Target Announces Impacted Second-Quarter Profits
Jun 7, 2022 By MarketDepth
Target (NYSE: TGT) has cautioned investors that its second-quarter profits will be impacted for a short time, as it reduces prices of undesirable products, cancels orders and makes moves to rid itself of excess inventory. The news sent other retail stocks flat, specifically affecting the S&P 500. The company’s share’s also fell 7% during early morning trading following the announcement.
“We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment.”CEO Brian Cornell said in an interview with CNBC
According to Cornell, the action will also allow Target to make room for items that its customers do want, like groceries, beauty products, household items as well as seasonal categories. He went on to highlight that its stores and website were experiencing high traffic and “a very resilient customer,” though those individuals were no longer purchasing Covid pandemic divisions.
“Over the past several weeks, we’ve continued to assess the broader retail environment and I think it’s no secret right now based on what’s been reported, the level of inventory across all retail is pretty high.”Michael Fiddelke, Target’s chief financial officer, in an interview with the Star Tribune
Nevertheless, Target believes profit margins will be approximately 6% at the end of the year, better than the company’s average performance in the years before the pandemic began.