NEWS & BLOG
Views: 11 Author: Site Editor Publish Time: 2022-08-23 Origin: Site
This week, "Target", the second-largest U.S. department store, released its Q2 2022 earnings. The earnings showed that revenue was US$26.037 billion, a year-on-year increase of 3.5%, slightly lower than market expectations; net profit was US$183 million, a year-on-year drop of 90%.
Although Target refocused on best-selling categories and adjusted inventory in the face of a slump in consumer demand caused by historic inflation in North America, its second-quarter sales fell short of expectations. The main reason is the decline in demand caused by inflation, and the increase in commodity and freight costs caused by supply chain mismatches, and finally a large-scale clearance sale event that hopes to reduce redundant inventory.
Chief executive Brian Cornell said he would still insist on canceling some supplier production orders and reducing product prices. Brian Cornell described the moves as short-term financial pain necessary to maintain a fresh shopping experience and prepare for the second half of the year.
Target was the first retail giant to reflect on its 2022 forecast and warned of the impact of inflation on consumers, after the retailer slashed its guidance earlier this month and said it would cut prices and cancel orders as consumers slashed prices. Soaring food and gas prices have reined in their discretionary spending.
Chief executive Brian Cornell described the price cut as a "bold effort" to quickly adjust its inventory position. Target, too, had planned to try to maintain its margins this quarter by slowly clearing inventory over time rather than quick discount clearance. But slow cleanup increases the cost of storing and managing inventory, degrades the customer experience with cluttered sales floors, and leaves stores and supply chain teams tasked with managing excess inventory in the system.
That's a dramatic shift from 2021 and early 2022, when retailers were scrambling to keep shelves stocked in response to high demand and supply chain safety stock. Regarding the inventory issue, Most Shipping believes that it is clear that North American retailers have grossly misjudged demand, focusing too much on getting product to market at all costs and paying little attention to the cost of paying. This is not an afterthought or an afterthought. It is a reminder of the risks to all parties in the supply chain and investors at the beginning of the year.
For now, the move to clear inventory has allowed Target to move into better-selling categories -- some of which have lower profit margins, such as food and other consumables. Plus, beauty got a boost from its partnership with Ulta Beauty as consumers restart their social lives more than two years after the Covid-19 pandemic.
But, unlike Walmart's brand positioning known for its low-price promise, Target's price cuts could hurt its brand image in the minds of customers. The impact will remain even after inventory is emptied.