reported our first quarter results, we have continued to monitor external conditions and have determined the necessary actions to remain nimble in the current environment.
The additional steps we are announcing today will ensure that we deliver for our guests while driving further growth.
While these decisions will result in additional costs in the second quarter, we’re confident this rapid response will pay off for our business and our shareholders over time, resulting in improved profitability in the second half of the year and beyond.”
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