Target Announces New Plans Centered On Inventory Optimization

Target Corporation (NYSE: TGT) announced today a series of actions to right-size its inventory for the remainder of the year and increase flexibility to focus on serving guests in a rapidly changing environment.

Photo Insert: Target has survived and even thrived in the vicious US retail market.

These actions are the result of the Company's ongoing evaluation of current industry performance, the operating environment, and consumer trends.

"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. 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,” said Brian Cornell, chairman and chief executive office of Target Corporation.

Several actions are planned for the second quarter, including additional markdowns, the removal of excess inventory, and the cancellation of orders.

The action plan also includes adding incremental holding capacity near U.S. ports to increase flexibility and speed in the supply chain segments most affected by external volatility; pricing actions to address the impact of unusually high transportation and fuel costs; and working with suppliers to shorten supply chain distances and lead times.

Cornell added, “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."

Furthermore, the Company is speeding up work that is already in progress, such as rapid revisions to sales forecasts, promotional plans, and cost expectations by category.

In particular, the Company anticipates continued strength in frequency categories such as Food & Beverage, Household Essentials, and Beauty, while planning more cautiously in discretionary categories such as Home, where trends have shifted rapidly since the beginning of the year.

The Company is also pursuing aggressive cost-cutting measures, such as ongoing collaboration with vendors to help offset inflationary pressures, driving continued operational efficiencies, and lowering costs while maintaining a strong guest experience.

Finally, the Company continues to increase capacity in its upstream supply chain to support future growth by adding five distribution centers over the next two fiscal years.

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