Prompted by a 50 decline in profits from 2021, Target announced recently that it was cutting prices, canceling orders, and removing excess inventory. Target cut its profit outlook for the second time in less than a month as the US retailer said it planned to cancel orders and further mark down prices to clear excess inventories in response to. That's bad news for the stores like Target, who are looking to cut. Some of the retailers with the most challenging inventory levels have struggled to get top-line sales moving in recent quarters (I’m looking at you Kohl’s). Too much inventory in an era stocked with supply-chain challenges It is a reality for a handful of big-box stores, most recently, Target. Louis Fed shows that non-auto inventory has grown by nearly 100 billion between April 2021 and April 2022.
The breadth and depth of promotional efforts is likely to widen considerably in the coming weeks. I suspect that this is just the tip of the proverbial iceberg. Informal store checks I conducted this weekend reveal an unusually high level of markdowns on the part of many national retailers whose stores I visited. population can find a Target store within a 10 mile radius. But inflationary pressures are starting to have a dampening effect on purchasing activity overall and how spending is prioritized in particular.Īs the pace of overall product purchasing moderates, and the rebalancing of category spending we are witnessing in a post-Covid, post-stimulus world becomes more pronounced, retailers are going to be especially challenged to move through high inventory levels quickly and without significant damage to their bottom lines. Brian Cornell’s decision to shed excess goods quickly is the latest abrupt strategy shift for the CEO. Prompted by a 50 decline in profits from 2021, Target announced recently that it was cutting prices, canceling orders, and removing excess inventory. But it still had a glut of inventory during Q1 and Q2 of the current fiscal year, the retailer reported.
We determined that acting aggressively was the right way to continue to fuel the business.Given both low unemployment and growing wages, the consumer remains in decent shape. Too much inventory in an era stocked with supply-chain challenges It is a reality for a handful of big-box stores, most recently, Target. 2 in the 2022 Digital Commerce 3), shifts in consumer demand caused it to cancel billions of dollars’ worth of orders from suppliers late in 2021. ”And they certainly are for us, in some of the categories that we misforecast. “Retail inventories are elevated,” Michael Fiddelke, Target’s chief financial officer, told The Associated Press in a phone interview Monday. But Target is also facing sharply higher costs for everything from labor to transportation and shipping, and it will offset price cuts where it can with higher prices for goods now in demand. In aggressively clearing out unwanted goods, Target wants to make room for what is now in demand, including groceries and makeup products. Target declined to give a dollar amount of merchandise orders that are being canceled and depths of the discounts. Walmart said at its annual shareholders’ meeting on Friday that 20 percent of its elevated inventory were items the company wishes it never had. Throw in a warning in early-June of the negative financial impact from an inventory optimization plan, and the stock TGT, +0.07 has tumbled nearly 19 since Target reported first-quarter. Other retailers including Macy’s, Kohl’s and Walmart cited rising inventories when they reported their quarterly earnings results last month.
0 kommentar(er)
