Changing consumer behavior led some retailers to have excess inventory, including Target. After the price slashing, Target’s profits declined sharply from the same time last year — from $183 billion in 2021 to net earnings of only $183 million in the second quarter of 2022, according to Forbes. Target released its second-quarter earnings this morning.
The company announced it expects its operating margin rate to more than triple to 6 percent in the last two quarters of the year. Its most recent operating margin rate was 1.2 percent, nearly a full percent less than the company’s anticipated 2 percent rate.
Despite the less-than-expected revenues, Target News tweeted a statement from CFO Michael Fiddelke that said the company’s future is bright.
“Because of our inventory actions, our future path is even brighter,” the tweet said. “$TGT operations are healthy and our teams have more flexibility to maneuver with fresh assortment and uncluttered shopping experience guests deserve. That commitment to guest experience is one of many reasons TGT has now seen 21 consecutive quarters of comp sales growth.”
However, despite Fiddelke’s tweet, reports show that Target’s inventory rose 1.6 percent over last quarter. After the company announced its quarterly earnings, shares fell 4 percent to $173.04, according to the Chicago Tribune, but have since risen to more than $175.
Other company officials were also quoted on Target News’ Twitter feed, all touting the second-quarter earnings.
“$TGT remains passionately focused on long-term investments for the future—including modernizing & expanding our store footprint, increasing supply chain capacity, automating distribution processes to reduce store workload and enhancing last-mile capabilities,” COO John Mulligan tweeted.
Chief Growth Officer Christina Hennington and CEO Brian Cornell also tweeted praises for the company.
“Our bold Q2 inventory actions enabled $TGT to focus on what we do best—providing great guest experiences,” Cornell tweeted. “Looking ahead, our team is laser-focused on delivering convenience, value and joy in the rest of 2022 and beyond.”
Target isn’t the only big-box store slashing prices. Walmart announced this week it also would mark down certain items. It also reported, however, that its sales and profits for the second quarter rose, in an announcement Tuesday.
The markdowns are the result of last year’s supply-chain issues, as merchandise stuck on ships is now overflowing on store shelves. Target first warned it would be canceling orders from suppliers and aggressively cutting prices in June. Consumer habits shifted from spending money on home-related purchases, such as TVs and home goods, to spending more on dining out and traveling.
