Target is cutting prices to get rid of excess inventory
MIAMI, FLORIDA - MAY 18: Shopping carts wait to be taking back to a Target store on May 18, 2022 in Miami, Florida. The retail store reported a 52% drop in profit for the first quarter, missing Wall Street's forecasts. The company blamed higher expen
MINNEAPOLIS (FOX 9) - Retail giant Target is cutting prices in an effort to get rid of excess inventory, the company said Tuesday.
The Minneapolis-based retailer is taking a set of actions to "right-size its inventory for the balance of the year and create additional flexibility to focus on serving guests in a rapidly changing environment," a news release said. Those actions include canceling orders from suppliers, including for home goods and clothing, and cutting prices to clear out inventory.
This move is an example of what retailers are doing in the wake of inflation and changing consumer habits as shoppers return to pre-pandemic routines, seeking out dressier clothes and services as opposed to the casual clothes and home goods that boosted Target's sales during the COVID-19 pandemic.
"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," Target CEO Brian Cornell said in a statement. "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," Cornell added.
Target cut its profit margin expectations for the second quarter. And shares fell about 1% in early trading on Tuesday.
The Associated Press contributed to this report.