Target reported profit plunged 90% in the second quarter, falling far short of expectations, as inflation-weary customers pulled back on spending on nonessential items.
via: Axios
The Minneapolis-based retailer on Wednesday reported a 90% drop in profits during the second quarter as it clears out inventory, either by discounting or by cancelling orders.
Target’s performance in the second quarter shows just how hard it’s been for the average retailer to operate during the pandemic, Axios Closer author Hope King writes.
The swift economic recovery from the pandemic gave companies little time and room to adjust first to logistics challenges and, more recently, to changing consumer preferences.
You can find deals in home decor, furniture, small appliances and apparel.
Target anticipates clearing out the excess inventory by the end of October, with prices back to normal this winter, CEO Brian Cornell said on an earnings call Wednesday.
Target expects its profits to rebound in the next six months because most of the inventory clearance costs have been paid.
Target could have just held onto the inventory and sold it slowly, but opted to be more aggressive.
A glut of inventory clutters sales floors, interrupts workflow and clogs fashion racks from carrying the freshest items, Cornell explained on the call.
Target said back-to-school and college shopping is currently looking “encouraging” ahead of the more important Halloween to holiday season in the latest part of the year.
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