Target warned Tuesday that it has far too much inventory, forcing it to drop prices, cancel orders and cut its profit outlook to clear out the excess.
“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,” chief executive Brian Cornell said, “resulting in improved profitability in the second half of the year and beyond.”
Three weeks ago, Target shares slumped more than 25 percent after reporting that net profit shrank 52 percent in the first quarter. The Minneapolis-based chain cited supply chain pressures and rising expenses, factors that also hurt and helped spark a broader market sell-off that erased more than 1,100 points off the Dow Jones industrial average.Target said Tuesday it is taking unspecified “pricing actions” to help offset unusually high transportation and fuel costs, and also working with suppliers to shorten travel distances in its supply chain. It is also adding “incremental holding capacity” near U.S. ports to make sure it can handle a future spike in inventory.This is a developing story and will be updated.
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