STATEN ISLAND, NY – If you’re a target shopper who regularly scours the aisles for clearance items and discounts, you’re in luck – the big-box retailer announced plans Tuesday to cut prices and expand its liquidation section in an effort to resize its inventory for the rest of the year.
News of the sales surge comes after Target announced in its quarterly earnings report last month that profits fell 52%, leaving the chain with bloated inventory. Inflation and an overall shift in spending by shoppers — who are ditching non-essential purchases and instead focusing on day-to-day needs like groceries and gas — were also big contributors to the store’s decision.
“The company is planning several actions during the second quarter, including additional markdowns, removal of excess inventory and cancellation of orders,” Target noted in press release focused on its updated financial plan. “The action plan also includes adding additional storage capacity near US ports to add flexibility and speed in parts of the supply chain most affected by external volatility; pricing measures to deal with the impact of abnormally high transport and fuel costs; and working with suppliers to shorten distances and lead times in the supply chain.
The brand predicts the biggest drop in discretionary categories like home and fashion, which currently contain the bulk of junk. By slashing the prices of small appliances and out-of-season clothing, the retailer plans to make room for more in-demand merchandise like groceries and beauty products.
The company is also pursuing aggressive options to control costs, including continued work with suppliers to help offset inflationary pressures. Target also announced plans to build on its own supply chain capability, adding five new distribution centers over the next two fiscal years.
“Target’s business continues to generate healthy increases in traffic and sales, despite continued volatility in the macro environment, including changing consumer buying habits and rapidly changing operating conditions. “said Brian Cornell, President and CEO of Target Corporation. “Since we released our first quarter results, we have continued to monitor external conditions and have determined the actions needed to remain agile in the current environment.”
The company said it hopes to complete this liquidation of accumulated inventory before the critical fall and holiday shopping seasons.