Target told investors in May 2022 that its shelves were crammed in the wrong areas during the first half of the year, leading to write-offs.
The video from Morning Brew, which has garnered more than 140,000 views on TikTok, claims that target shoppers are seeing sales as the company tries to move excess inventory that doesn’t sell.
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“Retailers didn’t realize that demand was going to fade, so they ordered from previous levels, and now they have a little bit of excess inventory,” Matthews said.
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Target leadership told investors during an earnings call in May that its shelves were full in the wrong areas during the first part of 2022. The company saw growth in sales of food and beverages — along with other essentials — and beauty, and a dip in spending on apparel and household items, the president said. Target’s board and CEO, Brian Cornell, during the call.
“While we expected a slowdown after stimulus in these categories, and expect consumers to continue to refocus their spending away from goods and services, we did not anticipate the scale of this shift,” Cornell said. “This led us to carry a very large inventory, especially in the huge categories, including kitchen appliances, televisions and outdoor furniture.”
As a result, Target has created room for “fast-growing categories,” Christina Hennington, executive vice president and chief growth officer, said, leading to “gradual write-offs” in other areas.
In early June, the company mentioned discounts again in a press release, saying it was planning “additional write-offs” and “removal of excess inventory and order cancellations” during the second quarter of 2022 that began in May.
Target is promoting deals in packed categories, including home items and appliances, ahead of its annual Target Deal Days event, which takes place online and in the company’s app from July 11-13. Shoppers will see 50% off select tech items and headphones, 30% off home items, 50% off select apparel and accessories, and 40% off kitchen appliances, among other checkouts.
Target isn’t the only company dealing with excess inventory, either. Costco’s leadership told investors in May that it was “heavy” in small appliances and home decor, and Walmart reported a 32% increase in apparel and other non-grocery inventory.
Matthews doesn’t expect deals at stores like Target to last for long because overall demand is still higher than it was before the COVID-19 pandemic.
“As long as demand remains high the same, inventory levels, at current levels, are not a problem,” he said.
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