Shoppers in the United States are becoming increasingly cautious about the way they spend their money amid inflation. In an attempt to counter these changing habits, retail giant Target decided to take some surprising actions.
The first step for the company will be clearing out its inventory. This was announced in a letter to investors that explained the company is planning to double down on discounts while canceling a significant number of orders. As a result, Target expects a short-term hit in profits but believes it will be rewarded for the move further down the line.
“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 explained the move in an interview with CNBC.
By cleaning out their inventory, Target will not only get rid of unwanted items but will also give the company flexibility and make room for in-demand goods. This includes everyday groceries, household essentials, beauty items, and seasonal items.
Target recently reported $2.19 adjusted earnings per share for the first quarter, which was well below the $3.07 expected. As a result, the company’s stock plunged more than 25%